Why Should You File Your Tax Return?

It’s a new year and you might have sworn to be true to your New Year’s resolution. Among the top six New Year’s resolutions are to get organized and to be better with money. One of the surest ways to keep your finances organized and in check is to file your taxes. Everyone over the age of 18 should file a return in Canada and here is why.
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1.  Avoiding penalties & interest: The story is fairly common. It starts off innocently enough – maybe it started because you were in a financial pinch and you made the decision to avoid paying the taxes you think you owe by not filing your taxes. Perhaps, you did not file your taxes because you were going through a major life event such as a divorce or the death of a loved one. The next year, the task and the tax debt seem a little more daunting so you deferred it to the next year. Before you know it, it’s been years since you last filed your taxes.

In some of these cases, the taxpayer can get a notice of assessment that they owe a huge sum of money with not much other details. This can happen if CRA notionally assesses your taxes. If this happens, call your favourite tax preparers right away. They can find a way out of your tax jam. Other cases, CRA does not issue a request to file and we can help the tax payer avoid penalties.

Even if you cannot pay the taxes, you should file the tax return to avoid penalties. If you are unable to pay upon filing, payment terms may be negotiated with CRA.

2.  Receive Child Tax Benefits: If you are a parent, you may be eligible to receive the Child Tax Benefits. However, one of the requirements is that you file your taxes.

3.  Receiving GST credits: Similarly to the Child Tax Benefits, if your income is under a certain threshold, you must file your taxes in order to receive this benefit.

4.  Being able to using some government assistance: A good example of needing to file taxes in order to qualify for government assistance was the CRB program. A requirement of receiving CRB was that you had filed your taxes in previous years. If you are self-employed, you need to file your taxes to report the CPP you are contributing in order to qualify for your pension after 65.

5.  Not losing some tax credits: Some tax credits have expiration dates. For example, overpayments of CPP contributions expire after four years. If your spouse is the one responsible for the finances in your household, ensure you are the one to sign your taxes every year. Make sure you understand what you are signing to avoid surprises in the future.

If you have questions about your tax situation, we are more than happy to offer a free one-hour consultation.