Little to no income? 4 Reasons why you should still file your taxes
When you file your annual tax return, you’re not only reporting your earnings and how much income tax you owe to the Government – the Government uses your tax return to assess what may be owed to you. This includes any taxes you overpaid and what type of income-based benefits you ought to receive.
If you don’t file your taxes, you can’t take advantage of the tax benefits and credits – like the Goods and Services Tax/Harmonized Services Tax credit, the Disability Tax Credit, the Working Income Tax Benefit and Canada Child Benefit. These programs sometimes include a supplemental amount for people living with disabilities as well.
1) Goods and services tax/harmonized services tax (GST/HST) credit
The goods and services tax/Harmonized sales tax credit is a tax-free payment paid to individuals with low or modest incomes every 3 months. Since one’s income determines their eligibility, Canadian residents are automatically assessed for the GST/HST credit when they file their taxes.
2) Disability Tax Credit
As a non-refundable tax credit, you can only claim the Disability Tax Credit (DTC) against any income taxes you owe or have paid in the past. This means to benefit from the DTC, you must file your present or past income taxes.
Technically, the DTC helps you receive a credit or refund of any income taxes you overpaid or anticipate paying. This tax credit is useful because it’s retroactive up to 10 years, meaning if you’ve filed your taxes for the last 10 years (and paid income taxes), you could anticipate a maximum refund of $20,000 for an adult with a disability and up to $50,000 for a child with a disability.
Supporting family members who have filed their income tax returns may transfer and claim the DTC.
3) Working Income Tax Benefit
The Working Income Tax Benefit (WITB) provides relief for eligible low-income individuals and their family members. Only those who are currently working and file their income tax returns may qualify.
As of 2016, single individuals whose 2016 income is between $7,112 and $18,529 may qualify for WITB. For families, the WITB qualifying income threshold is between $10,472 and $28,576.
WITB amounts may vary across provinces, but the maximum 2016 WITB benefit is $1,972 per household.
If you are approved the Disability Tax Credit, you may also receive a WITB disability supplement.
4) Canada Child Benefit & Child Disability Benefit supplement
Families with children under 18 years old can receive a monthly, tax-free payment, called the Canada Child benefit (CCB) – up to $6,400 per eligible child (for the 2015 tax year).
CCB is calculated based on family income, so families are only eligible if they file annual tax returns.
To qualify for CCB, the Canada Revenue Agency considers your family income, the number of children who live with you and their ages, and the province or territory you live in.
If your child is eligible for the Disability Tax Credit, you may also receive the child disability benefit – a monthly, tax-free benefit that can be claimed retroactively up to 10 years. For the period of July 2016-June 2017, the CDB amount is up to $2,730 for the year for each eligible child.