Why should I file a tax return if I don't have
income or have to pay tax?
If you have to pay tax or have earnings on which CPP contributions must
be paid, you must file a tax return. You must include your worldwide
earnings in your taxable
income. You will usually have to pay tax if
your taxable income exceeds the amount of the basic personal
exemption. See the tables of non-refundable
tax credits for amounts for federal and
provincial/territorial basic personal exemptions and
other tax credits. If you have net self-employment income or
pensionable employment income in excess of $3,500, you may have to
remit CPP contributions.
There are other circumstances which also may require a tax return to be
You were requested by the Canada Revenue Agency (CRA) to file a return.
You have disposed of capital property (real estate or
investments, for example) during the tax year.
You claimed a capital gains reserve on your previous
year's tax return.
You have withdrawn amounts from your RRSP under the Home
Buyers' Plan or the Lifelong Learning Plan, and have not yet repaid the
Even if you are not required to file a tax return, it will often be to
your advantage to do so, for some of the following reasons:
Filing a return is the easiest way to establish your
contribution room for a Tax-Free Savings Account
(TFSA), even though the contribution room is not affected by taxable income.
CRA says that "Individuals who
have not filed returns for prior years (because, for example, there was no
tax payable) would be permitted to establish their entitlement to
contribution room by filing a return for those years or by other means
acceptable to the CRA."
You have had tax withheld from your income, and
receive a refund.
The federal government and some provinces have refundable tax credits, which are payable to you even if you have no
earnings and have paid no tax. This means they will
send you a cheque for the tax credit! This includes the federal Working
Income Tax Benefit, which was new in 2007.
You want to apply for the GST/HST credit - If you are 18 years of age or older, you should file a
tax return even if you have no income, in order to apply for the GST
credit. You must be 19 to receive the credit, but if you will turn 19
before April 1 of the following year, you should apply now so that you will
receive your first GST payment as soon as possible after you turn 19.
Some provinces have benefits similar to the GST
credit. By filing your tax return, you are applying
for these benefits.
You want to apply for the Canada
Child Tax Benefit - In order to receive or continue to receive Canada Child
Tax Benefit (CCTB) payments for your children, you and your spouse must both
file tax returns. CCTB payments are non-taxable monthly payments made to
eligible families with children under age 18. To learn more about the
CCTB, visit the CRA web site CCTB
page. Many provinces and territories also pay
benefits to families with children. By applying for
the CCTB and filing your annual tax returns, you will be
eligible to receive these benefits. For more
information, see the CRA page on provincial
and territorial child benefit and credit programs.
You have "earned
income" for RRSP purposes. Even if you do not wish to
contribute to an RRSP currently, the earned income amounts can be carried
forward indefinitely. Also, you can contribute to an RRSP, up to
$2,000 more than your RRSP
deduction limit, and wait until a future year (when you are making
higher income) to deduct the contribution. This gives your retirement
fund an early start.
For seniors who are receiving the GIS
(Guaranteed Income Supplement), filing of their annual income tax return
automatically renews the GIS. For more information on the GIS, see the
article on GIS information on the Seniors
You have a non-capital
loss, which you can carry back to prior years or carry forward to future
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substitute for professional advice. Each person's situation differs, and
a professional advisor can assist you in using the information on this web
site to your best advantage.
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