Canada Revenue Agency: Don’t Forget These 2 Taxes

The tax deadline is fast approaching, and if you haven’t filed yet, you should hurry up. And don’t forget to take all of your tax obligations into account.

The tax-filing deadline is fast approaching, and if you haven’t filed yet, it’s time that you pick up the pace. The late-filing penalty is nothing to scoff at. Also, you might be in the danger zone if you don’t take into account every dollar of taxable income or lose valuable opportunities if you don’t benefit from every tax break you are eligible for, just because you put it off till the very last days.

The 2020 taxes might be a bit different from the ones you’ve filed before, especially if you received benefit payments.

The two taxable benefits

The two “taxes” or, rather, taxable income sources that you shouldn’t forget about when filing your taxes this year are CERB and CRB. You also shouldn’t mix the two up. The CERB came from the CRA as a $2,000-a-month benefit payment. So, all of it will be added to your taxable income, and you are obliged to pay taxes on it at your marginal rate.

The CRB, however, came pre-taxed. The CRA withheld 10% of the CRB benefits before releasing the payments, so their tax burden might be a bit lighter than the CERB. Both the discontinued CERB and the currently functional CRB came at a time when millions of Canadians desperately needed financial assistance from the government.

One way to make the tax burden sting a bit less is to think of it as replenishing the government’s coffers that it uses to issue benefit payments like these. Another way is to offset the taxes using a convenient deduction.

The RRSP contributions

The RRSP contributions can help you get quite a sizeable deduction, especially if you are contributing the full amount. But perhaps more important than the size of your contributions is the asset you choose to grow them. One contender is the Champion Iron (TSX:CIA) stock. The company is headquartered in Australia and trades on the local stock exchange as well.

Currently, all of its flagship and exploration projects are in Canada (most are in Quebec). It has a market capitalization of $2.89 billion and a very strong balance sheet. The cash and investments of the company are almost double the debt it carries. The company is focusing on “greener” steel production and catering to the rising demand for low-contaminant products.

The stock grew at an impressive rate in the last five years, and not all of its growth can be tied to the after-crash momentum of the market. It grew over 900% between April 2016 and March 2020 (before the crash). Despite such impressive growth, the company is not nearly as overvalued as it could be. And if it can sustain even half of its five-year CAGR of 94% for the next five years, it can turn $10,000 in your RRSP to over $60,000.

Foolish takeaway

Unlike the RRSP, the TFSA contributions can’t help you offset your tax obligation. But they can help you in other ways. For example, if you had a sizeable enough nest egg in your TFSA when the pandemic hit, you wouldn’t have needed the CERB or CRB to survive. You could have relied on your own savings to financially sustain you until your lost income sources returned.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

Concept of multiple streams of income
Stocks for Beginners

Lock Up This 9.2% Dividend Yield From a Top Royalty Stock

Royalty stocks have a strong advantage when it comes to creating passive income for investors. But this one has the…

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Metals and Mining Stocks

Is First Quantum Minerals Stock a Good Buy Right Now?

First Quantum is a TSX stock that trades 61% below all-time highs. However, the mining stock still trades at a…

Read more »

nugget gold
Metals and Mining Stocks

The Best Gold Stock to Invest $1,000 in Right Now

Here are two of the best Canadian gold stocks that can yield some eye-popping returns in the long run.

Read more »

nugget gold
Stocks for Beginners

The Ultimate Mining Stock to Buy With $1,000 Right Now

This mining stock just saw a drop, but don't let that keep you from diving in. This miner is due…

Read more »

A plant grows from coins.
Metals and Mining Stocks

Canadian Mining Stocks: Buy, Sell, or Hold?

Explore 2025’s top Canadian mining stocks – gold, uranium, and base metals offer big potential in a dynamic, commodity-driven market.

Read more »

farmer holds box of leafy greens
Metals and Mining Stocks

3 Reasons to Buy Nutrien Stock Like There’s No Tomorrow

Nutrien stock has lost 34% of its value just this year alone and looks incredibly cheap today. Yet, secular trends…

Read more »

Canada national flag waving in wind on clear day
Tech Stocks

Trump Trade: Canadian Stocks to Watch

With Trump returning to the presidency, there are some sectors that could boom in Canada, and others to watch. But…

Read more »

Super sized rock trucks take a load of platinum rich rock into the crusher.
Metals and Mining Stocks

Invest $7,000 in This Dividend Stock for $672 in Passive Income

High yield can be an essential requirement when you need to start even a modestly sized passive income with a…

Read more »