Tax Basics

Who Is Required to File an Income Tax Return?

 If you’re new to Canada or just entering the workforce, you may be wondering if filing a Canadian tax return is a necessity.  The Canada Revenue Agency does require annual filing for most citizens but there are exceptions. Here’s a list of who is required to file an income tax return.

Do I Have to File?

You must file a return if:

  • You owe tax.
  • You’re self-employed and have Canada Pension Plan premiums due. Also, you’re required to file if you’re paying employment insurance premiums on your self-employment earnings.
  • You and your spouse want to split your pension income.
  • You’re participating in the Home Buyers’ Plan or Lifelong Learning Plan and have repayments due.
  • 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 (principal residence exemption).
  • You have to repay any of your old age security or employment insurance benefits
  • You received working income tax benefit advance payments in 2016.
  • CRA has sent you a request to file.

Making Money in Canada

Your Canadian residency status doesn’t affect whether or not you have to submit an 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 the CRA’s criteria listed above, you have to submit a return regardless of your residency status.

For example, if you live in another country but you receive income from a business you own in Canada, you most likely have to file an income tax return. This requirement has nothing to do with your residency status, but is instead based on the fact that you likely earned enough income to owe tax.

Same goes if you sell a property you own in Canada. You’ll most likely have to file an income tax return, simply because you have capital gains for the year.

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, CRA expects to receive a return from you.

Students –  you’re 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 a 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 submit your return.

  • 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 GST/HST quarterly payments.
  • 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 the better.
  • 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.

References and Resources