Why File a Income Tax Return?

by Tax Guy - Burlington Accountant on January 5, 2011 Print This Post Print This Post

Taxes are boring! They are complicated, can take a lot of time to do and can be a pain in the-you-know-what. But did you know that if certain conditions apply, you don’t have to file a tax return? Sadly these conditions do not apply to everyone and even if you don’t have to file, it can still be a good idea to file.

When Do You Have To File A Tax Return?

  • If you had income and owe taxes, then you have to file! After-all, if you don’t file, the CRA won’t know how much to charge you.
  • If you had net self-employment income that was more than $3,500, then you will have to pay CPP.
  • Do you and your spouse want to split your pension income? If so, you both have to file a tax return.
  • Did you sell investments or other capital property? If so, you must file a tax return to declare the capital gain or loss.
  • If you have to repay Employment Insurance (EI) or  Old Age Security Benefits (OAS), then you have to file a tax return.
  • If you took amounts from your RRSP for the Home Buyers Plan (HBP) or Life Long Learning Plan (LLP) and must make repayments, then you are required to file a tax return.
  • The CRA told you that you have to file! Don’t ignore the request as there can be penalties for failing to file.

Good Reasons To File A Tax Return

Perhaps you don’t have to file an income tax return this year. In many cases it still makes good sense to file anyway. Here are a few good reasons to file:

  • The government owes you money and you want a refund! If they owe you a refund and you don’t file, then you won’t earn any interest on that money.
  • You want to receive the GST or HST credit.
  • If you receive the Child Tax Benefit (CTB) and want to continue to receive those payments, then you’ll have to file.
  • If you were a student and want to carry forward your unused tuition and education amount to future years, you’ll have to file a tax return. If you want to transfer these amounts, you will also have to file.
  • Did you have earned income and you can build more RRSP contribution room by filing your income tax return.
  • Did you have a non-capital loss in the year? If so, you’ll have to file to be able to carry this amount forward.
  • Did you receive the Working Income Tax Benefit (WITB) advanced payment? Do you still want to receive it? Then you should file.
  • If you receive the Guarantee income Supplement (GIS), you will have to file in order to continue receiving those benefits.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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Jasper January 5, 2011 at 12:04 pm

Another good reason: Increase your TFSA contribution space.

Tax Guy January 5, 2011 at 3:29 pm

@ Jasper:
You don’t have to file a tax return to generate TFSA space. You need only be a resident of Canada and over the age of 18. Your room generates automatically.

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