CRA & Revenu Québec, Getting Organized, Tax Basics, Tips & Advice

Who Is Required to File an Income Tax Return?

If you are new to Canada or if you are just entering the workforce, you may be wondering if filing a Canadian tax return is a necessity, and if so, when do you have to file your first tax return?
The Canada Revenue Agency (CRA) does require annual filing for most citizens but there are exceptions, so let’s have a look at who is required to file a Canadian T1 General tax return and when.

You Must File an Income Tax Return, If:

  • You owe tax to the CRA.
  • You are self-employed and have to pay your Canada Pension Plan premiums.
    • Same for paying employment insurance premiums on your self-employment earnings.
  • You and your common-law spouse / partner want to split your pension income.
  • You’re participating in the Home Buyers’ Plan or Lifelong Learning Plan and have repayments owing.
  • You disposed of capital property. If you sold your home, you must file a tax return even if you don’t have to pay capital gains tax on the sale (referred to as the principal residence exemption).
  • You have to repay any of your Old Age Security or Employment Insurance Benefits
  • You have received a Working Income Tax Benefit advance payments in the tax year.
  • The CRA has sent you a Request to File.
  • If the CRA has sent you a Demand to File, then that means they are serious about your lack of filing and you had better get to it.

Making Money in Canada

Your Canadian residency status doesn’t affect whether or not you have to file a Canadian income tax return, however, it does affect how you file your taxes, what income you need to report, and the availability of certain credits or deductions.  If you meet any of the CRA’s criteria listed above, for example, you have to file a tax return regardless of your residency status.

If you live in another country but receive income from a business you own in Canada, or from investments you have in Canada or if you have property in Canada, then you will need to file an income tax return.

No Exemption for Age or Occupation

Whether you’re 9 or 90, age has no effect on your requirement to file a tax return. If you meet one of the above requirements, the CRA expects to receive an income tax return from you.

Students are not exempt from filing either. If your 20-year-old child is an entrepreneur who made over $3,500 (after expenses) running a small business last summer, they must file an income tax return even if they’re still in school.

Should I File a Return Anyway?

Even if you’re not required to file, sometimes it’s in your own best interest to do so anyways, for the following reasons;

  • You want to claim a refund.
  • Entries on your tax return determine if you’re eligible for certain benefits programs. Even if you had no income, you still may qualify for the GST/HST Credit.
  • Your RRSP contribution limit starts growing as soon as you earn any income. Even if you’re not expecting a refund, the more RRSP contribution room, the better.
  • If you want to claim the working income tax benefit (WITB) or if you want to continue receiving your Canada Child Benefit (CCB)
  • In order to claim tuition credits, you must declare the amounts on your tax return. You might not be in line for a refund this year but you’ll want to apply those credits in the future when your education pays off with a good paying job.
  • You or your spouse want to continue to receive guaranteed income supplement (GIS).