Every year, you’re required to do your tax filing with the Canada Revenue Agency (CRA) to report your income and determine your tax liability.
If you’re filing your tax for the first time, you need to create a CRA My Account if you don’t have one and prepare the following information:
- Your Social Insurance Number (SIN) including that of your spouse and dependents (if any)
- Your date of birth and those of your family members
- Your family’s net income
This article provides a step-by-step guide on how to file your taxes in Canada accurately and efficiently.
Table of Contents
How to File Your Taxes in Canada
Follow the steps below to file your taxes in Canada:
1. Gather your tax documents
The first step of filing taxes in Canada is to gather all your tax documents, such as:
T4 slips
- T4 Statement of Remuneration Paid
- T4A Statement of Pension, Retirement, Annuity, and Other Income
- T4A(OAS) Statement of Old Age Security
- T4A(P) Statement of Canada Pension Plan Benefits
- T4E Statement of Employment Insurance and Other Benefits
- T4RIF Statement of income from a Registered Retirement Income Fund
- T4RSP Statement of RRSP Income
T5 slips
- T5 Statement of Investment Income – slip information for individuals
- T5007 Statement of Benefits
- T5008 Statement of Securities Transactions – slip information for individuals
- T5013 Statement of Partnership income
- T5018 Statement of Contract Payments
Usually, tax slips are provided by employers and financial institutions by the end of February with the exception of T3 and T5013 slips which are released at the end of March.
If you have not received or missed a tax slip, you can request a copy through the CRA online or by phone.
2. Choose a filing method
After gathering all the necessary information and documents, the next step is to choose a filing method.
There are different ways to file your taxes in Canada. You can do so through:
- A tax accountant
- NETFILE-certified tax software such as Wealthsimple Tax and EachTax
- Automated phone line (by invitation only)
- Community volunteer tax clinic
The method you choose to file your taxes will greatly depend on your tax situation and knowledge of the tax filing process.
3. Determine what you need to report
Before you can file your taxes in Canada, you need to determine what you need to report. This includes all sources of income you earned throughout the year, such as:
Employment and self-employment income
- Security options benefits
- Emergency services volunteers
- Wage-loss replacement plan income
- Commissions included on line 10100
- Wage-loss replacement contributions
- Employment income not reported on a T4 slip
- Net research grants
- Clergy’s housing allowance or an amount for eligible utilities
- Foreign employment income
- Income-maintenance insurance plans (wage-loss replacement plans)
- Certain GST/HST and Quebec sales tax (QST) rebates
- Medical premium benefits (box 118 of your T4A slip)
- Wage Earner Protection Program (box 132 of your T4A slip)
- Self-employment income
Pension and savings plan
- Old age security (OAS) pension
- CPP or QPP survivor benefit (box 15)
- CPP or QPP disability benefit (box 16)
- CPP or QPP child benefit (box 17)
- CPP or QPP death benefit (box 18)
- Payments from annuities, pooled registered pension plans (PRPP), and registered retirement income funds (RRIF), including life income funds
- Pensions from a foreign country
- Elected split-pension amount
- Registered disability savings plan income
- Registered retirement savings plan (RRSP) income
- Lump-sum payments
- Retiring allowance
- Death benefits (other than CPP or QPP death benefits)
- COVID-19 amounts from CRA (CERB, CESB, CRB, CRCB, CRSB)
- Net federal supplements paid
Taxable capital gains
- Calculating and reporting your capital gains and losses
- Capital losses and deductions
- Shares, funds, and other units
- Capital gains (or losses) from information slips
- Principal residence and other real estate
- Transfers of capital property
- Capital gains and losses from a business or partnership
- Gifts of shares, stock options, and other capital property
Benefits
- Universal child care benefit (UCCB)
- Employment insurance and other benefits
- Lump-sum payments
- Retiring allowance
- Death benefits (other than CPP or QPP death benefits)
- COVID-19 amounts from CRA (CERB, CESB, CRB, CRCB, CRSB)
- Workers’ compensation benefits
- Social assistance payments
Keep in mind that the CRA has various penalties for failing to report income or claiming inappropriate deductions or credits.
As such, it is crucial to be diligent and thorough when determining what you need to report to avoid potential issues and ensure compliance with tax laws.
Click here to learn more about the types of income you will need to report.
4. Fill your tax return on time
Filing your tax return on time is a crucial step in the process of filing taxes in Canada.
The deadline for filing tax returns in Canada is April 30th of each year.
For 2023, the deadline falls on May 1, 2023, since April 30, 2023, falls under weekend.
But if you or your spouse/partner are self-employed, you’re required to file your taxes by June 15, 2023.
Failure to file your taxes after the deadline will attract you a 5% penalty on your tax balance and an additional 1% penalty for each month you default tax filing.
Filing your tax return on time is not only necessary to avoid penalties and interest charges, but it also ensures that you receive any benefits or refunds owed to you promptly.
Additionally, defaulting your tax filing for long can impact your credit score and potentially limit your access to credit in the future.
Therefore, it is essential to prioritize filing your tax return on time to maintain financial responsibility and compliance with Canadian tax laws.
5. Submit your tax return
Submitting your tax return is the final step in the process of filing taxes in Canada.
After completing your tax return, you must submit it to the CRA.
There are different ways to submit your tax return, including online, by mail, or at a CRA tax center depending on your tax filing method.
Once the CRA receives your tax return, they will process it and send you a Notice of Assessment, which outlines the amount of tax you owe or the refund you will receive.
It is essential to keep a copy of your tax return and any related documents for at least six years in case of a future audit or review by the CRA.
- Pro Tip: Before you submit your tax return, review it carefully to ensure that all of the information is accurate and complete. Double-check your calculations and make sure you have included all relevant deductions and credits.
6. Wait for your assessment
After submitting your tax return, you will need to wait for the CRA to assess it. This process typically takes about two weeks if you filed online or eight weeks if you filed a paper return.
During this time, the CRA will review your return and verify the information you provided. They may also contact you if they need more information or have any questions about your return.
Once the assessment is complete, the CRA will send you a notice of assessment, which will indicate whether you owe taxes or are entitled to a refund.
If you owe taxes, the notice will provide instructions on how to pay. If you are entitled to a refund, the notice will specify the amount and when you can expect to receive it.
It is crucial to review your notice of assessment carefully and ensure that all the information is correct.
If you notice any errors, you must contact the CRA to have them corrected promptly.
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Overview of the Canadian Tax System
The Canadian tax system is administered by the Canada Revenue Agency (CRA) and it’s a progressive system.
This means that individuals with higher incomes pay a higher percentage of their income in taxes.
The system is designed to fund public services and social programs, such as healthcare, financial assistance, and educational aid that benefit Canadians.
Canadians are required to pay both federal and provincial or territorial taxes. The federal government sets its tax rates and collects taxes.
Also, the provincial and territorial governments set their tax rates and collect their taxes.
However, you’re required to file a single tax return consisting of federal and provincial/territorial taxes.
Canadians are required to file an income tax return each year to report their income and claim any deductions or credits they may be entitled to.
The CRA provides various resources and tools to help individuals understand their tax obligations and file their tax returns accurately and on time.
Conclusion
In conclusion, filing taxes in Canada can seem like a daunting task, but it doesn’t have to be.
By following the basic steps identified above, you can fulfill your obligations as a taxpayer and possibly even receive a refund.
It is important to remember to keep accurate records and seek professional help if you need it.
By staying informed about changes to tax laws and regulations, you can make the process of filing your taxes easier and more efficient in the future.
