Chances are you’ll get a refund
Published Mar 24, 2023 • Last updated 1 day ago • 4 minute read
You’ll miss out on benefits and credits if you don’t file an income tax return. Photo by SunMedia files There are those who file their income taxes as soon as possible, and those who avoid it as long as possible, sometimes missing the deadline by months or even years.
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Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors Some of my clients like to quickly file their returns because either they are expecting a refund, or they just want to get it out of the way. If they owe money, they would rather know than not know, even if they can’t afford any more payments.
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But a great many clients are anxious about filing their returns. Often, their financial information isn’t organized and they don’t know where to find the income tax documents they need. They are also afraid of how much they might owe because one more debt could be their tipping point.
Regardless of which camp you’re in, here are three reasons why you should bother to file your income tax return.
Chances are you’ll get a refund As of March 13, 2023, the Canada Revenue Agency (CRA) has reported that 66 per cent of the 3.7 million returns processed since the start of this year’s tax filing season have resulted in a refund, and the average refund was $2,172. The government made changes to tax credits and deductions, and slightly shifted tax brackets upward to account for higher living costs. As a result, many refunds are a little bigger this year.
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Only 14 per cent of tax returns have resulted in a balance owing, which on average amounted to $4,470. If you owe and file on time, even if you can’t pay, you avoid the late filing penalty and interest charges on that amount. Twenty per cent of returns filed this year so far have neither a balance owing nor a refund due. But by filing a “nil” return, these folks qualify for any federal and provincial income-tested programs or services in their province of residence.
All this means that the odds are in your favour that you will get a refund if you file your taxes. And who couldn’t use a cash injection right about now? While letting the government use your money for free for a year isn’t ideal, it also means you aren’t hit with an income tax bill each April.
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The lump sum of money most of us will get can be used for anything from paying off debt to jump-starting an emergency savings account or indulging in a splurge. To decide what’s best for you in the long run, check your budget to see where you stand in relation to your goals.
You’ll miss out on benefits and credits It should be obvious by now that if you don’t file a tax return, you won’t get any refund if one is due to you. But there’s more you’ll miss out on, too.
If you have kids, you won’t get the Canada child benefit (CCB), which can be the difference between struggling to afford the high cost of groceries and having an easier time feeding your bunch. The Canada workers benefit (CWB) will help if you’re working, but earn a low income. Receiving the quarterly GST/HST credits depends on filing your tax return, as does the Guaranteed Income Supplement (GIS) for lower-income seniors.
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Article content There are provincial and territorial benefits along with these federal benefits and there are also income-tested programs and services across the country. If you don’t file your taxes, you will be forced to pay the maximum for any service because your eligibility for reduced fees depends on your verified level of income.
Create options for your future financial wellbeing Filing your income tax return, by default, causes us to think about the past year. Maybe you sold your home and bought another, started a business or created a mortgage helper rental suite, separated from a spouse, added a family member, or faced changes due to your health or age. What many forget is that filing your tax return also creates options for your future.
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Article content By filing, even if you have little income, you create registered retirement savings plan (RRSP) contribution room that can come in useful when your income is higher. It can also serve to verify your income if you apply for the child-rearing Canada Pension Plan provisions.
If you have children, have established a registered education savings plan (RESP), and your income is moderate or less, you may qualify for the Canada Education Savings Grant (CESG) or the Canada Learning Bond (CLB), both of which add to what you’re saving towards your children’s future post-secondary education costs.
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Completed personal tax return information is required if you need financing to start a business. It can be needed by applicants and/or parents when applying for a student loan. It is essential that seniors file their income taxes so that they receive the correct amount of Old Age Security (OAS) and that their eligibility for housing or care isn’t delayed based on income verification requirements.
You miss out on a lot of things if you don’t file your taxes, but you’ve still got time. The deadline is normally April 30 each year, but because that’s a Sunday this year, the deadline is May 1, 2023. If you’re not sure where to start, check out this comprehensive FAQ from the CRA.
Sandra Fry is a Winnipeg-based credit counsellor at Credit Counselling Society, a non-profit organization that has helped Canadians manage debt for more than 26 years.
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