Getting ready to file your income tax and benefit return? The Canada Revenue Agency (CRA) has a few tips that could save you time and money. For information about online filing, deadlines, and helpful links for the 2021 tax-filing season, visit canada.ca/taxes-get-ready.
You can also check out our questions and answers about filing your taxes for help on COVID-19 benefits, and the tax filing process.
1. File your income tax and benefit return
First things first, make sure you file your return! It’s important to file your return on time so that you can get any benefits and credits you may be eligible for! The CRA uses the information from your return to calculate your benefits and credits.
You should file your return on time every year, even if you don’t owe tax on your income or if you had no income at all. If you have a spouse or common-law partner, they should also file an income tax and benefit return. You should file your return by the deadline, so you aren’t charged late-filing penalties on any money you owe.
If you want to file your return yourself, the CRA has a step-by-step guide that makes filing easy.
If you have a low to modest income and a simple tax situation, a volunteer may be able to complete your return for you, for free. This year, volunteers may be able to complete and file returns virtually by videoconference, by phone, or through a document drop-off arrangement. To see if you’re eligible and to find a clinic, go to canada.ca/taxes-help.
2. File your return online
This year, the CRA encourages you to sign up for direct deposit and to file your return online to get your refund faster and avoid any delays. We strongly encourage you to file online this year through the Community Volunteer Income Tax Program(CVITP), through NETFILE certified software, or through the services of an electronic filer who is certified to use our EFILE service. If you choose to file electronically on your own, there are a variety of software products to meet your needs, some of which are free. Also, some of the software gives you information about benefits, credits, and deductions.
If you chose to file electronically using NETFILE, you will be asked to enter an eight-character alphanumeric access code before filing. This unique code can be found on your Notice of Assessment (NOA) in the top right area of the first page. While this Access code is not mandatory, if you do not enter your Access code, you will not be able to use any information from your 2020 tax return when confirming your identity with the CRA. You will have to rely on other information for authentication purposes.
If you file by paper, COVID-19 may cause delays in processing paper returns, processing changes to your return, as well as delivering notices of (re)assessment and cheques in the mail. The CRA will process paper returns and any changes requested in the order it receives them. Since these delays do not impact the processing of electronic returns, the CRA encourages you to file your 2020 return or any adjustments online.
If you’re using NETFILE certified tax software and you’re registered for My Account, you can use Auto-fill my return. It allows you to quickly and easily fill in parts of your return with the information the CRA has on file, including tax slips you will get if you received COVID-19 emergency benefits.
3. Claim all your benefits, credits, and deductions
There are tax deductions, credits, and expenses you may be able to claim on your return. The CRA uses the information from your return, and your spouse’s or common-law partner’s return (if applicable) to calculate your benefit and credit payments. These include the Canada child benefit, the goods and services tax / harmonized sales tax (GST/HST) credit, and other related provincial or territorial benefits. Benefits and credits can provide payments to help you throughout the year, so you have more money in your pocket!
You may be able to claim non-refundable tax credits for your medical expenses and for your student loan interest or a deduction for child care expenses. If you worked from home more than 50% of the time over a period of a least four consecutive weeks in 2020 due to COVID-19, you may also be eligible to claim the home office expenses deduction for 2020. These claims can reduce the amount of tax you may owe. Find out what you can claim.
If you own a business or are self-employed, you may be able to claim certain business expenses. These include motor vehicle and business-use-of-home expenses. Book a free virtual visit with a CRA liaison officer either by phone or videoconference. They can help you better understand your tax obligations and discuss business tax deductions before you file your return.
4. Enter all your income and COVID-19 benefit payment amounts
You should get your T4 slips from your employer by the end of February. You may also get slips from other payers, such as pension providers and financial institutions. If you don’t have all of your 2020 slips or if you lost one, ask your employer or payer for a copy. If you register for My Account, you may have access to online copies of your slips. If you’re still missing information, use your pay stubs or statements to estimate the income to report.
If you received the Canada Emergency Response Benefit (CERB), Canada Emergency Student Benefit (CESB), Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), or Canada Recovery Caregiving Benefit (CRCB) payments, these are considered taxable income, and you will have to enter on your return the total of the amounts you received. You will receive a T4A (for benefits issued by the CRA) and/or a T4E (for benefits issued by Service Canada) tax slip in the mail with the information you need for your return. You can view tax slips online as of February in My Account. Residents of Quebec will receive both a T4A and RL-1 slip.
We recognize that for some individuals, repaying these benefits could present significant financial hardship. For this reason, payment arrangement parameters have been expanded to give Canadians more time and flexibility to repay based on their individual financial situations.
Some income you earn may not be included on a tax slip. You should report other types of income such as:
- tips earned at your place of work
- money earned through the platform economy
- income from sales of goods or services (e.g., side jobs)
- Sharing economy – Leveraging personal assets to earn revenue (e.g., Airbnb, Canada Stays, Uber, Lyft, Uber Eats, DoorDash)
- Gig economy – Short-term or short contract-based work (e.g., Clickworker, Crowdsource, Fiverr)
- Peer-to-Peer (P2P) – Selling of goods and services from one person directly to another, either through a retail or wholesale platform (e.g., Etsy, eBay, Craigslist)
- Social media influencers – Income earned through the use of social media platforms via advertisement revenue, subscriptions, product placement, product promotion, “gifts”/”donations”. (e.g., YouTube, Instagram, Twitch)
In addition to declaring all money you earn through these activities, you can claim eligible expenses on your return. Reporting all of your income helps contribute to the social and economic well-being of Canadians in need by supporting benefits and programs delivered through the tax system.
5. Make the right claims
Make sure you know what you can and can’t claim. Sometimes people mistakenly claim costs that are not eligible for tax deductions. If the CRA finds a mistake, we will adjust your return.
Common adjustments are made for things such as:
- funeral expenses
- wedding expenses
- loans to family members
- reimbursed medical expenses (such as prescription drug claims)
If you filed your return, but you want to change it, you can:
- use Change my Return in My Account
- use the ReFILE service in your certified tax software
- ask your tax representative to send a change
6. Simplify your life with My Account
My Account helps you easily manage your taxes from the comfort of your home. Register for My Account to easily:
- view and update your personal information
- see what you owe to the CRA
- view your limits for a tax-free savings account or registered retirement savings plan
- view the status of your return
Note that some individuals may have received a notification informing them that their CRA user ID and password has been revoked. This was done as a preventative measure and impacted individuals will receive information on how to re-gain access to their account.
Make sure your information is up to date with us. This will ensure you get your benefit and credit payments, and can help protect you from frauds and scams. For added security, you should always use a unique password. My Account users should also sign up for “Email notifications,” to get notified by email if your address, direct deposit, or other important information has been changed on CRA records.
If you signed up for My Account to apply for COVID-19 benefits, you can enter the security code you received in the mail to use all of My Account‘s features. If you have misplaced your security code, or it has expired, contact the CRA to have a new CRA security code issued to you.
7. File and pay on time
If you have a balance owing, paying it in full by the deadline will ensure interest is not charged. If you cannot pay in full, file your return by the deadline to avoid late-filing penalties. If you file your return by the deadline, you may be able to make a payment arrangement. This lets you make smaller payments over time for the debt and interest until you’ve paid the entire amount.
If you have a balance owing and don’t file your return on time, the CRA will charge you a late-filing penalty. The penalty is 5% of your balance owing on the due date of your return, plus 1% of your balance owing for each full month your return is late (to a maximum of 12 months).
With Taxpayer relief, the CRA may cancel or waive penalties or interest under certain conditions if you can’t meet your tax obligations.
Some people are eligible to receive benefit payments, like the Canada child benefit, GST/HST credit, and provincial or territorial benefits. Filing before the deadline will help ensure there are no delays or stoppages in your payments.
8. Keep receipts and documents
You should keep all your receipts and documents for at least six years starting from the end of the last taxation year to which they relate.
Sometimes the CRA reviews returns to make sure that income, deductions, and credits are properly reported. If the CRA reviews your return, having your receipts and records on hand will make it easier for you to support your claims.