Filing your annual income tax return is one of the most important financial obligations for all permanent residents (PRs) in Canada.
You’ll find more helpful information in our articles: ‘Confused about Canadian tax returns? All you need to know as an international student’ and ‘Tax returns for newcomers in Canada: 6 things you should know,’ where we explore the basics of Canada’s tax system from the perspective of students as well as permanent residents.
Now, let’s look at some of the action items and critical dates filing your returns for the 2019 tax year.
1. Keep up with the tax filing season: Mark your calendars with these dates
|Feb 18, 2020||Tax packages are available at post offices, local tax services offices and online.|
|Feb 19, 2020||Earliest date for filing your individual tax return.|
|Feb 24, 2020||E-filing service opens for residents in Canada for the 2019 tax year.|
|Feb 28, 2020||Last day for employers and institutions to provide you with ‘T-slips’ (such as T4, T4A, etc.)|
|Mar 2, 2020||Last day to contribute to your Registered Retirement Savings Plan (RRSP) for the 2019 tax year.|
|Apr 30, 2020||Last day to file individual tax returns with the Canada Revenue Agency (CRA).|
|Jun 15, 2020||Last day for self-employed persons to file tax returns. However, if you owe the government money for 2019, you still have to pay it on or before April 30, 2020.|
For a detailed description of changes to the 2019 tax year, you may refer to the Government of Canada website.
The government of Canada recommends that regardless of how you submit your tax return (online or on paper), you must keep all your tax documents for at least six years. If you claimed expenses, deductions or tax credits, make sure you keep all your receipts and any related documents in case the CRA asks to see them.
Once you file your tax returns, you will receive your notice of assessment (NOA) shortly after. This notice shows the result of the assessment of your tax return.
Timelines for receiving refund and credits from the government
According to the CRA, if you file your tax return online and choose direct deposit, you could receive your refund in as little as eight business days. If you send a paper tax return, it generally takes eight weeks before the CRA issues your NOA and any refund.
The Government of Canada has also outlined specific benefit and credit payment dates so you can keep track of when to expect a payment during the year.
2. File your tax returns on time to avoid penalties
Delay or failure to file your tax returns and pay the amount owed can lead to penalties and interest charged on the amount owed.
As per the CRA, those who file their tax returns late and owe the government money, will be subject to a late-filing penalty:
- 5% of your balance owing, plus
- 1% of your balance owing for each month the return is late, up to a maximum of 12 months
If you’ve already been charged the late-filing penalty in any of the three previous tax years, the penalty increases to:
- 10% of your balance owing, plus
- 2% of your balance owing for each month the return is late, up to a maximum of 20 months
Additionally, if you have a balance owing for 2019, the CRA charges compound daily interest starting May 1, 2020, on any unpaid amounts owing for 2019. The CRA will also charge you interest on the penalties starting the day after your filing due date. The rate of interest the CRA charges can change every 3 months.
If you were unable to meet the tax filing timelines due to circumstances that were beyond your control, the CRA has provisions in place to assist you. The government website provides more information about the conditions and criteria under which the late-filing penalty and applicable interest is waived.
3. Timely tax planning can help you save more and pay less
One of the practical ways to save taxes is to invest money in your future — such as through an RRSP, for instance. When you contribute any amount to an RRSP, it reduces your net income, lowers your tax bracket and depending on your tax situation, may even qualify you for a refund.
The amount held in an RRSP is tax-free until you decide to withdraw it. You may use the money for purposes such as buying your first home through the Home Buyer’s Plan (HBP) or pursuing further education through the Lifelong Learning Plan (LLP) without paying any taxes upon withdrawal as long as you continue to meet the eligibility conditions for participation in the program.
|RBC has an easy-to-use online calculator that helps you see your savings through RRSP contributions.|
As a newcomer, it may take a while to completely understand investments and the tax system in Canada. However, the sooner you start building your financial knowledge, the faster you’ll be able to manage your finances with confidence. Through our blogs, webinars and guides, Arrive is here to help you every step of the way in achieving your life, career and financial goals!
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This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.