How To File Taxes For The First Time

Estimated reading time: 15 minutes

Navigating the process of filing taxes in Canada for the first time? Learn the steps, software, and benefits of filing your tax return.

Don’t let filing taxes cause stress, as it’s a learning process that’s worth the effort if you have a personal tax return.

The 2023 Tax season in Canada officially opened on February 19, 2024, and ends on April 30, 2024.

However, if April 30th falls on the weekend, the Canada Revenue Agency (CRA) allows the last return to be filed the next business day.

Purpose Of Filing Taxes

Why do we have to file taxes in Canada?

Simple!

We file taxes to ensure we get the benefits, credits, and services we are eligible for yearly.

Getting A Tax Return

Although getting an income tax return is like a bonus to most Canadians, often it’s best to owe nothing and receive little or nothing.

If you are getting money back from the government, you’ve likely paid too much taxes and given them your money to invest.

The idea is to pay the government as close to the amount you need to to get a clean break from them.

Often, the first line of defense is letting your employer know you’d like them to take less taxes from your cheque.

Do not allow your employer to take more taxes off than needed because you’re giving the government more money to invest.

You’re better off investing the money in a Tax-Free Savings Account than gifting it to the CRA to use as they see fit.

It is even better to invest the money in an RRSP instead if you plan to leave it long-term.

Every situation is unique, so it’s best to consult with a professional who can assess your needs.

There are forms to fill out, so talk to your human resources department for more information if you choose to go with these routes.

When Can We File Taxes In Canada?

Most people don’t receive their tax documents until the end of February, and some into March, depending on what they are.

As soon as your tax documents are ready, it’s best to file as quickly as filing season begins.

For example, if there was a death in the family, a power of attorney must file a tax return for the deceased person.

Another example might be getting T5 tax documents from banks where one has earned interest.

Yes, even that minuscule interest amount must be declared as income on your tax return.

Manulife, whom we invest with, is pretty quick to send our tax forms, as is my employer.

In the meantime, we must prepare receipts for medical expenses and my blogging business.

Related: 4 Benefits For Tracking Your Medical Expenses

Some people like to get a headstart with their taxes and begin to file as documents arrive, but I’m not particularly eager to do this.

I’m a bit of a planner and prefer to wait until I’ve collected everything before I begin the tax filing process.

Filing dates for 2023 taxes

February 19, 2024: Earliest day to file your taxes online April 30, 2024: Deadline to file your taxes June 15, 2024 (June 17, 2024, since June 15 is a Saturday): Deadline to file your taxes if you or your spouse or common-law partner are self-employed

The payment date for 2023 taxes

April 30, 2024: Deadline to pay your taxes

What’s New For The 2023 Tax Season

As of January 1, 2024, remittances or payments to the Receiver General of Canada should be electronic if the amount is more than $10,000. Advance payments of the Canada worker’s benefit (CWB) are now issued automatically under the ACWB to those who received the benefit in the previous tax year. As a result, Form RC201, Canada Workers Benefit Advance Payments Application, has been discontinued. The Government of Canada has announced its intention to double the rural supplement to 20% starting in April 2024. It also intends to use the census metropolitan areas determined by the 2016 Census for the 2023 and 2024 tax years. Starting in 2023, the maximum employment deduction for tradespersons’ eligible tools has increased from $500 to $1,000.  Federal, provincial, and territorial COVID-19 benefit repayments made after December 31, 2022, can be claimed as a deduction on line 23200 of your 2023 return. The First Home Savings Account (FHSA) is a new registered plan to help individuals save for their first home. Starting April 1, 2023, contributions to an FHSA are generally deductible, and qualifying withdrawals from an FHSA to purchase a qualifying home are tax-free. 

Home Renos, Property Flipping, Fuel Charges, Home Business Expenses 2023

The Multigenerational Home Renovation Tax Credit (MHRTC) is a new refundable tax credit that allows an eligible individual to claim certain renovation costs to create a secondary unit within an eligible dwelling so that a qualifying individual can reside with their qualifying relation. If eligible, you can claim up to $50,000 in qualifying expenditures for each renovation completed, up to a maximum credit of $7,500 for each claim you are eligible to make. Property Flipping: Starting January 1, 2023, any gain from the disposition of a housing unit (including rental property) located in Canada or a right to acquire a housing unit located in Canada that you owned or held for less than 365 consecutive days before its disposition is deemed to be business income and not a capital gain unless the property was already considered inventory or the disposition occurred due to, or in anticipation of certain life events.  The Return of fuel charge proceeds to farmers tax credit is now available to self-employed farmers and individuals who are members of a partnership operating a farming business with one or more permanent establishments in Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island or Saskatchewan. If eligible, a portion of your fuel charge proceeds may be returned to you. The temporary flat rate method does not apply to 2023. Therefore, taxpayers looking to claim home office expenses 2023 must use the detailed method and get a completed Form T2200, Declaration of Conditions of Employment.

You can find more information for each new 2023 tax change above, plus those for each province and territory in Canada, by visiting What’s New, Canada.ca.

What You Need To File Your Taxes

Before filing your tax return, you must collect all necessary documents.

The fastest way to get your income tax return is to ensure that your information is updated with the CRA.

If you change your martial status, name, address, or phone number, update that on your CRA dashboard.

You can also register to get tax refunds via direct deposit while in your dashboard.

Report Your Income

Employment and Self-employment – Report income related to employment and self-employment, including commissions and foreign employment income Pension and Savings Plan Income – Report pension and savings plan income like old age security, CPP or QPP benefits, or pensions from other countries Investment Income– Report income earned through investments like interest, dividends, and capital gains Benefit Income – Report benefit income from EI and other benefits, workers’ compensation benefits, social assistance payments or UCCB

Use this handy tick box from Revenue Canada to find out what line to report income and the types to report.

Learn how to report your COVID-19 benefits on your tax return, repay a benefit amount, or arrange to pay your COVID-19 debt over time.

Claim Expenses, Deductions, and Credits

Find out which deductions, credits, and expenses you can claim to reduce the tax you must pay.

Use the handy tick box to filter by topic or search for what you can deduct and what line to put it on your income tax return.

Family, childcare, and caregivers Education Disability Pension and savings plans Employment Provincial and territorial

Collect Your Income Tax Slips

You should have received your tax slips by the end of February. However, the T3 and T5013 slips may arrive by the end of March.

Receipts for RRSP and PRPP contributions made in the first 60 days of the tax year may not be received until May.

You can filter through the 19 various types of tax slips here.

T4 Slips T5 Slips T3 T2202 T1024 RC62 RC210 RRSP PPRP

Ways To File Taxes In Canada

You can file taxes online for free or through paid tax software or mail in a paper version via Canada Post.

Below are common ways Canadians file their taxes in Canada.

SimpleFile By Phone

The SimpleFile by Phone service, formerly File My Return, allows eligible individuals to auto-file their income tax and benefit returns over the phone.

SimpleFile is free, secure, and easy to use, with no forms or calculations and no agents to speak to.

The only catch is that to use SimpleFile, you must be invited and will receive an invitation letter from the Canada Revenue Agency (CRA) either by mail or email.

If registered online with the CRA, you can view the letter in My Account only if your correspondence preference is “Electronic mail.”

My First Experience Having To File Taxes In Canada

If you’re new to Canada or it’s your first time filing taxes, I want to share how I learned to file, including the process and software.

Moving to Canada from the UK meant I had to learn a new tax system different from what I was used to.

In the UK, we don’t have to file taxes as the government does this for us, which I hope Canada will adopt at some point.

We have a system called Pay As You Earn, or (PAYE) where the government takes taxes from us automatically.

Most people pay Income Tax through PAYE . This is the system your employer or pension provider uses to take Income Tax and National Insurance contributions before they pay your wages or pension.

Your tax code tells your employer how much to deduct.

Gov.UK

As of 2023, I will file taxes for our family, including my inlaws, using the free Netfile software.

I’ve also had to file for disability tax credits for both my wife and son, which I found easy.

However, if it’s your first time filing taxes in Canada, you may want something with more instructions.

Although I find a simple personal income tax return straightforward, it took some practice.

Hiring An Income Tax Professional

It is important to note that, per CRA regulations, tax professionals CANNOT use NETFILE software to file their clients’ tax returns. They must use EFILE certified software.

The first time I filed my income tax in Canada, I hired a professional to do the job.

It was a no-hassle way to file taxes, and all I needed to do was sit with him for a quick 15-minute chat and bring all the necessary documents.

The only issue was the cost of over $100 per person many years ago.

Then we hired someone we found online to prepare and file taxes for us, and she charged $25.

Although everything turned out fine, I learned that she used Netfile, and I took it upon myself to learn the process.

Community Volunteer Tax Clinic

Your community will have volunteer tax clinics set up where you can get your return completed.

If you are unsure where to go, visit the Canada Revenue Agency’s (CRA) Community Volunteer Income Tax Program (CVITP) website to see a complete list of clinics operating in Ontario.

You can also call CRA for additional support at 1 800.959. 8281

Source: CPA Ontario

Using Paid Tax Return Software

Before I ventured to Netfile, I dabbled with Turbo Tax because I felt it was a stepping stone.

I was a new immigrant or permanent resident and needed to learn about the Canadian tax system.

Final Stop: Free Online Tax Software

From there, I started using the free online Nefile software to file taxes for my family.

It’s not so bad. However, I suggest taking your time to understand each process step.

Netfile Through Revenue Canada

Use certified tax software online to file taxes for the first time for free, up to a maximum of 20 returns per computer or online account.

For the 2023 tax year, prior to filing your tax return electronically with NETFILE, you will be asked to enter an Access code after your name, date of birth, and social insurance number.

Your eight-character Access code is made up of numbers and letters and is located on the right side of your Notice of Assessment for the previous tax year.

While this Access code is not mandatory, if you do not enter your Access code, you will not be able to use any information from your 2023 tax return when confirming your identity with the Canada Revenue Agency.

You will have to rely on other information for authentication purposes. This code does not apply to you if you are filing your tax return for the first time.

Canada.ca- Netfile

Paid Software To File Taxes

Any of the below-paid income tax software programs are acceptable to use.

Turbo Tax

Get up to 15% off your TurboTax purchase! (Valid until 12/31/24)

Plus, get a 10% discount now. Use Rakuten to get even more cashback. 

One of the best apps, Rakuten is a Cash Back App worth signing up for.

Plus, if you sign up for Rakuten using my referral link above and then click on Turbo Tax and purchase it, you will get $30 cashback from Rakuten.

How cool is that? It doesn’t get any cheaper for Turbo Tax Canada.

For those who want top-notch help with your return, try Turbo Tax Canada, as it’s one of the most trusted tax software.

Turbo Tax Canada is a trusted source for Canadian Budget Binder in supporting tax software in my community.

UFile

Over a million Canadians put their trust in UFile products every year. File smart with UFile’s 20 years of experience serving Canadian taxpayers.

Studio Tax

Unlike online and cloud-based applications, where you must trust a private third party to secure your valuable personal information, StudioTax gives you complete control over your security.

StudioTax 2023 is the version required to prepare and file the 2023 returns(due by April 30, 2024).

Who can use StudioTax?

StudioTax is made available for individuals who prepare their tax returns or returns for a few relatives and friends.

StudioTax installs on your computer’s hard drive, saves your returns on your computer’s hard drive, and absolutely NO personal or otherwise information leaves your computer.

Other Online Certified Tax Software To File Taxes

Tax softwareCertified
tax yearsPlatformCompany information

CloudTax Free for Android	2018-2023	Mobile app	CloudTax Inc.
StudioTax for Android	2019-2023	Mobile app	BHOK It Consulting
GenuTax Standard for Windows	2017-2023	Desktop	GenuSource Consulting Inc.
CloudTax Free	2018-2023	Online	CloudTax Inc.
Wealthsimple Tax	2017-2023	Online	SimpleTax Software Inc.
TaxTron for Web	2018-2023	Online	Taxtron Inc.
Wealthsimple Tax for Android	2020-2022	Mobile app	SimpleTax Software Inc.
EachTax Free	2021-2023	Online	XInfo Technology Inc.
Wealthsimple Tax for iPhone, iPad	2017-2022	Mobile app	SimpleTax Software Inc.
StudioTax for iPhone, iPad	2019-2023	Mobile app	BHOK It Consulting
CloudTax Free for iPhone, iPad	2018-2023	Mobile app	CloudTax Inc.

Reference: Canada.ca

What Happens If You Don’t File Taxes?

If you owe money to the government and don’t file by the deadline of April 30th, the government will impose penalties on the amount you owe.

Missing the deadline means you’ll be immediately charged % of the amount owing – plus 1% for every additional month you are late.

It’s important to remember that the amount owing is also due by the filing deadline.

If the deadline passes and you still owe money, you’ll have to pay interest not only on the amount owed but also on any penalties you incur.

For those taxpayers who owe money, it’s essential to pay on time, every time.

Q: Can I file taxes for two years at once?

Yes, you can file taxes for more than one year at once.

Consequences Of Tax Evasion In Canada

If you are convicted of tax fraud, you can be sentenced to up to 14 years in prison.

Included with a prison sentence, you’ll be fingerprinted and foreign travel restrictions.

When convicted of tax evasion:

You must still pay the total amount of taxes owing, plus interest and any civil penalties assessed by the CRA Imposed a jail term of up to five years You may be fined up to 200% of the taxes evaded

Fraudulent Tax Return Consequences

Q: Can I go to jail if I file taxes as a single when I’m married?

If you live in a common-law relationship but do not file as such on your income tax return, you may be guilty of filing a fraudulent tax return and could face inevitable consequences.

These include being reassessed for unpaid taxes, interest, and penalties. Being denied CPP benefits. Source

Protect Yourself From Income Tax Fraud

Always be vigilant regarding phone calls from banks, investors, and government institutions, including Revenue Canada.

Unfortunately, scammers are working hard to steal your identity and money.

To avoid scams and fraud, be aware of when and how the CRA might contact you.

The Scams and fraud page provides information on how the CRA may contact you, including by phone, email, mail, and text message.

Important Links To Help You File Taxes In Canada

Income tax package for 2023 My Account Make a payment to the CRA Personal income tax rates All online services Tax Refund Change your address Direct deposit

To learn more about how to pay any income tax that you owe the CRA and any other information, please visit the Canada.ca website.

As always, I’m not a tax professional, so it’s best to consult with one if unsure or contact Revenue Canada.

Discussion: If you have any other questions about how to file taxes in Canada for the first time, please leave them below.

Thanks for stopping by,

Mr. CBB

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