Tips & Advice

A First-Time Tax Filer Primer: Do I Have to File a Canadian Personal (T1) Income Tax Return?

Filing your income tax return can be a stressful event, but it is really much less complicated than it appears, especially if you’re using the right tools, have the right expertise, and have comfort that you are doing it right.

You may have heard that you are not required to file an income tax return if you did not earn any income during the year, and yes, in some circumstances that might be true, but there are many more benefits to filing income taxes which far outweigh the reason not to file.

For example, by filing your taxes, you may be eligible for a tax refund, as well as other federal and provincial tax credits or benefits.  If you do not file, however, then you are simply not eligible.

Here are some reasons why you should file your Canadian Personal (T1) Income Tax Return.

Benefits of Filing

One of the main benefits of filing your taxes is to receive a tax refund. After all, the government will only pay out your tax refund if you file your taxes.

Did you know that any money you get back as a refund is actually your money? A tax refund is when the government sends you back all or part the taxes you’ve already paid since your tax liability in the year was less than the taxes you paid.

This occurs when your employer takes too much taxes off for the income tax bracket you are in, or when you’re eligible for certain non-refundable tax credits that lower the amount of taxes you owe.

If you’re 19 years old or older, you may also be eligible for a larger refund from refundable credits such as:

  • Working Income Tax Benefit
  • GST/HST credit
  • Canada Child Benefit (CCB).

Students who pay tuition at a qualifying post-secondary institution can also benefit from filing their taxes, even if they have no tax refund. Unlike most non-refundable credits, tuition credits can be carried forward to a future year to use when you have earned more income and need the credit, or transferred to a spouse/common-law partner or parent/grandparent.

You Might Be Required to File

You must file a Canadian Personal Income Tax Return (T1), for 2018 if:

  • You have to pay tax for 2018.
  • The Canada Revenue agency (CRA) sent you a request to file a return.
  • You and your spouse or common-law partner elected to split pension income for 2018.
  • You received Working Income Tax Benefit advance payments in 2018.
  • You disposed of capital property in 2018 (for example, if you sold real estate, your principal residence, or shares) or you realized a taxable capital gain (for example, if a mutual fund or trust attributed income to you, or you are reporting a capital gains reserve you claimed on your 2017 return).
  • You have to repay any of your Old Age Security (OAS) or Employment Insurance (EI) benefits.
  • You have not repaid all amounts withdrawn from your registered retirement savings plan (RRSP) under the Home Buyers’ Plan or the Lifelong Learning Plan.
  • You have to contribute to the Canada Pension Plan (CPP). This can apply if for 2018 the total of your net self-employment income and pensionable employment income is more than $3,000.
  • You are paying employment insurance premiums on self-employment and other eligible earnings.
  • You are a non-resident receiving certain types of Canadian source income.

As mentioned previously, even if none of these requirements apply, you should file a return if:

  • You want to claim a refund.
  • You want to claim the working income tax benefit for 2018.
  • You want the goods and services tax/harmonized sales tax (GST/HST) credit (including any related provincial credits).
  • You or your spouse/common-law partner want to begin or continue receiving Canada child benefit payments, including related provincial or territorial benefit payments.
  • You have incurred a non-capital loss in 2018 that you want to be able to apply in other years.
  • You want to transfer or carry forward to a future year the unused part of your tuition.
  • You want to report income for which you could contribute to an RRSP and/or a pooled registered pension plan (PRPP) to keep your RRSP/PRPP deduction limit for future years current.
  • You want to carry forward the unused investment tax credit on expenditures you incurred during the current year
  • You receive the guaranteed income supplement or allowance benefits under the old age security program. You can usually renew your benefit by filing your return by April 30th.  If you choose not to file a return, you will have to complete a renewal form. This form is available from Service Canada.

How to Complete Your Tax Return

If you are filing your tax return for the first time, you generally will only need to be concerned with a few of sections of your T1 tax form. Income is the first section of this form, so make sure you have collected and saved a T4 all your income slips from the past year including T4s, T5s and T3s.

If you are a Canada Revenue Agency My Account holder, you can view copies of your T4’s online.

You should also be prepared to record any extra money you may have made from a small business venture or cash jobs.

If you are filing online using TurboTax, most of your slips can now be brought into your return through the CRA’s Auto-fill my return feature, which will even enter the data in all the correct places in your return.  This feature saves time and help you ensure the details are entered accurately.  This feature also ensure that you do not miss reporting any T-slips that you may have received during the year which can result in penalties or interest charges against you.

In order to claim tuition, make sure you get a T2202A from your post-secondary institution.

To reduce the amount of taxes you owe, save receipts for medical expenses, professional or union fees, and child care expenses as you may be able to claim these amounts as well.

If you are filing for the first time, or you have always filed, and you want to make sure that you are doing it correctly, while maximizing the amount of refund that you are eligible to claim, then you should strongly consider using TurboTax.

TurboTax has been helping Canadians get their taxes done right for more than 20 years. With simple to use software options that guide you through your taxes step by step, to full service TurboTax Live options where a tax pro can help you prepare your taxes, TurboTax takes the work out of taxes.