Now that the Registered Retirement Savings Plan (RRSP) season is over, in my world, tax season in Canada is officially here. If you’re hoping to get maximum mileage out of your income tax return, you’re in the right place.
The Canada Revenue Agency (CRA) officially opened its net file service and started accepting tax filings this week, and there are plenty of ways to ensure you’re getting the biggest possible refund. Whether it’s claiming the right deductions, taking advantage of credits or simply filing on time, a little preparation can go a long way.
Changes
If you’re self-employed, this is even more important. Many self-employed individuals fail to keep track of their business expenses, which means they could miss out on valuable deductions. Setting up a simple filing system, whether it’s digital or a physical folder, can make a huge difference when it’s time to file.
Recent life changes
Did you get married last year? Have a baby? Buy or sell a house? Move cities? Start a side hustle? Start working from home? Lose your job?
If your life situation changed in 2024, you might be eligible for new tax benefits.
Don’t file the same way each year if your life situation is different from the previous year. Life changes, like getting married or having a baby, can affect how you file your taxes as you might be eligible for benefits you were not previously entitled to.
Update dependants
Did you know that keeping your dependant information up to date could help you save money on taxes? Dependants aren’t just kids. You can claim various tax credits and deductions based on your dependents (spouse, children, or other individuals who rely on you financially).
For example, new parents might be able to claim the child care expenses deduction if they’ve paid for day care or babysitting while working or attending school. Parents can also take advantage of deductions for their child’s medical expenses and get boosted amounts for payments like the GST/HST Credit, Canada Carbon Rebate, Canada Child Benefit and more.
Even if your dependant isn’t a child, caregivers who support a family member might qualify for additional credits like the Canada caregiver amount. If you don’t update this information when you file, you could miss out on some serious cash.
Contribute to an RRSP
One of the simplest ways to maximize your tax refund is by RRSP or using your company’s Registered Pension Plan (RPP).
The RRSP and RPP allow you to reduce the income for which you will be taxed on taxable income, which directly reduces your tax payable, and might bring you down to a lower tax bracket.
The RRSP deadline for 2024 was Monday, March 3. However, it’s even better if you contribute regularly throughout the year instead of waiting until the last minute, so you can take full advantage of tax-deferred growth while ensuring you don’t miss out on the deduction.
File on time
This might seem obvious, but filing on time is crucial, especially if you owe money to the CRA. If you owe taxes, filing on time or before the tax deadline helps you avoid penalties and interest.
Plus, if you’re expecting a refund, it’s always a good idea to file early to get your money sooner. The deadline for most Canadians to file their 2024 income tax return is April 30, 2025, but you can start filing now if you’re ready.
The bottomline
You should always file your tax return, even if you have no income to report or not enough to owe tax on it. Low-income Canadians should still file. At low-income levels, they would be entitled to benefits such as the GST Credit (and provincial equivalent, if applicable) but can only claim this credit by filing their tax return.
Filing ensures that you can carry forward various unused tax non-refundable credits or deductions to future years. Tax credits like sales tax rebates and childcare benefits may still apply, even if you had little to no income. Filing a tax return each year is a requirement to continue receiving many government benefit payments, even if you’re already receiving them now. One of the strategies in Keeping Life Current.
