It's spring at last, but with the warmer season comes the duty to file your personal income taxes. The filing deadline for the 2016 tax year is April 30, 2017 for most filers. Aside from potential penalties from the Canada Revenue Agency for failing to file your taxes on time, there are many important reasons for everyone to file taxes regardless of your income.
For low-income people, it's particularly important to file your taxes because many federal and provincial government benefits are delivered through tax filing. It is the single greatest annual opportunity to boost your income. Your tax return may also be the largest infusion of cash you receive in the year, so tax season is a good time to plan for your financial future.
Benefits are delivered through taxes in a few different ways including tax credits, rebates, and qualification for programs. Tax credits work to lower your gross income to potentially receive a higher personal tax refund, such as the Disability Tax Credit. Other programs like Ontario’s Trillium Benefit provide rebates (like the GST rebate) or benefits (like the Canada Child Benefit) throughout the year if you qualify based on your annual income. Filing taxes is a prerequisite to qualify for some government programs at other points in the year, such as the Canada Learning Bond, the Canada Education Savings Grant, and the Registered Disability Savings Plan. Also, failing to file your taxes can impact benefits later down the roads, such as those delivered through the Canada Pension Plan.
Filing your taxes can also be important to access certain income-based services throughout the year. For example, qualifying for a Legal Aid lawyer, or visiting the dentist through Ontario’s Healthy Smiles program require proof of income, generally through your Notice of Assessment from the previous tax year.
Filing taxes can be a daunting task for everyone, but especially if you are new to Canada or struggle with reading and completing forms. Luckily, most communities offer free tax clinics for low-income people. In Toronto, a list of free or low-cost tax clinics is available here. Outside of Toronto, check here for clinics in your area. Some clinics are offered year-round, but most are available only during tax season. If you have not filed taxes for prior years, some tax clinics will do them during tax season, while others will not. Be sure to contact the clinic for an appointment (most are by appointment only). Ask them what documents you need to bring.
Gathering the necessary documents can also be challenging. You should have a designated place where you store receipts and invoices throughout the year so you can find them easily at tax time. Save your rent receipts, medication and other medical-related receipts, and tax forms as you receive them. Your landlord is obligated to provide rent receipts, so if you do not receive them monthly, be sure to ask your landlord for a receipt for the entire year at tax time.
Be sure to remember that if you miss the April 30 deadline, you can and should file as soon as you can after that. You only have to pay interest to the Canada Revenue Agency if you owe money on your tax return but missed the deadline.
Although you may think that you shouldn’t bother with filing taxes because your income is not very high, I hope this article demonstrates the importance of filing taxes in Canada. Even though you may not receive a monetary return at tax time, filing your taxes is beneficial.
Rachael Lake is a staff lawyer with Waterloo Region Community Legal Services, practising in the areas of Disability and Employment Insurance Law. Reasonable Doubt appears on Mondays.
A word of caution: You should not act or rely on the information provided in this column. It is not legal advice. To ensure your interests are protected, retain or formally seek advice from a lawyer. The views expressed in this article do not necessarily reflect those of Waterloo Region Community Legal Services.