Not filing a tax return? You could be missing hundreds of dollars in government benefits
A survey by H&R Block Canada says of last week there were still be seven million Canadians who have not filed their taxes to the Canada Revenue Agency.
Many will be scrambling to get them done by midnight tonight, although some admit their procrastinating because they fear they owe money.
According to Revenue Canada it’s estimated that about ten per cent of Canadians never file a tax return either because they are worried they owe money, there may be a language issue or they’re unaware it’s something they need to do.
But if you don’t, you could be missing out on government benefits.
“In order to get benefits for example the child benefit or the GST credit you need to file your tax return in order for the government to properly determine the credits and benefits you deserve,” UFILE tax expert Gerry Vittortos said.
The Canada Revenue Agency (CRA) has been speeding up the process of assessing returns and Vittortos said that many Canadians who have already filed their taxes have received their refunds.
“If your tax return is not too complicated there is an automated system and you could have your return processed and your refund in your account within five business days” said Vittortos.
There are some changes to the tax system when you're filing your return this year.
About 500,000 Canadians opened a First Home Savings Account (FHSA) last year hoping it can help them save a down payment for their first home, including Greg Rondeau from Geraldton, Ont. near Thunder Bay.
“It’s definitely better than what we had before and I think more in this case is better,” Rondeau said.
Rondeau said he maxed out his FHSA last year with $8,000 and hopes to invest another $8,000 this year, which will also help him get a larger tax refund.
"I’m glad that I started investing and paying myself first. I’m seeing the returns with my investments and it's super fun,” Rondeau said.
FHSA contributions of up to $8,000 can be made annually to a lifetime maximum of $40,000. Contributions are tax deductible, and income earned inside the registered plan from qualified investments will not be taxed.
“This is a key new financial incentive for first-time homeowners,” John Oakey, vice-president of tax at Chartered Professional Accountants Canada, said.
There is also a Multigenerational Home Renovation Tax Credit. It’s a refundable tax credit of up to $7,500 (15 per cent of $50,000) has been introduced for Canadians who renovate their home to accommodate a qualifying individual. This new credit will allow taxpayers to deduct 15 per cent of qualifying expenditures on qualifying renovations, incurred on or after Jan. 1, 2023, to a maximum amount of $50,000 for each qualifying renovation completed in the year.
Another major change there is full taxation on residential estate property bought and sold within 365 days. According to CPA profits from the sale of residential real estate properties, including rental properties or personal use properties, that are owned for less than 365 consecutive days will be fully taxed as business income. They will not be treated as a capital gain, as part of new “anti-flipping” rules. Exceptions, such as a sale related to a death or relocation, may apply.
There is also the doubling of tradesperson’s tools expenses. The deduction doubled from $500 to $1,000 in the 2023 taxation year. Employees can now deduct up to $1,000 annually for eligible tools of the trade required for employment.
Mortgage rates have gone up and the CRA has also raised its rates when it comes to penalties if you owe the government money.
"I believe the last quarter interest rates for the CRA was 10 per cent, so if you want to manage your tax situation well you want to make sure you're paying your tax installments and your taxes that are due on time" said Oakey.
Tax software can walk you through filling out your return and there are many free programs you can use that are accepted by the government. You can find a list of them on the CRA website.
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