Lesson 17 — Activity 2:

Why and How to File a Tax Return

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The process of filing an income tax return may seem difficult and time-consuming, but there are some advantages to doing so. For example:

• You will receive a refund if you have paid more income tax than required.
• You might be eligible for the Goods and Services Tax (GST) credit if you have a fairly low income. You can request that the credit be placed on your income tax return.
• You can receive a Child Tax Benefit to assist with the costs of raising children.
• You will be able to claim some of your expenses for attending university or college.
• You can increase your contribution to a Registered Retirement Savings Plan (RRSP).

Once you begin to earn a steady wage, you are required by law to complete and submit a tax return to Canada Revenue Agency. There are several ways to do this:

• by completing the forms on paper and mailing them to the CRA
• by having the forms completed for you by an accountant or financial institution
• by filing your return online

After you send in your tax return, the CRA will review the information on the forms and make any necessary corrections. You will then receive a "Notice of Assessment" that will notify you if any errors were made on the forms. The Notice of Assessment will include information about a refund or a further notice.

One reason for a notice about a change in how much tax you owe could be that the employer did not make the correct deductions on your paycheques.

In the next activity, you will look at what is needed to complete an income tax return.

Self-check!