A tax return in Canada is a set of mandatory forms or documents that must be submitted to the Canada Revenue Agency (CRA) at the end of each financial year by individuals or corporations earning an income in Canada.
There are two types of Canadian tax returns: Individual and corporate. People who earn income from employment, self-employment, investments, or other sources file an individual tax return. Businesses and organizations file corporate tax returns.
Additionally, the documentation for the tax return includes the total of the previous year’s (January to December) taxable income, tax-credits, and other relevant information
Why Should You file Your Tax Return in Canada?
It is noteworthy that filing a tax return for Canadians is critical to the smooth functioning of the Canadian government.
A Canadian tax return is a process through which the Canadian government determines the amount of tax that individuals and corporations should pay.
Filing a tax return with the federal government can result in either a refund or an amount payable.
There is also a penalty for failing to file this. Therefore, it is necessary to file tax return in Canada.
Note: A refund is the money owed to the person or corporation filing the return.
Who Should File Canadian Tax Return
If you fulfill one or more of the following criteria, you must file a Canadian tax return:
- If you have income from employment, investments, or other sources, and you owe tax to the CRA.
- If you are a Canadian citizen. It includes international students and those who have traveled outside of Canada.
- If you are self-employed and must pay or owe Canada Pension Plan (CPP) and Employment Insurance (EI) premiums.
- In addition, the income that your spouse or common-law partner splits/divides/shares with you.
- If you used the Home Buyer’s Plan (HBP) or the Lifelong Learning Plan (LLP) and owed repayments.
- If you withdrew money from your Registered Retirement Savings Plan (RRSP) that was not part of the HBP or LLP.
- Furthermore, if you sold or gave away capital property, such as a home, a vehicle, or other assets. You must file your tax return even if you did not incur a capital gain.
- You must reimburse any Old Age Security or Employment Insurance benefits you received.
- If you received a government financial assistance benefit, such as social security, Canada Workers Benefit (CWB), or something similar.
- Lastly, if you received a Request to File or Demand to File from the CRA.
What Information Do You Need to File Your Tax Return in Canada?
There are a few things you’ll need to have to make the process as smooth as possible.
Here’s a quick rundown of what information you’ll need to file your Canadian tax return:
- A Social Insurance Number (SIN)
- An Individual Tax Number (ITN)
- A copy of your most recent Notice of Assessment from the Canada Revenue Agency (CRA)
- Your bank information (Account number, transit number, and institution number)
- Any relevant information regarding any changes in your marital status, dependents, or income
- Receipts for any expenses you plan on claiming as deductions or credits.
Consequently, if you have all of this information at your disposal, filing your tax return in Canada should be a breeze.
However, if you have any queries or encounter any problems, you can always contact the CRA for assistance.
Tax Filing Fee in Canada
If you’re thinking of filing your tax return in Canada, you might be wondering how much it will cost. The average fee for filing a tax return in Canada is $200.
Nevertheless, this can vary depending on the complexity of your return and whether or not you use a professional tax preparer.
However, if your taxes are more complex, it’s worth considering paying a professional to do them for you. This way, you can be sure that everything is done correctly and that you’re getting the maximum refund possible.
How do You File Your Tax Return in Canada
You’ll need to file a tax return each year if you’re a Canadian resident. It doesn’t have to be a laborious or expensive task. You can even do it yourself!
Here’s how to file your tax return in Canada:
- Gather your documents. You’ll need your T4 (employment income) slip as well as any other slips or receipts for the income you received during the year. Besides that, you’ll also need your business records if you’re self-employed.
- Get started on the right foot by ensuring you have the most recent tax forms. You can download these tax forms from the Canada Revenue Agency website.
- Now, complete your tax return form, including all necessary information about your income and deductions.
- Now, you’ll need to calculate your taxes owing. You can do it by using the CRA’s online tax calculator.
- Moreover, if you owe taxes, you’ll need to make a payment to the CRA. You can do it online, by mail, or through your financial institution.
- Finally, once your tax return is complete and filed, you’ll receive a notice of assessment from the CRA outlining any taxes owed or refunds due.
The due date for filing a tax return in Canada
Ordinarily, you must file your tax return in Canada by April 30 of the following year. There is no provision for generally extending this deadline, but there are a few exceptions:
- Self-employed individuals and their spouses must file their tax returns by June 15 of the following year. On the other hand, any Goods and Services Tax/Harmonized Sales Tax owed for the period is due on April 30.
- Tax returns for deceased individuals must be filed no later than the regular filing deadline or six months after the date of death, whichever is later. For example, suppose Mary died on January 30, 2004. Her 2003 tax return was due on July 30, 2004 (six months later), and her 2004 tax return was due on April 30, 2005. (Regular filing deadline). This provision applies to the surviving spouse as well.
- Non-residents who elect to file under section 217 must file their tax returns by June 30 of the following year.
- When the normal due date falls on a Sunday or a holiday, the due date of all individual returns will move to the next working day under the Interpretation Act. Although ministerial directives are used to apply this to Saturday due dates, it is not a legal requirement.
- In circumstances of emergency, such as floods, the Federal Finance Minister may extend the deadline.
Have You Missed the Deadline?
Each year, the tax year runs from January to December, and the deadline to file an income tax return is April 30 of the following year. You can still file late if you miss the April 30 deadline. However, you may face daily interest charges and a late penalty if you owe government taxes.
Conclusion
For many Canadians, tax season is a time of stress and anxiety. Filing tax returns can be a complex and confusing process, especially if you’re not familiar with all the ins and outs of the Canadian tax system.
However, it’s important to remember that filing your taxes is an important part of being a responsible citizen.
Not only does it ensure that you’re paying your fair share of taxes, but it can also help you retrieve any money owed to you.
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