Taxes

Why You Should File Your Taxes

Even if you have low income, we strongly recommend that you file your taxes every year to:

• Avoid Penalties – CRA doesn’t like it if you owe them money, but they get most upset when you don’t file, because they don’t know how much you owe; they don’t like uncertainty
  • If you don’t owe taxes, and don’t file, no penalty
  • If you owe taxes, the penalty for non-filing is:
    • 5% of your balance owing plus
      • 1% for each full month that you file after the due date
      • If the CRA charged you a late-filing penalty for 2020, 2021 or 2022 and made a formal demand for a return, the penalties are doubled  to 10% + 2% per month
• Avoid Interest – The balance owing for 2023 must be paid by April 30, 2024; If not, compound daily interest starts on May 1, 2024 at an annual interest rate of 10%
• Get a tax refund – if you don’t file, you won’t get a refund
• Get Government Benefits – if you don’t file, you won’t get:
  • Canada Carbon Rebate (formerly known as the Climate Action Incentive Payment); the base amount every three months for residents of Ontario is:
    • $140 for an individual
    • $70 for a spouse or common-law partner
    • $35 per child under 19
    • $70 for the first child in a single-parent family
  • Canada Child Benefit (if you have dependent children)
  • GST/HST Credit (for low and moderate-income individuals and families)
  • Advanced Canada Workers Benefit
• Establish RRSP contribution room
• Peace of mind – CRA won’t bother you about filing your taxes if you have already filed them!

Create a CRA Account

Why create a MyCRA Account?

• You can view the tax credits you are entitled to receive
  • Includes payment dates and amounts (and if applied to other balances)
• Easy to download T4s and all other tax slips
  • Don’t need to wait for mail from your employer
• Auto-Fill your taxes
• Register your bank account with CRA so they can directly deposit your
  • Tax refund
  • Canada Carbon Rebate
  • Etc.
• With your CRA account you can view your T4 slips, RRSP contribution slips, and you can see what government benefits you are eligible for, and when you will receive them.
  • NOTE: Your CRA account will not have various documents that are not issued by the government, including medical receipts, charitable donations, and rent receipts

How to create a MyCRA Account:

You will need your:

• Social insurance number.
• Date of birth.
• Current postal code.
• Enter the amount of line 15000 that you calculated and reported on the most recent tax return you filed (from either the current or previous tax year). The return you use must have been filed and assessed.
• Enter an amount you entered on one of your income tax and benefit returns. The line amount requested will vary, it could be from the current tax year or the previous one.

Go to the CRA Login page for Individuals and follow the prompts.  You can use a Sign-In Partner (like your bank) or create a CRA account directly.  Since you will likely change bank accounts at some point in your life, we recommend creating your account directly with CRA.

File Your Taxes Yourself, For Free (or for a minimal cost)

You work hard for your money, and you pay a lot in taxes, so we believe you should understand how taxes work, and the best way to understand taxes is to file them yourself.  (If you have a complicated situation, using a tax professional is a good idea, but if your situation is simple, try it yourself!).

Here is a list of free tax preparation software.  Other programs are low-cost.  Here’s our advice:

First, register for your CRA account (see above), so that your tax return software can auto-fill your return.  It makes filing taxes fast easy and reduces data input errors.

Second, ask your friends or your Hoyes Michalos trustee or credit counsellor what software they recommend.

Third, once you decide on the tax filing software, use the same program every year (because it makes it easy to carry forward your information each year).

Notify CRA Immediately of any changes

If your address changes, notify CRA immediately (you don’t want them sending letters to your old address.

All government benefits are calculated based on your family situation, so notify CRA of any of the following changes:

• marital status
• family situation (for example, if you have a new child)

Finally, and most importantly, notify CRA of any changes in your banking information.  CRA will send your tax refund and other benefits (like the Canada Carbon Rebate, HST rebate, or Canada Child Benefit) to your bank account, but only if they have your current banking information on file.

All of this information can be updated through your CRA account.