Only 19% received an A grade and many could be leaving money on the table at tax time
TORONTO, April 20, 2022 /CNW/ - Heading towards this year's personal income tax deadline of May 2, 2022, CIBC tested Canadians' knowledge to gauge their understanding of a range of tax scenarios and found there are gaps in understanding of important tax concepts.
Only 19 per cent of Canadians scored 80 per cent or better on the 10-question quiz. The good news is a higher number of people (41 per cent) correctly answered at least seven questions.
"Having a good understanding of personal income tax is critical not only for filing your return accurately, but the more tax knowledge people have, the better they can take advantage of applicable tax deductions and credits which can, in some cases, lead to savings," said Jamie Golombek, Managing Director, Tax and Estate Planning, CIBC.
Among the most common scenarios Canadians were asked on the test, many were split (50 per cent) on whether a person can give their child a tax-free gift of any amount (they can). Another question about whether a spouse or partner is responsible for their partner not filing their taxes tripped up some respondents, with 49 per cent believing they could be held accountable.
"There are many Canadians who could do with a tax refresher," added Mr. Golombek. "There is still some confusion around subjects such as inheritances, gifting, and spousal responsibility."
To help Canadians better plan for and prepare their income tax returns, CIBC offers free resources available from recognized experts such as Jamie Golombek. For more information, talk to your advisor or visit our tax strategies website.
- 32 per cent believe lottery winnings are considered taxable income
- 46 per cent believe an inheritance received by a Canadian resident is not tax-free
- 50 per cent believe you cannot give your child a tax-free gift
- 36 per cent believe laser eye surgery is not an eligible medical expense
- Withdrawing from a registered retirement savings plan (RRSP), other than to study or purchase a first home, is taxable. (True, 85 per cent correct)
- Lottery winnings are considered taxable income. (False, 68 per cent correct)
- Receipts and records need to be kept for 6 years for tax purposes. (True, 83 per cent correct)
- Laser eye surgery is an eligible medical expense. (True, 64 per cent correct)
- Moving expenses may be a valid tax deduction if you moved for work or school. (True, 85 per cent correct)
- Selling a personal item valued under $1,000, online, is a taxable transaction. (False, 72 per cent correct)
- It is possible to make an adjustment to your tax return after filing. (True, 83 per cent correct)
- You are responsible if your spouse doesn't file their taxes. (False, 51 per cent correct)
- You can give your child a tax-free gift of any amount. (True, 50 per cent correct)
- An inheritance received by a Canadian resident is tax-free. (True, 54 per cent correct)
CIBC is a leading North American financial institution with 11 million personal banking, business, public sector and institutional clients. Across Personal and Small Business Banking, Commercial Banking and Wealth Management, and Capital Markets businesses, CIBC offers a full range of advice, solutions and services through its leading digital banking network, and locations across Canada, in the United States and around the world. Ongoing news releases and more information about CIBC can be found at https://www.cibc.com/en/about-cibc/media-centre.html.
This Maru Public Opinion survey conducted on behalf of CIBC was undertaken by the sample and data collection experts at Maru/Blue. 1,515 randomly selected Canadian adults who are Maru Voice Canada online panelists were surveyed from March 31st to April 1st 2022. The results of this study have been weighted by education, age, gender and region (and in Quebec, language) to match the population, according to Census data. This is to ensure the sample is representative of the entire adult population of Canada. For comparison purposes, a probability sample of this size that is comprised of full-time employed respondents used in this study has an estimated margin of error (which measures sampling variability) of +/- 3.0%, 19 times out of 20. Discrepancies in or between totals when compared to the data tables are due to rounding.