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Who Is Required To File An Income Tax Return

If you are in Canada as a new immigrant or if you are just entering the workforce, you may be wondering if filing a Canadian Income Tax Return is necessary, and if so, when will you file your first tax return? The Canada Revenue Agency (CRA) usually require annual filing for most citizens but there are exceptions. See details below on who is required to file a Canadian T1 General tax return and when.

You are required to File an Income Tax Return for the following reasons:

  • If you owe tax to the CRA.
  • If you are self-employed and have to pay your Canada Pension Plan premiums.
    • Same for paying employment insurance premiums on your self-employment earnings.
  • If you want to split your pension income with your common-law spouse / partner
  • You have repayment due and you’re participating in the Home Buyers’ Plan or Lifelong Learning Plan.
  • If 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).
  • If you need to repay any of your Old Age Security or Employment Insurance Benefits
  • If you have received a Working Income Tax Benefit advance / payments in 2018.
  • If the Canada Revenue Agency (CRA) has sent you a Request to File.
  • If the CRA are serious about your lack of filing then a demand to file will be sent to you, you had better get to it to avoid legal consequences.

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, the income you need to report, and the availability of certain credits or deductions. If you meet any of the CRA’s criteria mentioned above, for instance, you have to file a tax return regardless of your residency status.

If you reside in another country but receive income from a business or investment you own in Canada or if you have property in Canada, then you will be required to file an income tax return.

No Exemption for Age or Occupation

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

Students are also required to file. If you have a 20-year-old child that 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 though you’re not required to file, sometimes it’s in your own best interest to do so anyways, for the following reasons;

  • If you wish to claim a refund.
  • This will determine if you’re eligible for certain benefits programs. You may still qualify for GST/HST quarterly payments even if you had no income.
  • As soon as you earn any income, your RRSP contribution limit starts growing. The more RRSP contribution the better, even if you are not expecting a refund.
  • If you have plans to claim tuition credits, you must declare the amounts on your tax return. You might not be eligible 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 can also see how to file taxes in Canada.