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Who is Required to File Taxes in Canada?

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Do you know who is required to file taxes in Canada? Filing taxes can be overwhelming for individuals and entrepreneurs in Canada. The complex forms to detail your information take time, effort, and knowledge.

Unfortunately, many Canadians don’t fully understand the tax requirements. As a result, they miss out on additional tax benefits and government programs.

Preparing and filing your tax documents correctly each year is essential. When you file late or have mistakes on your return, you’re at risk for penalties and fines. Hiring a professional accounting firm can protect you from these situations.

The Canada Revenue Agency (CRA) outlines specific guidelines regarding who is required to file taxes. But deciphering them may be challenging for someone without accounting experience. By using an expert accountant, you can ensure your tax documents are filed correctly.

Is There a Minimum Income to Pay Taxes in Canada for Individuals?

The Canadian government requires individuals who receive money from working, investment income, capital gains, or business profits to pay income taxes. However, there is a minimum income to pay taxes in Canada.

The federal tax rate in Canada will vary depending on your income. The provincial tax rate varies for each province and territory. Understanding these amounts is helpful when completing tax documents.

The CRA stipulates these rates according to each tax bracket. So, while you pay 15% federal income taxes for your first earning threshold, you may also pay 26% for earnings in that tax bracket.

This table outlines the federal and territorial income tax brackets in Canada:

Federal Income Tax Rate

Income Tax Threshold

15%

Income equal to or less than $55,867, plus

20.5%

From $55,867 to $111,733, plus

26%

From $111,733 to $173,205, plus

29%

From $173,205 to $246,752, plus

33%

More than $246,752

Each province and territory also regulates their income tax amounts in addition to these federal rates. For simplicity, this table shows the lowest threshold for each province.

Province/Territory

Income Tax Rate

Alberta

10% on $148,269 or less

British Columbia

5.06% on $47,937 or less

Manitoba

10.8% on $47,000 or less

New Brunswick

9.4% on $49,958 or less

Newfoundland and Labrador

8.7% on $43,198 or less

Northwest Territories

5.9% on $50,597 or less

Nova Scotia

8.79% on $29,590 or less

Nunavut

4% on $53,268 or less

Ontario 

5.05% on $51,446 or less

Prince Edward Island

9.65% on $32,656 or less

Quebec

14% on $51,780 or less

Saskatchewan

10.5% on $52,057 or less

Yukon

6.4% on $55,867 or less

Therefore, an average Canadian can pay 15% plus 20.5% in federal income tax plus their provincial or territorial rate.

The CRA Regulates Who Has To File Taxes In Canada

Over 38 million people live in Canada, but who will need to file tax documents? However, only some people must file taxes with the CRA. The government requires you to file taxes if you fall into any of these categories:

  • Canadian residents
  • Newcomers to Canada
  • Individuals living in Canada permanently
  • Legal representative for a deceased person
  • Factual residents living, working, or going to school temporarily in another country
  • Non-residents who receive income sources from activities in Canada
  • Emigrants leaving Canada permanently but declaring Canadian income or receiving a tax refund

Each category offers specific documents for filing. If you are unsure where you fit in, seek the advice of a professional accountant.

Do You Need to File Tax Documents? Accountor CPA Can Help!

Individuals in Canada who need to file tax documents must do so by April 30 each year. For self-employed individuals, this deadline extends to June 15. The Government of Canada will push the date to the following Monday if either of these deadlines falls on a Sunday.

It’s crucial to adhere to these filing schedules to avoid late penalties or fines with the CRA. If you need help preparing or filing your income tax documents, choose Accountor CPA.

Our industry experts specialize in many bookkeeping and accounting tasks, including:

  • Personal tax preparation
  • Individual tax return filing
  • Corporate taxes
  • US tax returns for Canadians
  • Partnership tax return preparation and filing
  • Tax planning services
  • CRA audit help
  • NIL corporate tax returns
  • Tax preparation and filing for small businesses
  • Tax support for medium-sized businesses

Contact us today for a free, no-obligation quote on all our tax services!

You Are Required To File Taxes With the CRA Even Without an Income

If you are a Canadian who isn’t receiving a working income, you may wonder who has to file taxes. There is no minimum income to file taxes. Regardless of your financial situation, the CRA requires everyone to submit a tax return.

Some examples of non-taxable income that won’t apply to income tax guidelines include:

  • Social assistance payments
  • TSFA (Tax-Free Savings Account) funds
  • Canada Child Benefits
  • Child support benefits with a court order after April 30, 1997
  • GST/HST credits
  • Life insurance policy death benefits
  • Workers Compensation benefits
  • Disability or death benefits of war veterans
  • Lottery winnings
  • Gifts or most inheritance amounts

Although you won’t pay income tax on these funds when you receive them, it can differ with time. For example, you may still be required to pay income tax on any interest you receive after investing these funds. The CRA considers only the interest payments as taxable revenue.

You will have to include many of these funds on your tax return. Completing a tax return each year provides several benefits for individuals.

Eligible Government Programs, Services, and Tax Credits

The Government of Canada offers additional programs, services, and refundable tax credits that require your tax documents for eligibility. You won’t have access to these benefits if you don’t file taxes yearly.

Extra payments like the Climate Action Incentive(CAI) plan or GST refunds are for qualifying residents. Many government offices rely on tax documents when determining eligibility for disability programs and services.

Establishing Your Account With the CRA

Having a tax account with the CRA is helpful in several ways. Even without taxable income, the CRA provides TFSA and RRSP limits based on your tax documents.

Another benefit of establishing your CRA account is the opportunity to carry forward unused tax credits to future years. Students with school expenses or individuals with non-capital losses can apply these amounts to taxable income later.

Therefore, even if all the money you receive is classified as non-taxable, you should report it. An expert accountant can help you determine which funds fall under this category.

The information provided on the page is intended to provide general information. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Accountor Inc. assumes no liability for actions taken in reliance upon the information contained herein. Moreover, the hyperlinks in this article may redirect to external websites not administered by Accountor Inc. The company cannot be held liable for the content of external websites or any damages caused by their use.

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