Nina Dragicevic, The Canadian Press
Published Tuesday, April 16, 2024 10:41 amEDT
Lower income does not mean lower priority when filing a tax return.
Students in particular may not be able to file if they earned little or no income last year, or if they are overwhelmed with assignments and tests, but that means missing out on a number of benefits.
“Students, for example, who file, can gain access to various credits and benefits that are paid automatically just for filing,” said Yannick Lemay, senior tax expert at H&R Block.
These include the GST/HST credit and Canada’s carbon rebate, he said.
Those born before April 1, 2006 will have automatic access to these tax credits, Lemay added, because recipients must be at least 19 years old at the time they receive the payment. The GST/HST rebate is available to those with low or modest incomes, according to the Canada Revenue Agency, while the carbon rebate is not based on income.
Canada’s carbon rebate applies to all provinces except BC and Quebec, and the territories, Lemay noted.
Payments for both can amount to a few hundred dollars, several times a year.
The GST/HST and carbon rebates are unique in the tax world, said Joel Gillis, owner of The Tax Depot in Halifax. Most tax credits and deductions reduce the amount of taxes you pay, but they don’t necessarily mean you’ll receive a cash refund.
“We call them refundable credits, so you’re actually putting money in your pocket,” Gillis said. “Quarterly credits will be a reason to apply, even if there is no income, basically.”
Tuition is another reason students should file every year: Their deductions can be significant and accumulate as they move. But it’s often a blind spot for people at the school, Gillis said.
“I see this every day, a lot of students we encounter get a four-year degree, but they don’t necessarily apply because they don’t want to or they forget,” he said. “And they don’t need the tax deduction for their tuition, so they don’t care.”
However, once they leave school and work, these graduates want to claim tuition (a major deduction), but now they have to file all previous years to continue it, Gillis said. At that time, it would have made more sense to file each year and collect GST/HST and carbon payments all the time. Students can also transfer tuition credits to their parents, she added.
Another thing that accrues with filing taxes: RRSP contribution room.
Once workers earn income, Lemay said, “they accumulate 18 percent of their income, up to a maximum, each year” in contribution room for their retirement savings.
Filing with the CRA also creates a financial document that can unlock various government programs; Essentially, taxes are your proof of income. And if your income is low or modest, there may be resources for you.
“There are many situations where filing taxes is critical to accessing many government benefits,” Lemay said, pointing to COVID-19 benefits and, more recently, the Canadian Dental Care Plan.
To that end, Lemay said H&R Block runs free tax clinics in 20 cities across Canada for people without a fixed address or bank account, or even a government ID, who cannot access benefits and programs. The CRA also operates free clinics across the country: in 2022, nearly 650,000 people filed a return using these free services.
People with children will definitely want to access the Canada Child Benefit, Gillis said, and for lower-income non-students, the Canada Workers Benefit is another payment.
“[The Canada workers benefit has] “It’s been around for a while, but they changed it recently, where if you qualify under a certain income level, last year they started paying those payments, almost like GST, up front,” Gillis explained.
“Instead of just helping the person at tax time if they’re in a low-income situation, they’re actually paying them before the end of the year. “It’s probably one of the newer things.”
As soon as someone starts earning some type of income, pays tuition, is close to turning 19, or needs government benefits (whichever comes first), filing tax returns with the CRA has benefits. In many cases, you will be a teenager with your first part-time job.
“Any time a teenager starts making a little money, even a small amount, it’s worth it,” Gillis said.
This report by The Canadian Press was first published April 16, 2024.