What benefits do Canadian tax-filers enjoy?

What benefits do Canadian tax-filers enjoy?

Workers and those earning an income in Canada will have until April 30th, 2024 to file their taxes for the 2023 fiscal year. For many recent newcomers and international graduates in Canada, it may be their first time doing so.

While filing one’s tax return (also called “doing one’s taxes”) may seem like a disadvantage to some, the benefits often far outweigh any potential drawbacks when reporting an income. This article will cover some of the benefits that new tax-filers in Canada may be able to access.

Receiving a tax-refund

Many salaried tax-filers in Canada will be eligible for a tax-refund upon filing their income taxes. This tax refund represents money that individuals can receive from the government for overpaying their taxes throughout the fiscal year.

A tax refund can also be generated after a review of tax credits, deductions and expenses—which occurs at the time of filing returns. Tax credits refer to money that the government can provide based on an individual’s eligibility for different programs (more on this later).

Deductions refer to amounts that can be subtracted from your income when filing tax returns to reduce the amount owed based. Finally, expenses are the total amount of taxes owed by an individual (effectively the opposite of a refund), which usually occurs if taxes are underpaid throughout the year.

Credits and benefits

In addition to receiving a tax refund, filers in Canada also enroll themselves into several credit and benefit programs (based on their eligibility), by doing their taxes every year.

Some examples of these credits include:

  • The Goods and Services Tax / Harmonized Sales Tax (GST/HST) credit—a tax-free quarterly payment which helps individuals and families with low and modest incomes offset the GST or HST that they pay;
  • The Canada workers benefit—a refundable tax credit to help individuals and families who are working and earning a low income;
  • The Canada training credit—a refundable tax credit available from 2020 onwards, to help individuals offset the cost of eligible training fees. Filers must be at least 26 years-old to be eligible to claim this credit;
  • The disability tax credit—a non-refundable tax credit to help persons with disabilities (or the person supporting them) reduce the income tax that they must pay. Eligibility for this credit can also lead to enrolment in other provincial and federal tax programs; and
  • The Canada child benefit—a tax free credit that is available to some families to help with the cost of raising children under 18 years of age.

The government of Canada also runs other tax credit programs. Find their dedicated webpage here. In addition, a comprehensive list of all tax deductions, credits and expenses can be found here.

For a newcomer’s guide on how to navigate filing taxes for the first time, click here. For more information on the topic, find our dedicated webpage here.

In addition, the government of Canada has created a benefits tool, to help newcomers and others understand what benefits they may be eligible for. The tool also covers other social programs and can be found here.