The month of April is almost at its end and many Canadians are just too lazy to bother filing their tax returns. They may not even be aware of how to file their tax returns. Perhaps they are complacent because they think that their employers are taking care of their taxes by deducting it from their salary. Don’t be one of them!
Even if your salary does not exceed C$3,500, it is important that you file your tax returns. Not only are you increasing the possibilities of being charged a fine, but you are also losing any chances of getting some free money in the form of tax refunds and credits. In such cases, you cannot expect the government to knock on your door and hand over the money to you. They will be happy enough to hold onto that money.
Here are few reasons why you should file your tax returns:
- Tax Refunds: Every person has a personal tax exemption amount. This year it is C$11, 038. You do not have to pay tax on any earnings equal to or less than this amount. However, working through the year, your employer could have deducted federal and provincial income taxes from your pay. Through this, you are eligible to get some money back.
- Tax Credit: Tax credit enables a certain amount of money to be returned to you by the Government under various schemes. Child tax benefit, Working Income Tax Benefit, Tuition Tax Credit, etc. enable you to gain some income refunds. Even if you are a student or a child, filing tax returns can give you tax credits that can be forwarded to future years when you start earning.
- GST/HST Credit: You may be eligible for the GST/HST credit program which aims at helping low and modest income Canadians. GST/HST refers to sales tax. This is a tax free quarterly payment credit program that is paid four times a year. However, you have to file your taxes to be eligible.
- RRSP: When you are young, saving up for your senior years is the last thing on your mind. Yet, filing your tax returns from an early age is a simple way of creating a contribution room for your Registered Retirement Savings Plan (RRSP). You can receive valuable tax credits which can amount to refunds of 30-40% of your RRSP contribution.
- Taxes: Filing your taxes will keep you safe from the law so you cannot be accused of siphoning off money or dealing with black money.
- Credit Report: Filing your tax returns will have a positive effect on your credit report and in turn, your credit score, both of which are important if you want to take a loan.
Filing a tax return is not a difficult process. First, you must collect all your financial documents and statements, including a T4 form, summarizing your income from your employers. Next is to acquire an Income Tax form from any Canada Post outlet or from the Canada Revenue Agency website. You then fill the form and mail it to the Tax Service office along with the required documents.
