If you have to pay tax or have earnings on which CPP contributions must be paid, you must file a tax return. You must include your worldwide earnings in your taxable income. You will usually have to pay tax if your taxable income exceeds the amount of the basic personal exemption. See the tables of non-refundable tax credits for amounts for federal and provincial/territorial basic personal exemptions and other tax credits. If you have net self-employment income or pensionable employment income in excess of $3,500, you may have to remit CPP contributions.
There are other circumstances which may require a tax return to be filed:
- You were requested by Canada Revenue Agency (CRA) to file a return.
- You have disposed of capital property (real estate or investments, for example) during the tax year, or even your principal residence (must be reported).
- You claimed a capital gain reserve on your previous year’s tax return.
- You have withdrawn amounts from your RRSP under the Home Buyers’ Plan or the Lifelong Learning Plan, and have not yet repaid the entire amount.
Good Reasons to File a Return Even if No Tax Owed
Even if you are not required to file a tax return, it will often be to your advantage to do so, for some of the following reasons:
- Establish your contribution room for a Tax-Free Savings Account (TFSA), even though the contribution room is not affected by taxable income. CRA says that “Individuals who have not filed returns for prior years (because, for example, there was no tax payable) would be permitted to establish their entitlement to contribution room by filing a return for those years or by other means acceptable to the CRA.”
- Tax was withheld from your income, and want to receive a refund.
- Apply to receive the Climate Action Incentive.
- Refundable tax credits, which are payable to you even if you have low earnings and have paid no tax. This means they will send you a payment for the tax credit! This includes the federal Canada Workers Benefit (CWB, formerly WITB). For provincial refundable credits, choose your province from the navigation bar at left, and check our information on personal tax credits, as well as the link to the provincial information on personal income tax
- Apply for the GST/HST credit – If you are 18 years of age or older, you should file a tax return even if you have no income, in order to apply for the GST credit. You must be 19 to receive the credit, but if you will turn 19 before April 1 of the following year, you should apply now so that you will receive your first GST payment as soon as possible after you turn 19. Some provinces have benefits similar to the GST credit. By filing your tax return, you are applying for these benefits.
- Apply for the Canada Child Benefit – In order to receive or continue to receive Canada Child Benefit (CCB) payments for your children, you and your spouse must both file tax returns. CCB payments are non-taxable monthly payments made to eligible families with children under age 18. To learn more about these benefits, visit the CRA web site Child and Family Benefits. Many provinces and territories also pay benefits to families with children. By applying for the CCB and filing your annual tax returns, you will be eligible to receive these benefits. For more information, see the CRA page on provincial and territorial child benefit and credit programs.
- Establish eligibility, or continued eligibility, for provincial benefit programs. See the Government Programs, Benefits and Services information for your province.
- You have “earned income” for RRSP purposes. Even if you do not wish to contribute to an RRSP currently, the earned income amounts can be carried forward indefinitely. Also, you can contribute to an RRSP, up to $2,000 more than your RRSP deduction limit, and wait until a future year (when you are making higher income) to deduct the contribution. This gives your retirement fund an early start.
- Renew eligibility for the GIS (Guaranteed Income Supplement), filing of their annual income tax return automatically renews the GIS. For more information on the GIS, see the article on GIS information.
- Report a non-capital loss, which you can carry back to prior years or carry forward to future tax years.
- Report tuition, education and textbook amounts that you cannot use, but would like to carry forward to use in the future.
Canada Revenue Agency (CRA) Resources
Tax Tip: File a tax return even if you don’t have taxable income.