Who Needs to File a Tax Return?

by Craig Anthony

3 min read

The rules for filing a tax return in Canada are not entirely straightforward. There are different obligations and filing dates for individuals, individuals in business, corporations and partnerships. Depending on your province of residence, you may need to file more than one return. In some cases, you may need to file even if you had no income, and there are instances when you don’ need to file even if you do have income.

Individuals and Partnerships

At the federal level, the basic rule for individuals is that you must file a tax return annually by April 30. Under the Income Tax Act, this applies to all individuals who have taxes to pay, no matter what their age is. If you have earned some income but not enough to pay taxes – for example, less than the basic federal tax credit threshold of $11,474 (for 2017) – you may not have to file a return, even if you are over the age of 18. You may still choose to file one, especially if you had taxes withheld at source by an employer that will be refunded or are entitled to a refundable tax credit.There are other instances where you must file a return: if you have received a request to do so from the Canada Revenue Agency, if you and your spouse elected to split pension income, if you received working income tax benefit advance payments, if you disposed of capital property, or if you realized a taxable capital gain. You also need to file a return if you have an outstanding balance on a Home Buyer’s Plan or a Lifelong Learning Plan.If you are an individual in business – a sole proprietor – your deadline to file is June 15. However, you must pay your taxes by April 30, or else you’ll have to pay interest on what you owe. As such, it may still be best to complete your return by April 30, or at least have a reasonable estimate of the taxes you owe, and make the payment.Partnerships are considered to be flow-through entities for tax purposes, and the individual partners must include their portion of the profits in their income. Since partnerships are in business, the June 15 filing deadline applies to income from a partnership.Many provinces use the same rules as the CRA, but not always. Check with your provincial tax authority for the rules applicable to your case.

Corporations

All corporations that are resident in Canada must file an income tax return, even if they have no tax payable – or even if they have no income. This includes nonprofit organizations, tax-exempt corporations, and inactive corporations. The only exceptions to this rule are tax-exempt Crown corporations, Hutterite colonies, and registered charities. In the case of registered charities, they must file an information return.The filing date for corporations depends on the fiscal year-end that you chose when you created the corporation. You must file your corporate return no later than six months after the end of each tax year. If your corporation’s tax year ends on the last day of a month, you must file the return by the last day of the sixth month after the end of the tax year. If the last day of the tax year is not the last day of a month, file the return by the same day of the sixth month after the end of the tax year.For example, if your tax year ends July 31, your filing due date is January 31. If your tax year ends September 23, your filing due date is March 23.In Quebec and Alberta, corporate taxes are a provincial matter; if you do business there, you should check on your particular status.Knowing if you need to file a tax return – and when – can save you interest, penalties, and lots of time that you can dedicate to growing your business rather than correcting mistakes with the CRA.

References & Resources

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