Taxes in Canada: How do I know if I need to file a tax return?

Most Canadians, and non-Canadians living in Canada, will need to file a tax return each year. It’s not as simple as only needing to file a tax return if you earned money from working for or owning a Canadian business. 

In its simplest form: you need to file a tax return with the Canada Revenue Agency (CRA) if you owe tax or want to receive a refund. 

Taxable Income in Canada

You may owe tax to the CRA if you’ve received taxable income in Canada. Income that is considered taxable includes:

Common types of taxable income

Some of the most common types of taxable income include: 

• Wages from employment
• Income from running your own business/being self-employed
• Income from property, including rent
• Taxable dividends from companies
• Withdrawals from RRSPs
• A portion of the profit on the sale of appreciated assets.
  

Essentially, you will likely need to file a tax return if you earned taxable income in an amount higher than the tax-free threshold (known as the basic personal income) in Canada within a financial year.

The basic personal income in Canada for 2019 was $12,069. It was initially proposed to be $12,298 for 2020, but legislative changes are tipped to adjust this upwards to $13,229. Keep an eye out for updates!

Tax returns for a deceased person who earned taxable income

A final tax return may need to be completed for people who pass away in Canada during the financial year. If you’re the legal representative of the estate of a person who passed away, you can find out more about completing a tax return on their behalf on the CRA website. 

Reasons to file a tax return in Canada

According to the CRA, You should file a tax return in Canada if you: 

• Have to pay tax for the financial year
• Want to claim a tax refund from the CRA
• Claim benefits like the Canada workers benefit, Canada child benefit, or Guaranteed income supplement
• Receive GST/HST credits
• Have received a request from the CRA
• Split pension income with your spouse or common-law partner
• Disposed of capital property or realized a capital gain
• Have to repay your old age security or EI benefits
• Need to make repayments to your RRSP 
• Contribute to your Canada Pension Plan
• Have incurred a non-capital loss that you want to use in the future
• Want to transfer or carry forward unused tuition fees.

So, parents, Canadian workers, foreign workers, investors, retirees, benefits recipients, students, and business owners all likely need to file a tax return in any given year. 

Filing a tax return if no income is earned

There are plenty of reasons you might not have earned any income within a financial year. Perhaps you’re a parent looking after your children, or you took time off to care for a sick relative. Maybe you were laid off during the pandemic, or you decided to take time out for yourself. 

Whatever your reason, if you earned no income or didn’t earn enough to need to pay tax, you might still want to file a tax return.

Why? 

Because you can still claim credits and take advantage of tax breaks. 

I’m a foreign worker in Canada, do I need to file taxes?

Your tax residency affects the amount of tax you pay, but it doesn’t impact whether or not you need to file taxes in a financial year. 

If you’re on a work holiday visa and you haven’t earned any income, you may not need to file a tax return. 

If you’re on a temporary visa and you have earned taxable income during the financial year, you will need to file a tax return. 

Expert Tax Advice from Edmonton’s Tax Return Specialists

We’re large enough to have the expertise and years of experience your tax accountant should have. But we’re small enough to treat your personal tax documents with the care they deserve.