Lower income doesn’t mean lower priority when it comes to filing a tax return.
Students in particular might skip filing a return if they earned little to no income last year, or are swamped with assignments and exams — but that means missing out on a number of benefits.
“For students, for example, filing their return, they can get access to several credits and benefits that are automatically paid just because they filed their return,” said
These include the GST/HST credit and the
Those born before
The
Payouts for both can be a couple hundred dollars, several times a year.
The GST/HST and carbon rebates are unique in the tax world, said
“We call them refundable credits, so you actually put money in your pocket,” Gillis said. “The quarterly credits will be a reason to file, even if there’s no income, basically.”
Tuition is another reason students should file every year — their deductions can be significant, and they accumulate as they’re carried forward. But it’s often a blind spot for people in school, Gillis said.
“I see this every day, a lot of students that we encounter, they do a four-year degree, but they won’t necessarily file because they don’t want to, or they forget,” he said. “And they don’t need the tax deduction for their tuition, so they don’t care.”
Once they are out of school and working, however, these graduates want to claim tuition — a major deduction — but now they have to file all prior years to carry it forward, Gillis said. At that point, it would have made more sense to just file each year and collect the GST/HST and carbon payouts all along. Students can also transfer tuition credits to their parents, he added.
Another thing that accumulates with filing taxes: RRSP contribution room.
Once workers have earned income, Lemay said, “you accumulate 18 per cent of your earned income, up to a maximum, every year” in contribution room for your retirement savings.
Filing with the CRA also creates a financial document that can unlock various government programs — essentially taxes are your proof of income. And if your income is low or modest, there might be resources for you.
“There are many situations where filing your tax return is critical to get access to many government benefits,” Lemay said, pointing to COVID-19 benefits and, more recently, the Canadian Dental Care Plan.
To that end, Lemay said
People with children will definitely want to access the
“[The Canada workers benefit has] been around for a while, but they changed it recently, where if you qualify under a certain income level, last year they started paying those payments out, almost like GST, in advance,” Gillis explained.
“Rather than just helping the person at tax time if they’re in a low-income status, they’re actually paying them before the end of the year. That’s probably one of the newest things.”
As soon as someone starts earning any kind of income, pays for tuition, is close to turning 19, or needs government benefits — whichever happens first — filing tax returns with the CRA has benefits. In many instances, that will be a teenager with their first part-time job.
“Whenever a teenager starts making a little bit of money, even if it’s a small amount, it’s worthwhile,” Gillis said.
This report by The Canadian Press was first published
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