It’s officially tax season, and whether you like it or not, it’s that time of the year when you need to get the receipts, tax slips, and income statements all set for the Canada Revenue Agency (CRA)—that is, if you are required to file your taxes.

There will always be a tax season every year, and it is essential to plan ahead to avoid filing your taxes late. Here’s what you should know if you need to file your income tax and benefit return in Canada.

Who is Required to File a Tax Return in Canada?

If you are wondering whether you should file an income tax and benefit return in Canada, the Canada Revenue Agency has provided some guidelines on this. You may be required to file taxes if you are a deemed or factual resident of Canada under certain conditions. The CRA expects you to file a tax and benefit return:

• if you are required to pay tax,
• if you want to claim a refund,
• if you’re going to claim the Canada workers benefit (CWB) or report CWB advance payments,
• if you or your spouse or common-law partner receive or intend to receive credits and benefits such as the Canada child benefit (CCB), the goods and services tax/harmonized sales tax (GST⁄HST) credit, or the guaranteed income supplement (GIS),
• if the CRA specifically requires you to file a return,
• if you had a taxable capital gain in the year,
• if you have not paid back outstanding Home Buyers’ Plan (HBP) or Lifelong Learning Plan (LLP) balances,
• if you fall under any of the situations listed by the CRA.

When Do I Need to File My Tax Return?

Generally, most individuals have a tax-filing deadline of April 30. For self-employed individuals, the tax filing deadline is June 15. Also, if you owe any tax payments, you will be required to pay this amount by April 30.

You may need to file your tax before the due date to avoid late-filing penalties and if you want your tax refund processed early. If the tax deadline dates fall on a weekend, the deadline becomes the following working day, usually the Monday after the weekend. For 2021, since April 30 falls on a weekend, the tax filing deadline for most individuals is May 2 — the Monday after the April 30 deadline.

How Do I File My Tax Return in Canada?

The Canada Revenue Agency provides various ways to file your tax return. There are six ways you can file your tax return in Canada, and they include filing through:

• a certified tax software (The NETFILE)
• a paper tax return,
• a community volunteer tax clinic,
• an authorized representative,
• a discounter (tax preparer)
• an automated phone line, or
• a tax filing assistance from a CRA agent.

When Will I Receive My Tax Refund

If you file your tax return by the required deadline, it can take about two to eight weeks to receive your tax refund from the Canada Revenue Agency (CRA). The timeline usually depends on the tax filing method you use.

For an online and electronic filing method, you can get a tax assessment from the CRA in about two weeks. However, if you file your tax return by paper, your tax refund may take up to eight weeks.

Common Tax Deductions and Credits

You may be eligible to claim certain tax credits and deductions. Tax deductions reduce your taxable income before your tax rate is applied; this, in turn, reduces the tax you have to pay. On the other hand, tax credits reduce your calculated tax payable, dollar for dollar. If your tax credit is refundable, you may get a refund payment from the CRA, and if it is non-refundable, the tax credit can only reduce your tax payable to zero; the CRA will not make any payments to you.

If eligible, some tax credits and deductions that you can use to reduce your taxes are:

• Moving expenses if you had to move for work, business or education.
• Employment expenses incurred as a result of carrying out your employment activities.
• Child care expenses if you either had to work, attend school courses, or carry out research activities in the year.
• RRSP contribution deduction for amounts you contribute to a Registered Retirement Savings Plan (RRSP)or a pooled registered pension plan (PRPP).
• Education expense tax credit for post-secondary education in a recognized educational institution in Canada or outside of Canada.
• Medical expense claims for eligible health expense.
• Carrying charges and interest rates for certain investments.

What is My Tax Rate?

The Canada Revenue Agency applies a progressive income tax system based on your taxable income. Your taxable income is your total income less any applicable tax deductions and credits. The tax rate that the CRA uses to calculate your federal tax for the year is called your marginal tax rate.

Generally, the marginal tax rate brackets change every year and are indexed for inflation. The 2022 marginal tax rates are:

• 15% on the first $50,197 of taxable income,

Plus

• 5% on the portion of taxable income over $50,197 up to $100,392,

Plus

• 26% on the portion of taxable income over $100,392 up to $155,625,

Plus

• 29% on the portion of taxable income over $155,625 up to $221,708,

Plus

• 33% of taxable income over $221,708

For example, if you have a taxable income of $100,000, your federal tax will be calculated as follows:

• First $50,197 will be taxed at 15% = $7,529.6
• Next $49803 will be taxed at 20.5% = $10,209.6

Your total federal tax is = $17,739.2  ($7,529.6 + $10,209.6)

In addition to the federal tax rates, you will need to pay provincial taxes based on where you live and work at the end of the year.

The provincial tax rates in Canada are calculated in a similar way to the federal income tax and are applied to your income in addition to the federal tax rates. The provincial tax rates differ across provinces and territories.

COVID-19 Tax Updates for 2021

What’s new for taxes linked to the Covid-19 relief benefits? Well, as you probably know, due to the COVID-19 pandemic, the Government of Canada provided some help to Canadians through relief programs such as the following:

• Canada Emergency Response Benefit (CERB)
• Canada Recovery Benefit (CRB)
• Canada Recovery Caregiving Benefit (CRCB)
• Canada Recovery Sickness Benefit (CRSB)
• Canada Emergency Student Benefit (CESB)

If you received any of the government COVID-19 benefit payments, the CRA would send a T4A slip to you along with the instructions on how to report these

benefits on your tax return. You can find your T4A slip in your CRA MyAccount profile.

For business owners, if you have received Covid-19 benefits such as the Canada Emergency Wage Subsidy (CEWS), Canada Emergency Rent Subsidy (CERS), Canada Recovery Hiring Program (CRHP), or Fish Harvester Benefit and Grant Program (FHBGP), you will need to report the amounts in your tax return. You can do this by either:

• including the benefit amount in your business income or,
• reducing your expenses by the benefit amount you received.

Also, if you received the Canada Recovery Benefit (CRB) in 20221, you may need to make some repayments. A repayment would apply to you if you were not eligible for the benefits that you received due to a change in your circumstances or if you received an overpayment. If your net income after certain adjustments is more than $38,000, then the CRA will notify you of any overpayments and repayments.

Final Thoughts

Filing your income tax and benefit return can be straightforward if you have a simple tax situation. However, if you have a complex tax situation, you may need to use an authorized representative such as an accountant. When you file your tax return, you may be required to submit supporting documents for your income, expenses, deductions, and credit.

If the CRA does not request supporting documents, you will need to keep your tax records and documents for at least six years. Examples of supporting documents to keep are statements of income, tax slips, bank statements, pension statements, capital gains records, property purchase or sale/exchange transaction statements, etc.