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Why File an Income Tax Return

Monday, March 3, 2014

This article is by Canadian Immigrant, but the title and content have been significantly changed by Settlement.Org.
Originally published in 2011.

If you are new to Canada, filing an income tax return can seem daunting and you may be tempted not to do it. However, it's in your best interest to submit one every year. All residents of Canada must pay provincial and federal taxes on their worldwide income. (More information on the taxation system in Canada and whether you have to file an income tax return on Settlement.Org and the Canada Revenue Agency website.)

You might be shocked by how much tax we pay in Canada. Remember, though, that all residents benefit when we pay taxes because governments use tax revenue to provide services, such as roads, schools and health care. If you don't pay taxes on your income, you may get a criminal charge and may have to pay penalty fees. (More information on how much income tax you will have to pay on Settlement.Org.)

If you are employed, taxes are deducted automatically from most income you receive. If your employer deducts too much income tax, you will get a refund after you file your tax return. If you paid too little, you will have to pay more taxes when you file your return. Your employer will provide you with an information slip called T4 (Statement of Remuneration Paid), which you will need to fill out your tax return. (More information about what happens after you file your income tax return on Settlement.Org.)

If your income is modest or you are unemployed, you would still need to file a tax return to qualify for various government benefits, such as the Canada Child Tax Benefit (CCTB) and the Goods and Services Tax/Harmonized Sales Tax (GST/HST) Credit.

The Canada Child Tax Benefit is a tax-free monthly payment made to eligible families to help them with the cost of raising children under age 18. If you have children under 18 years of age and you want to begin or continue receiving CCTB, both parents need to file a tax return, even if one of them does not have any income. To estimate your CCTB amount, you can use this CCTB online calculator on the Canada Revenue Agency (CRA) website. (More information on the CCTB on Settlement.Org.)

The GST/HST credit is a tax-free quarterly payment that helps individuals and families with low and modest incomes offset all or part of the GST or HST that they pay. To estimate your GST/HST Credit, you can use this GST/HST credit online calculator on the CRA website. (More information on the HST credit on Settlement.Org.)

If you are unemployed, on social assistance or a pensioner, you also have to fill out an income tax return. Pensioners who receive Guaranteed Income Supplement or allowance benefits under the Old Age Security Program need to file a return to renew their benefits.

Students should also file a tax return even if they have no income. Post-secondary students can reduce their income tax by claiming eligible tuition fees and set education amounts. If students do not have any income and do not have tax to pay, they may carry forward the unused portion of their tuition and education amounts for future years. In this case, a student must file a tax return each year so his or her records show the unused tuition and education amounts available to carry forward.

The deadline for completing your tax return is April 30 of each year. You can get the appropriate forms from any post office or Canada Revenue Agency tax services office. (More information on other important dates in the tax year on Settlement.Org.)

If your income is low and your tax situation is simple, specially trained volunteers can help you to fill out a tax return for free.

To find other free services to help you with your taxes, call the Canada Revenue Agency at 1‑800‑959‑8281. If your taxes are more complicated, you may want to hire a tax accountant to help you complete your return correctly, saving you money in the end.

The title and content of this article were significantly changed from the original version. You can read the original article and other stories on CanadianImmigrant.ca.