Complicated situations make taxes intimidating

Johanne Plamondon is a certified financial planner with Delphi Private Wealth Management of Raymond James in Calgary. Plamondon emphasizes it’s normal to feel anxious around tax time — especially if you’ve been through a rough year personally.

“Our lives are very busy,” she says. “People are juggling responsibilities … lots of things are on the go. And so when tax time creeps up very quickly … all of a sudden, you're starting to get all these receipts in the mail and they pile up.”

Part of the problem may be rooted in general financial anxiety. A study from FP Canada found that nearly one in three Canadians say financial stress is “making them unwell.”

But Plamondon notes that the other two-thirds of the population can also be prone to financial anxiety, come tax season.

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Cindy Marques, a certified financial planner and the co-founder and CEO of MakeCents — a financial planning company in Toronto — works with a number of young small-business owners. And many of them feel doing their taxes has suddenly become much more complicated — with higher stakes.

“A lot of them feel a lot of pressure, especially if they're coming from a position of having previously worked for an employer where everything was deducted at source,” says Marques.

That pressure leads to a lot of procrastination, she adds. Having to sort out what they owe can be daunting. It can be intimidating if you’re worried about putting in the wrong numbers or triggering an audit.

“There's a lot of fear around that, even when launching into the business to begin with,” says Marques. “It kind of carries with them all year round, and really explodes around this time of the year.”

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Tackling it head on

But Marques says the only thing worse than having to deal with owing the CRA money is avoiding it.

“The consequences of filing late are worse than just having tax outstanding,” says Marques. The CRA automatically charges a 5% fee on your balance owing, plus an additional 1% for every month you’re late — up to 12 months.

And if you’ve filed late the past several years, that initial penalty is bumped up to 10% and the monthly fee is an additional 2% for up to 20 months after the deadline.

“At least if you file, you have all your cards on the table, you know what you owe, it's one less unknown,” says Marques.

And once the official paperwork is done, many people feel a huge sense of relief.

“There's no situation that isn't solvable,” says Plamondon. “It's important for people to understand they may think that they have the worst situation in the world, and that as soon as CRA finds out, they're gonna go to jail, but that's not the case.”

It may sound silly to some, but Marques says worries over jail time are actually pretty common with tax anxiety.

“There's this constant fear that even with the guidance of tax software, even though they've been setting aside money all year round … of doing things wrong,” says Marques. “And they're really worried about what the consequences are should the CRA ever put a magnifying glass over their situation.”

She adds when she helps her clients prepare their taxes, she makes a point of doing it with them rather than for them. Having an understanding of how everything adds up puts many taxpayers at ease — and sets them up for success for future filing, too.

Another way of taking back some control when experiencing financial anxiety is to track your expenses. Marques points out the FP Canada report on financial stresses showed that while only 19% of respondents felt that would help ease their stress, nearly double that amount did find it helpful once they picked up the habit.

“Start early and start small”

Marques and Plamondon say being prepared is the best approach to make the process less stressful. Never guess on numbers, get help from an accountant or financial advisor if you’re uncertain, and stay organized.

That can be as simple as creating a file folder to store your various tax slips once they start arriving. And keep those documents together long after you file. Even if the worst happens and you are audited one day, Plamondon adds having some record of your rationale will go a long way with the CRA.

Finally, don’t be afraid to ask for help if you need it. If you have questions or maybe it’s your first time filing, you can seek out a free tax clinic to get support. And use what you learn this year to set yourself up for success next year.

“One piece of advice I would have for people going through tax time this year … take a look at their situation. Start from that point and reach out to an advisor and say, ‘Here was my experience, how can I improve this?’” says Plamondon.

“Start early and start small, and then you will start to take control of your situation.”


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Sigrid Forberg Associate Editor

Sigrid’s is's associate editor, and she has also worked as a reporter and staff writer on the team.


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