Tax season in Canada may seem like it’s many months away, but that filing deadline will be on our doorstep soon enough. The time of year when you report your income and eligible expenses to the government is never a fun one, but waiting until the last minute, or failing to gather the appropriate receipts in advance will make the process harder and more stressful.
This guide to tax season in Canada 2019 will ensure you know everything you need to file your taxes this year and hopefully get a refund.
Deadlines for Filing Taxes in Canada 2019
The first step towards a successful tax season is to prepare early by organizing your documentation well in advance of the tax deadlines. If you owe taxes, the last day to file as an individual is April 30th, 2019. It’s also the last day to pay your taxes if you owe the government money.
If there is a chance you’ll owe taxes, you should file several weeks in advance of the deadline so the Canada Revenue Agency (CRA) can assess your return before payment is due. If you file late and end up owing taxes, you’ll pay interest and penalties on your outstanding tax balance until you submit your payment to the CRA.
One thing to note: if you’re self-employed, there’s a little more wiggle room when it comes to filing dates.
“Self-employed individuals have an extended filing deadline to June 15,” says Brendan McCann of Kudlow McCann, a chartered accounting firm in Toronto. “However, they should still ensure their taxes for 2018 are paid by April 30 to avoid interest charges.”
Earliest Date You Can File Taxes in Canada 2019
While the last day to file is April 30th, the first day to file is much earlier. The CRA started accepting returns on February 26th of last year, and you can expect the first day to file around the same time this year.
Whether you think you owe taxes or not, early filing has benefits. If you owe taxes, early filing will give you enough time to have your return assessed well before the April 30th deadline. If you don’t owe money, early filing will result in your refund reaching your bank account sooner. Winning!
How to File Taxes in Canada
If you’re old school, there is always the option to send in forms by snail mail. But why not take the easier route and file your tax return with the CRA by Internet?
There are two options: NETFILE or EFILE. NETFILE is set up for individuals who prepare their own tax return using computer software like SimpleTax or TurboTax. Once complete, just click a button and the software sends the completed return electronically to the CRA. Simple!
In contrast, the EFILE option is geared for those who have had their tax return prepared by a professional tax preparer (like an accountant or tax preparation service). The company then sends the completed tax return to the CRA electronically on your behalf.
Do You Need to File Taxes in Canada 2019?
Technically, you only have to file your taxes if you owe money to the government. That said, it’s still good practice to file your taxes every year for two main reasons.
First, if you don’t owe money, there’s a chance you’ll receive a refund from the government. This money can be put to good use bettering your finances.
Second, the government uses your tax return to assess whether you qualify for various benefit programs. One of the biggest programs is that uses your income tax return is the GST/HST tax credit, which is a tax-free quarterly payment to help Canadians with low incomes. You are automatically assessed for this tax credit when you file your taxes.
The other major benefit that uses your income tax return is the Canada Child Benefit (CCB). The CCB is a monthly payment made to families with children under the age of 18. The CRA uses information from your income tax return to calculate how much your payments will be, which is why it is important for you and your partner to file a tax return every year, even if you had no income.
What’s New for Taxes in Canada 2019
2018 saw a slew of tax credit changes ranging from coverage for fertility treatments to the loss of some tax credits for transportation and textbooks. Even how and when you could file your return changed. In contrast, 2019 doesn’t seem to be a year with many tax changes on the docket. Most of the changes introduced were aimed at small business owners or professionals.
Deductions to Remember for Taxes in Canada 2019
Although there aren’t many tax changes slated for millennials in 2019, there are a variety of deductions that you might have missed in previous years.
For renters living in Ontario, it’s important to request a receipt from your landlord for rent paid in 2018. This information is useful for determining whether you qualify for the Ontario Trillium Benefit, a refundable tax credit for low-income families.
If you made donations this year, make sure to find the receipts, because you can claim those donations on your taxes. If you made donations in previous years and didn’t claim them, request receipts from the charitable organization, because donations can be claimed up to five years after they occurred.
If you’re a new homeowner, you’re probably feeling the financial crunch that comes with new home ownership. The good news is that you’ll qualify for the $5,000 first-time home buyer’s tax credit. The only requirements to claim this tax credit are that you or your partner have purchased the home in 2018, and you did not live in another home owned by you or your partner in the four years before the purchase.
Finally, for students or recent graduates, you might be lamenting the elimination of the textbook tax credit, but you can still claim some deductions for being a student. Student loan interest is deductible, and if you paid tuition at a recognized post-secondary institution, you might be eligible to claim your tuition or carry it forward to higher earning years. Your school’s student accounts office will have copies of your tuition payments.
What Isn’t Happening for Taxes in Canada 2019
You might remember a shocking article earlier this year, claiming that under the current Liberal federal government, Canadian middle-class families will face a tax hike of $2,200 (!). While the headline was certainly eye-catching, it isn’t quite true. The $2,200 number is instead the result of a study conducted by the Fraser Institute, a right-leaning think tank. The Institute studied the proposed Canada Pension Plan (CPP) increases but made several leaps in their analysis. The actual truth is that the average worker making $55,000 will pay an extra $7 per month in CPP contributions in 2019, with that number rising to $34 per month by 2023. So don’t worry, your refund won’t be eaten up by a tax hike.
Should you contribute to your Registered Retirement Savings Plan (RRSP)?
During ‘RRSP Season’ many organizations tout the benefits of contributing to your RRSP to reduce your liability at tax time. But prioritizing contributions to your RRSP (which are tax deductible) over your Tax Free Savings Account (TFSA) isn’t always the best strategy for millennials.
“If you are in the lowest tax bracket (income under $43,000), it is not recommended to contribute to an RRSP,” says McCann. “TFSA contributions are recommended if you are in a low-income tax bracket, expect to be in a higher tax bracket in the future, or no longer have any RRSP contribution room.”
The bottom line? Think twice before putting money into your RRSP. If you earn less than $48,000, your TFSA might be a better option. But whatever option you choose, you can run your RRSP or TFSA account via a robo advisor, one of the most cost effective ways to manage your money.
Getting the Most from your Tax Return
Going into tax season in Canada 2019, early preparation is the key to ensuring you file early and claim every possible deduction. Make sure to keep your previous year’s notice of assessment, which contains important information about your RRSP contribution amounts, tuition tax credits, Home Buyer’s Plan repayment amounts, etc. If you don’t have your notice of assessment, you can log into your CRA account and find the information you need.
To make sure you’ve claimed every possible deduction, use online tax software, like SimpleTax or TurboTax. It will not only make filing a cinch, but also assesses your information and suggest additional deductions that you haven’t considered. You can even opt to have a tax professional review your return online, to make sure you’ve claimed all available deductions.
Lastly, don’t forget to review our handy guide on How to Get More Money Back from your Tax Return! It could put a little more change in your pocket.
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