Siddhi Bagwe
Sandra MacGregor
Beth Buczynski
Canadians first began to pay income taxes in 1917 and we have been paying them ever since. Canada’s taxation system is based on a self-assessment principle, which means that it’s up to each citizen to self-report any earnings by filling out a tax return.
A tax return is a form, or series of forms, and schedules that a Canadian must fill out (either via paper copy or digitally) each year to inform the Canada Revenue Agency (CRA) about how much money they received from all eligible sources of income during the year.
The T1 form, known as the “General Income Tax and Benefit Return,” is the most common tax return form for individuals and unincorporated small businesses. Corporations use a different form. The T1 also summarizes all the other ancillary tax forms and schedules you need to fill out.
Information listed on a tax return
A tax return includes:
- Your gross and net income.
- How much provincial income you owe (aside from Quebec, see below).
- How much tax you need to pay.
- Deductions you can make.
- Any potential credits you could receive.
A tax return is also used to determine your eligibility for the GST/HST credit, the Canada PRO deposit and the Canada child benefit.
Once completed, a tax return will also show whether you owe any taxes or if you’re eligible for a tax refund.
In most of the country, the federal government collects both federal and provincial taxes and then distributes them. However, the Quebec government manages its own provincial tax with a separate tax return.
After submitting your tax return, you will receive a notice of assessment from the Canada Revenue Agency, which proves that your tax return has been received and reviewed.
Different tax return forms for federal and provincial governments
While you only need to complete one overall T1 form (except if you live in Quebec, where you’ll do a separate return for provincial taxes), various sections of your T1 form will differ significantly depending on what province or territory you live in.
That’s because every province and territory has different tax rates, determined by the tax brackets, and often also has different tax exemptions and credits.
For this reason, you must use the T1 form specific to your province of residence on December 31 of the applicable tax year. You may also need to download any additional relevant regional forms or schedules from the government website.
Who must file a tax return and why?
In general, everyone who lives in Canada and receives income from any source needs to file a tax return and pay any taxes they owe. Your income can come from an employer, an investment property, stocks, or government benefits.
The idea is that any income you receive over the minimum basic personal amount — which is a non-refundable tax credit and changes year to year — is subject to eligible taxation. The basic personal amount for the 2023 taxation year is $15,000 and will be indexed for inflation in the following years.
Nerdy Tip: If you’re uncertain whether you need to pay taxes, consult the government website, which provides a detailed list of why and when you need to file a tax return. In many cases, the CRA will send you a notice to file a return.
Canadians earning an income, new immigrants, Indigenous people, corporations and even the estate of the recently deceased must file a tax return. Indigenous people, however, may be subject to special tax exemptions if they are eligible under section 87 of the Indian Act.
In some cases, Canadians living temporarily out of the country, international students and seasonal workers may also file taxes. Similarly, non-residents pay tax if they receive income in Canada.
How to file a tax return
Most Canadians must file and pay their taxes by April 30, unless they are self-employed, in which case they have until June 15 to file.
You can submit your taxes on your own or with the help of an accountant, tax service or software by mail or online. The CRA also allows eligible low-income Canadians to file taxes via a special automated phone system or with the help of a CRA agent, but these methods are by invite only.
Documents needed to file a tax return
What you need to file a tax return depends on the territory or province you live in, your unique employment circumstances and your various sources of income. With that in mind, here are some examples of the documents you may need to fill out a personal tax return in Canada successfully.
Common tax slips
Most Canadians are familiar with a T4 slip. It lists your income and tax deductions, as well as any other deductions your employer made, such as Employment Insurance premiums and Canada Pension Plan contributions.
Other common slips include:
- T4RSP Statement of RRSP Income.
- T4E Statement of Employment Insurance and Other Benefits.
- T4A(P) Statement of Canada Pension Plan Benefits.
- T5 Statement of Investment income, which includes interest earnings on bank account deposits, income from stocks, ETFs and other investments in non-registered accounts.
Common tax receipts
Sometimes you may be eligible for certain deductions, especially if you’re self-employed, so it’s important to keep receipts to refer to when you do your tax return.
Smart receipts to hold on to include:
- Child care and moving expenses.
- Hydro and electric bills if you have a home office.
- Medical expenses not covered by your provincial healthcare plan such as, prescriptions or physiotherapy bills.
- Professional dues.
- Charitable donations.
Other documents and records
Other forms and records you should keep on hand could include:
- Proof of foreign income for a property owned outside of Canada.
- Any GST or HST payments you collected, especially if you are self-employed or own a business.
- Records of any tips you received if you work in a restaurant.
- Royalties you may have received from past creative work.
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