Most people don’t like to hear anything about taxes, and it’s entirely normal. The thought of giving out a certain percentage of your hard-earned money sounds unfair. However, the Canadian tax system is designed to be fair, it makes sure that every single person contributes their share towards the nation’s development, whether they like it or not.

Whether you’re working a 9-to-5 job, you’re a freelancer, or are running a business, filing your taxes is non-negotiable. In this blog, we will talk about why you need to file taxes each year.

1. It is a Legal Obligation

In Canada, the Income Tax Act sets the rules for how Canadians file their taxes. Filing tax is not a suggestion, it’s not an option, nor something you can give excuses for; it’s the law. If you earn a certain income that falls under the tax bracket, you’re expected to file a tax return every year. Ignoring your obligation to pay your taxes can lead to some serious consequences. The Canada Revenue Agency (CRA) has the power to enforce these laws, and when you fail to file, it can lead to you paying for penalties and interests. But it doesn’t stop there. If you consistently fail to file, you could be audited, which is a thorough examination of your financial records.

2. You Could be Eligible for Government Benefits

Many government programs rely on your tax information to determine if you’re eligible for tax benefits. An example is the GST/HST credit, which helps offset the goods and services tax for low-income individuals, and the Canada Child Benefit, a tax-free monthly payment for eligible families to help with the cost of raising children.

How Tax Returns Determine Benefit Calculations

You don’t just receive tax refunds like a manna falling from heaven. The government uses your tax information to decide how much support you’re entitled to. For example, you may be eligible for the Canada Child Benefit. If you don’t file, the government won’t have the data they need to give you what you might be eligible for.

3. You Could Get Refund Opportunities

You will probably like this part. One of the reasons why you should always file your taxes every year is that you could be entitled to a tax refund. If you’ve had taxes deducted from your paycheck, made charitable donations, and so on, you might be entitled to some cash back. The only way to find out is when you file your taxes.

4. For Financial Record Keeping

Each tax return is a record of your earnings, deductions, and credits for the year. When you are conscious and mindful of your income, you become more organised, because you will keep track of receipts and expenses throughout the year.

Lenders and financial institutions can request copies of your tax returns when you apply for loans. These documents can serve as proof of your income since you already have it handy. Moreover, when you’re consistent with timely tax filings, you will improve your credibility in the eyes of lenders.

Giving CRA Up-to-date Information

When you file your taxes, you are giving up-to-date information about your finances and other relevant details about you. This information will make it easy for CRA to assess your tax liabilities and what you may be entitled to. For example, if you’ve recently had a child, you may be eligible for Canada Child Benefit. But this may not be possible if you never filed for taxes.

5. To Avoid Penalties and Interest

Imagine having to file later and still paying extra on penalties. Is it not better to just file on time and forget about it? The CRA has the power to impose a late-filing penalty on you if you owe taxes and don’t file your return by the deadline. This penalty starts at 5% of your balance owed, plus 1% of your balance owed for each full month your return is late, up to a maximum of 12 months. 

6. You’re Contributing to Public Services

When you file taxes, you’re doing yourself and your country good. Your tax is not for some people to pounce on. Every tax dollar you give goes towards funding essential services and infrastructure like healthcare, education, public safety, and the maintenance of roads and parks. When you file your taxes and contribute your share, you’re supporting the development and sustainability of these public services. 

Final Thoughts 

What makes you a good citizen is patriotism, and how can you be patriotic when you don’t file your taxes? It’s your civic duty and you should put it in mind to ensure you do it with joy.

Do you have overwhelming debts that are making you unable to file your taxes? Not paying your tax is a serious offense, and overwhelming debts are also disturbing. You can reduce your debt by up to 80%, and interest will stop immediately. Our debt experts at EmpireOne Credit will listen to you and assist you achieve debt-freedom. Call us at (416) 900-2324 to schedule a free consultation with us. Being debt-free feels good!