Summary
- Whether you are a refugee or a foreign student, you have to file your tax returns.
- The deadline for personal tax filing is April 30, 2025, while self-employed people can file taxes until June 15, 2025 (though you need to pay until April 30, 2025, if you owe self-employed taxes).
- Filing your taxes online is not only convenient but also beneficial. You can also receive your refunds faster if you file taxes online.
- The Canada Revenue Agency (CRA) requires you to keep your records for at least six years.
- It is important to track tax filing deadlines; otherwise, you have to pay the penalties imposed by the CRA.
It can be a daunting task to avoid tax filing mistakes, especially if you are new to Canada or a foreign student living here. It is mandatory to file taxes, and in some cases you get significant financial benefits even if you are a newcomer to Canada.
In this blog, we will discuss some of the common mistakes that people make while filing tax returns and how they can avoid them to get maximum tax credits and refunds. Here are 10 important points to know what the purpose of taxes in Canada is and why it is crucial for you to understand the system.
Significance of Tax Filing Deadlines and Record Keeping
It is important to track tax filing deadlines because otherwise you have to pay the penalties imposed by the CRA. In case you are getting late in filing your taxes, it is better to contact the CRA so that they can make some kind of arrangement for you. But meeting deadlines is paramount.
If you owe some amount to the CRA, you can request them to make some instalment arrangement for you, but for that you need to take them into confidence about your circumstances.
The Canada Revenue Agency (CRA) requires you to keep your records for at least six years. This means you need to keep all the electronic or paper evidence to prove your claim. You do not need to send receipts to the CRA; you just have to produce them in case the CRA requires to see them.
If you fail to produce your records or receipts, the CRA can reduce your claim, and you will not get your intended amount.
You Can Use the Free Tax Clinic
You are eligible to use a free tax clinic if you have a simple tax situation and a lower income bracket. Free tax clinics are places where eligible individuals can get help in filing their tax returns. These places are run by community organisations where volunteers help those facing problems in filing taxes.
Some of these clinics require you to just walk in, while others ask you to make an appointment. In some cases, you can drop off your documents and then come back to pick them up.
Why is Tax Filing Electronically Better?
Filing your taxes online is not only convenient but also beneficial. You can also receive your refunds faster if you file taxes online.
Similarly, you can also receive your notice of assessment (NOA) immediately the moment the Canada Revenue Agency (CRA) processes your income tax returns. In most cases, you can also get your returns directly into your bank account.
In 2024, about 93% of Canadians filed their income tax returns online. You can file your tax returns yourself through NETFILE – a certified tax software – to make the tax filing process easier. You just need to have a registered CRA account to view your NOA.
NETFILE software is easy to operate, as it helps you step by step. This way the chance of making mistakes also gets lower, and you can complete the process with much more accuracy.
Why are RRSP Contributions Important?
There are several ways through which you can take advantage of tax credits and reduce your taxable income. Some of the common deductions include childcare expenses, donations, tuition fees, etc. You can keep your receipts if you do charitable donations to get higher refunds at the end of the year.
Registered Retirement Savings Plan (RRSP) contributions can be used to deduct your taxes. The RRSP incomes are usually tax exempt until you keep funds in the plan. Generally, you need to pay tax when you receive payments from the plan.
You can consult with your financial advisor to know how much contribution you can make to optimally use the RRSP contributions.
Conclusion
These tax filing tips can help you navigate the Canadian tax system. Try to file your taxes before the deadlines to save your time and energy and protect yourself from potential penalties by the tax authorities.
Contact us for more information.
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