Webinar for students: It pays to do your taxes
Please note: The content of this presentation is accurate as of the date it was aired, on November 30, 2021. For the most recent information on these topics, go to the following website: Students - Canada.ca
Hello, and welcome to the Canada Revenue Agency’s webinar for students.
My name is _____ and I’m your host. Today, I’ll talk about how doing your taxes actually benefits you, as well as what you need to get them done.
Now, let’s get started.
I would like to begin by acknowledging that I am presenting to you from Mi’kma’ki, the ancestral and unceded territory of the Mi’kmaq People.
We recognize that everyone on the line is joining us from different places. We invite you to take a moment of silence to acknowledge the territory that you are on.
Throughout this presentation I will tell you about Miguel, an 18 year old, in his last year of high school. I will take you through Miguel’s journey from starting his first job to doing his taxes for the first time.
We’ll talk about taxes and
- Why we pay them
- your first job
- your first time doing taxes
- what happens after you do your taxes
- the GST/HST credit and other tax credits
- online services offered by the CRA
- the underground economy
- and scams
For the rest of this presentation, I’ll call the Canada Revenue Agency, the CRA
If you are like Miguel, you might find taxes a bit intimidating. After today’s presentation, I hope you’ll feel like there's nothing to worry about and maybe that doing your taxes has real benefits for you.
There are different types of taxes – for example, property taxes are municipal, income tax is federal and there is sales tax on purchases that is both provincial and federal.
Today we’ll be focussing on federal income tax.
Did you know that many of the services, programs and benefits you use are made possible through taxes? The government collects taxes to pay for things such as education, libraries, health care, emergency services, airports, and roads.
The taxes we pay also help put money into the pockets of students, lower-income families, newcomers, seniors, and people with disabilities. This money is distributed through benefit and credit payments.
Taxes also fund social programs such as income support and old age security that some of your family members or friends may be receiving.
Now let’s take a look at Miguel and where he is on his tax journey.
Summer’s over and Miguel is starting his last year of high school. Like many of you, he’s starting to think about his future after high school. He wants to get a job so he can save money for university and possibly buy a car.
The coffee shop close to Miguel’s home was hiring for after school and weekend work. Miguel dropped off a resume and lucky for him, he got the job!
Little did he know that getting his first job was his first step in contributing to Canada’s tax system.
Miguel has to fill out some paperwork before he can start his new job. Some forms ask for his social insurance number, also called SIN for short. A SIN is a 9 digit identification number you need to work in Canada and to get any benefits or services from the government. The federal organization that issues SINs is Service Canada.
Your SIN is unique to you. You are the only person who is supposed to use it, and you are responsible for keeping it safe.
If your SIN gets into the wrong hands, it could lead to fraud or even identity theft.
You will need to give your SIN to your employer when you start a job and to your bank when you open an account. They are responsible for protecting your personal information. They use your SIN to send information about your income to the CRA.
You also need to provide your SIN to government agencies or departments to access a benefit or service. For example, you’ll give your SIN to the CRA when you file your taxes. Here, your SIN will help identify you in the CRA’s system.
Now let’s talk about getting a SIN. You may already have one. Often, parents and legal guardians will apply for their child’s SIN when they are born.
If you do not already have a SIN, you can apply for one online, by mail, or in-person through Service Canada. You will have to provide or send in a document that proves your identity.
Visit a Service Canada office if you are not sure if you have a SIN, or have forgotten or lost it.
To find a Service Canada office near you, or for more information on the SIN, go to the web addresses on your screen or call the toll free numbers.
The first form Miguel has to fill out for his job is the TD1 Personal Tax Credits form. Many of us fill them out when we start a new job but don’t really understand why. So let’s explore what a TD1 form does.
One of the most common taxes that you pay in Canada is income tax. Your employer is responsible for deducting this tax from your pay.
Your employer uses the information your provide on your TD1 form to calculate the amount of income tax to deduct from your pay.
You will be asked to fill out a TD1 form every time your start a job.
If you work for the same employer from year to year, you usually do not have to complete a TD1 form every year.
Miguel receives his first pay cheque from the coffee shop. He’s a little surprised that he got less money than he was expecting. Instead of getting his hourly-wage for the hours he worked, he noticed that some money was taken off in the form of deductions. He’s not sure what these are for.
Let’s check out a video that explains what you need to know about a pay stub
Learn About Your Taxes: The One About Your Pay Stub - YouTube
Miguel has been working hard every weekend and is proud that he’s saved his money. University is only a few months away!
In mid-February, Miguel receives a T4 slip from his employer but he is unsure what to do with it.
A T4, Statement of Remuneration Paid, is usually referred to as a T4 slip.
Your T4 is an important document that your employer gives you. It shows information about your employment income and deductions for the entire calendar year. You use the information on this slip when you do your taxes.
The slip provides a history of your employment earnings for the calendar year. You will use the information found on your T4 slip(s) for different calculations when doing your taxes.
Your employer has to send you a T4 slip before March 1st following the year in which you worked for them. You may receive a digital or physical copy, but both will show the same information.
If you had multiple jobs, you will receive a T4 slip from each of your employers. You must remember who you have worked for so that you do not forget to report even a small income.
The employer must also send a copy of your T4 slip to the CRA.
You may also receive other slips to report things like employment insurance, interest earned from the bank and income support.
Not all income will be reported on an information slip. But you are still responsible for reporting it on your tax return.
Income in these categories could include tips or occasional earnings, such as payments received through a food delivery service or tutoring.
It’s good to track this money throughout the year. You may need to gather documents such as financial statements, invoices, or other records.
At the coffee shop Miguel and his coworkers empty the tip jar weekly and split the tips equally. If Miguel’s employer split the tips, they would be responsible for including that information on Miguel’s T4 slip at the end of the tax year.
However since Miguel and his coworkers split them up, it is up to him to report his share on his tax return. Miguel will also have to report income for the occasional tutoring he does throughout the year.
Miguel tracks all the money he makes and will report the total he received between January 1st and December 31st on his tax return.
Reporting this income also has some benefits. The additional income you report can be an advantage when applying for a loan; you will qualify for more money and may even get a better interest rate, because of your higher income. That extra income could get you closer to your first car or home!
Miguel is not sure if he needs to do a tax return and you may be asking yourself the same question.
Remember, completing a tax return and reporting your income lets you calculate whether you will receive a refund of taxes you overpaid or you owe tax.
In some situations, doing your taxes is mandatory. For example, if you have to pay tax, or if the CRA sent you a request to do so.
Even if you didn’t earn an income or your income is tax exempt, it is a good idea to do your taxes. For instance, you’ll need to do your taxes to get benefit and credit payments like the GST/HST credit.
For a complete list of when you need to do your taxes, you can refer to the section “Do you have to file a tax return?” on the Canada.ca website or in the General Income Tax and Benefit Guide.
In looking at his T4 slip, Miguel sees that there was income tax deducted from his pay throughout the year. He wonders if he could get any of that back. He decides to do a tax return, report all of his income and see the result.
When you are ready to do your taxes, gather your social insurance number and supporting documents such as your T4 slip, receipts and other information slips.
There are a few ways to do your taxes:
You can do your taxes online. This is the fastest way to do your taxes. Certified software is available to make online filing easy, and some software products are even free. The tax software guides you and calculates everything for you. It helps make sure you don’t miss out on any benefits and credits. Note: If the CRA does not have your complete date of birth on record, you cannot do your taxes online.
Volunteers may be able to help you do your taxes for free. There are tax clinics hosted by community organizations across Canada for those with a modest income and simple tax situation. For more information, go to canada.ca/get-tax-help.
You can also get help from a family member, a friend, or a tax preparer.
Or, you can download a tax package, fill out the paper forms and mail them to the CRA. You must use the package for the province you lived in on December 31. To get a package, go to Canada.ca/taxes-general-package or call the CRA at 1-855-330-3305.
You may be wondering what to do with your documents after you’ve filed. When filing electronically, keep all receipts and documents in case the CRA ask to see them later. For a paper return, the instructions will tell you what documents need to be attached, such as receipts and tax slips.
Keep all receipts and documents for at least six years after you file your return as the CRA may ask to review them.
Miguel chose to do his taxes online. But as mentioned in the last slide, you may be able to get your taxes done by a volunteer for free.
The CRA works with community organizations through the Community Volunteer Income Tax Program, also referred to as CVITP. The program is known as the Income Tax Assistance Volunteer Program in Quebec.
Volunteers prepare tax returns for people who have a modest income and a simple tax situation. Generally, you have a modest income if you make less than $35,000 (for a single person). Your tax situation is simple if you have no income or if your income comes from employment, benefits such as social assistance, scholarships, fellowships, bursaries or grants, or interest (under $1,000).
Your tax situation is not simple if you are self-employed, have employment expenses or have a small business.
Miguel had some questions about his return but was a bit intimidated to call the CRA himself so he asked his mom to help.
When she phoned the CRA, Miguel had to get on the phone and answer some confidentiality questions about himself and his return. He then gave the agent on the phone permission to discuss his file with his mom.
If he would like his mother to continue having access to his file, he can give her permission in My Account, or on paper by filling out Form AUT-01, Authorize a Representative for Offline Access, and sending it to the CRA.
Taxpayer information is confidential. The CRA needs your permission to deal with another person, such as a family member, friend, or an accountant, who may act as your representative for income tax and benefit matters. So, choose someone you can trust!
You don’t need to authorize someone as a representative if that person is only doing your taxes.
Miguel has done his taxes, so now what?
First, he will receive a notice of assessment in the mail or online in My Account if he registered for this service. A notice of assessment is an evaluation of your tax return the CRA sends you every year after you file. It includes the date we checked your return and the details about your refund or how much you may owe.
Your notice of assessment is an important document. Keep it with your tax records.
If you are expecting a refund, you will either receive a cheque in the mail, either on its own or attached to your notice of assessment or in your bank account if you signed up for direct deposit.
If you owe money and are unable to pay, contact the CRA to discuss your options. The CRA does have some flexibility when it comes to owing money. You can make a payment arrangement that lets you make smaller payments over time.
If you realize you made a mistake after filing your return you can make changes once you receive your notice of assessment. Maybe you forgot to include employment income or forgot to request a tax credit. Changes can be made using your tax software with ReFile, online through My Account or by mail.
Miguel is very excited about his upcoming 19th birthday. He heard that once he turns 19, he may be eligible to receive the GST/HST credit. You could be too!
The goods and services tax/harmonized sales tax credit, more commonly known as the GST/HST credit, is a tax-free payment for people with a low and modest incomes. It helps offset some of the tax they pay on goods and services.
To get it, all you have to do is your taxes every year, even if you have no income to report.
The CRA will confirm your eligibility, and how much you will get when you do your taxes.
If you are eligible, you could start receiving up to $114, four times a year. You could also be eligible for any related provincial or territorial credits.
And, if you sign up for direct deposit, you’ll get your money the day that it is issued – no waiting for a cheque in the mail!
That’s cash in your pocket! Or, better yet, in your savings account!
As Miguel is getting ready to head off to university, he becomes interested in learning more about taxes and other benefits, credits and deductions that are available to students
There are two different types of tax credits available - refundable and non-refundable.
Refundable tax credits are credits that can be paid to you if you are eligible, and can result in a refund. Or they are paid in a series of payments through the year to assist with living expenses.
Non-refundable tax credits can help reduce or eliminate the tax you may have to pay. They cannot create a refund. So if you owe $600 in taxes and are entitled to $500 in non-refundable tax credits, the credit will reduce what you owe to $100.
In the same scenario, if you owe $200 instead of the $600. The $500 non-refundable tax credit will reduce the taxes you owe to $0, but you will not receive a refund of the $300 difference.
There are many tax deductions and tax credits available when you do your taxes. Some are specific to students such as the tuition tax credit.
The tuition tax credit is a non-refundable tax credit that allows students to reduce the income tax they may have to pay. If you don’t need this tax credit to reduce your income tax to zero, you may be able to transfer it to an eligible family member or keep it to use in a future year.
Other non-refundable tax credits that are available include interest paid on your student loan and the Canada employment amount.
You could also claim moving expenses if you moved to go to school as a full-time student and your move was at least 40km closer to your school.
Go to the web address on your screen to view all deductions, credits and expenses you may be able to claim to reduce the amount of tax you need to pay.
Another tax credit that we want to tell you about is the disability tax credit, DTC for short. The DTC is a non-refundable tax credit that helps persons with disabilities or their supporting family members reduce the amount of income tax they may have to pay.
If you are eligible for the DTC, you or a supporting family member can claim up to $8,576 on your tax return. For those under 18 years of age, you can also claim a supplement up to $5,003.
Being eligible for the disability tax credit can open the door to other federal, provincial, and territorial programs such as the registered disability savings plan, the disability supplement of the Canada workers benefit.
And on top of that, you may also qualify for provincial or territorial credits and benefits.
If you want to get an estimate of the payment amounts you could get, go to the web address on your screen. This tool calculates any federal and provincial or territorial payments you may be eligible for.
Once you do your taxes for the first time or have them done for you, and you receive your notice of assessment, you can sign up for the CRA’s digital service called My Account.
My Account is a secure portal that lets you view your personal income tax and benefit information and manage your individual tax affairs online. You can track your refund, view or change your return, view online mail such as your notice of assessment, check your benefit and credit payments and statements, set up direct deposit, change your personal information, view any uncashed cheques, and more.
When you sign into My Account, the first page you’ll see is the Overview page. This page is constantly evolving, but it should resemble something like this.
My Account is for you if you really don’t want to talk to us, but I promise we are all as friendly as I am right now! If you’ve already done your taxes for the current year or the previous one, and it has been assessed, you can sign up for My Account.
For more information or to sign up, go to the web address on your screen.
There are many digital services available from the CRA. Here are a few that I would like to tell you about.
Auto-fill my return – is a secure CRA service that automatically fills in parts of your return, making it easier to do your taxes and helping prevent mistakes
Direct deposit – is a fast, reliable, and secure way for individuals to get payments from the CRA on time in the event of an emergency or unforeseen circumstances.
Email notifications – helps prevent fraud. Email notifications from the CRA let you know when changes are made to your personal information in My Account or there is CRA mail to view online.
For more information on the CRA’s digital services go to canada.ca/cra-electronic-services
At work Miguel has heard a lot about working under the table. He’s not sure what it means, so let’s investigate.
Moonlighting, working for cash and working under the table, are all terms used to describe the underground economy. These terms mean not reporting income for income tax and GST/HST purposes.
It sometimes, and can include not reported or under-reported income from:
- tips and gratuities
- money earned from renting out a room of your home and ride sharing
- gift cards received for work done
- cash payments for goods or services
- exchange of goods or services for other goods or services (bartering) without using money
Generally, income you earn is taxable and you have to report it on your tax return. This is true even when you don’t receive a T4 slip and when the activity is not your main source of income. If you don’t report all of your income and your return is selected for an audit, you may have to pay the income tax you didn’t pay, plus interest, and penalties.
Make sure you are on the payroll of an employer so that you can benefit from employment insurance or workers compensation program if you are injured on the job.
Always get a written contract or receipt when you buy goods or services.
If you don’t get a receipt to prove you purchased something, such as a new laptop, you’re not protected if something goes wrong and you want a refund. Instead, you’ll lose your money.
It’s important to know that evading taxes is illegal and can result in severe consequences such as penalties, fines, and criminal convictions.
A few dollars of unreported income may not seem like a big deal, but collectively they amount to billions of dollars lost that are needed to fund public services in your community.
So be part of the solution! Know how to recognize and avoid the underground economy.
We invite you to try out our new online interactive tool called Learn about your taxes.
In the coming weeks, go to the address on your screen to dive in and check it out.
This online self-directed tool takes you through starting your first job, figuring out your paycheque, and completing a basic tax return.
It has resources such as a video, common tax terms, and links to websites where you can learn more.
And, there are lesson plans for teachers and facilitators.
The learning tool has 3 modules and 14 lessons.
The first module is Starting to work and has 4 lessons. They cover why you need a SIN, when to fill out a TD1, and what’s on your pay stub and T4 slip.
Throughout the lessons, you will find definitions, examples and quizzes to put your knowledge to the test.
More topics will be added including content on the Canadian tax system, the purpose of taxes, what you should know after doing your taxes, and more on benefits and credits.
Be sure to check back!
Now I will give you an overview of, what to expect if the CRA contacts you, along with some tips to help you be scam smart by understanding and recognizing the different types of scams.
You may think that you received a text message or email from the CRA. But did you really?
There may be times when the CRA will notify you by email when a new message or a document, such as a notice of assessment or reassessment, is available for you to view in secure CRA portals such as My Account, My Business Account, or Represent a Client. Or, you may have subscribed to receive an email notification about an upcoming benefit payment.
Note that we will never ask you to provide personal information in return by email. However, the CRA may email you a link to a CRA webpage, form, or publication that you asked for during a telephone call. Also, the CRA will not use instant messaging such as Facebook Messenger or WhatsApp to communicate with you about tax-related issues under any circumstance. If you receive a text or instant message claiming to be from the CRA, beware since it could be a scam!
You should be careful when receiving a telephone call, a text message, an email, or mail from someone claiming to be from the CRA asking for personal information such as a social insurance number, a credit card number, a bank account number, or a passport number.
These scammers may insist that personal information is needed so you can receive a refund or a benefit payment. They can also threaten legal consequences to scare you into paying a debt to the CRA that does not actually exist.
There are also other communications that may urge taxpayers to visit a fake CRA website where the taxpayer is then asked to verify their identity by entering personal information. These are scams and you should never respond to these fraudulent communications or click on any of the links provided.
When in doubt, check if you have mail or any amount owing in My Account. If you don’t then make sure to delete what you received.
Never click on the link before you are sure it comes from the CRA.
You can also contact the CRA. And visit Canada.ca/be-scam-smart to learn more!
You can report a scam to the Canadian Anti-Fraud Centre online at the web address on your screen, or by calling 1-888-495-8501.
If you suspect you may be the victim of fraud, contact your local police service.
That is the end of our webinar. Thank you for joining us on Miguel’s journey.
Thank you for listening and enjoy your day!
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