Webinar - 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 9, 2022. For the most recent information on these topics, go to Students - Canada.ca.
Students, it pays to do your taxes!
Nicole: Hello, and welcome. My name is Nicole. I’m with the Canada Revenue Agency, or CRA for short. I’m very happy to be here today.
Today, I’ll talk about how doing your taxes benefits you, as well as what you need to get them done.
[Three students smiling at each other outside a school.]
Nicole: I would like to take this opportunity to acknowledge the land that I am presenting to you from today, which is the traditional territories of the Niitsitapi (Blackfoot) and the people of the Treaty 7 region in Southern Alberta, which includes the Siksika, the Piikani, the Kainai, the Tsuut’ina and the Stoney Nakoda First Nations, including Chiniki, Bearspaw, and Wesley First Nations. The City of Calgary is also home to Métis Nation of Alberta, Region III.
Given that we are meeting virtually, I also want to acknowledge the lands on which you are gathered and invite you to take a moment of silence to have a thought for the territory in which you find yourself.
Nicole: 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
- We’ll look at what you need to know when starting your first job
- We’ll explain the underground economy
- We’ll go over what to expect when you do your taxes for the first time and what happens after
- We’ll discuss the GST/HST credit and other tax credits you may be eligible for
- And we’ll conclude by sharing information on online services offered by the CRA and how to protect yourself from scams.
For the rest of this presentation, I’ll refer to the Canada Revenue Agency as the CRA.
[A smiling student on their laptop outdoors.]
Why do we pay taxes?
Nicole: If you are like Miguel, you might find taxes a bit intimidating. After today’s presentation, I hope you’ll feel more confident about taxes and be able to see the benefits of filing.
Taxes can be municipal, provincial/territorial, or federal. Today, we’ll be focussing on federal income tax.
Did you know that many public services, programs, and benefits 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, 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 to give support to members of our community.
Now, let’s take a look at Miguel and where he is on his tax journey.
[A collage of images showing a bridge, swimmers in a pool, medical practitioner and patient, firetruck outside a station, children’s playground, and sanitation workers at work.]
Starting to work
Nicole: 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. 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.
[An individual working at a café.]
Social insurance number (SIN)
Nicole: 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 that you need to work in Canada and to get any benefits or services from the government.
You get your SIN from 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.
You may already have a SIN. 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’re 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.
TD1 Personal tax credits
Nicole: The first form Miguel has to fill out for his job is the TD1 Personal Tax Credits form which your employer should provide to you. 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 you 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 you 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.
[A snapshot of form TD1, 2022 Personal Tax Credits Return.]
Nicole: 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.
[An example of a pay stub.]
[Video – The one about your pay stub – Canada.ca plays.]
Nicole: 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.
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.
[An example of a T4, Statement of Remuneration Paid.]
Nicole: 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!
Nicole: 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 can include not reported or under-reported income from:
- tips and gratuities
- money earned from renting out a room of your home, ride sharing, babysitting, mowing lawns, washing cars, and other jobs
- 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 a workers compensation program if you are injured on the job and employment insurance.
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.
[Two individuals signing a contract.]
Do I need to do taxes?
Nicole: 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 tax is owed or a refund will be issued.
In some situations, doing your taxes is mandatory. For example, if you are owing taxes or if the CRA sent you a request to do so.
But even if you don’t have to do your taxes, it can be a good idea.
For instance, you’ll need to do your taxes to claim a tax refund or get benefit and credit payments like the GST/HST credit. You could be eligible for payments even if you didn’t earn an income or your income is tax-exempt.
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.
Get ready to do your taxes
Nicole: 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.
Let’s check out a video that covers common documents you need to get started on your tax return.
[An individual writing in a notebook and using a laptop.]
[Video – The one about your documents – Canada.ca plays.]
There are a few ways to do your taxes!
Nicole: Miguel is finally ready to file a tax return and looks at the different ways he can do them.
There are a few ways to do your taxes:
You can do your taxes online. This is the fastest way as tax returns filed electronically are typically processed within two weeks. 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. Please note, if the CRA does not have your complete date of birth on record, you cannot do your taxes online. Make sure to also sign up for direct deposit, so if you are eligible for a refund, you can receive it faster!
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. Filing a tax return by paper can take up to 10-12 weeks to process. To get a package, go to Canada.ca/taxes-general-package or call the CRA at 1-855-330-3305.
Miguel also wonders what to do with his documents after he files. When filing electronically, it is important to keep all receipts and documents in case the CRA asks 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.
Free tax help
Nicole: Miguel feels that he needs help with preparing his tax return. He is intrigued by the CRA’s free tax clinics and may be able to get his taxes done by a volunteer for free!
The program is called the Community Volunteer Income Tax Program. In Quebec, it’s known as the Income Tax Assistance – Volunteer Program.
You’ re eligible to have your taxes done through the program if you have a modest income and a simple tax situation.
Generally, a modest income is less than $35,000 for a single person and less than $45,000 for a couple.
Your tax situation is simple if, for example, you don’t have a small business or income from a rental property.
Tax clinics are held all year. However, most clinics are offered in March and April. Many secondary and post-secondary institutions across Canada already host their own clinics. If your educational institution is interested in hosting its own clinic, reach out to us!
For more information or to find a clinic near you, go to the web address on the screen.
After doing his research, Miguel finds out that he is eligible and finds a free tax clinic in his community to complete his tax return!
[The Community Volunteer Income Tax Program (CVITP) logo with the text “People helping people” in the center.]
What happens after you do your taxes?
Nicole: Miguel has done his taxes, so now what?
First, he will receive a notice of assessment. 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. The notice of assessment is an important document and should be kept with your tax records.
When you file your first tax return, you will receive your notice of assessment by mail. Then, you can register for CRA’s My Account service and sign up to receive online mail going forward. I’ll speak more about the benefits of My Account later in the presentation.
If you are expecting a refund, you will either receive a cheque 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.
[A student holds their laptop outdoors.]
Nicole: Miguel has some questions about his return but is 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 share your tax information with another person, such as a family member, friend, or an accountant. So, choose someone you can trust!
You don’t need to authorize someone as a representative if that person is only doing your taxes.
Nicole: 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 low and modest incomes. It helps offset the GST or HST 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 if you are entitled, and how much you will get when you do your taxes.
If you are entitled, you could start receiving up to $116.75, four times a year. You could also be entitled to related provincial or territorial credits.
Also, to support those most affected by inflation, the government recently doubled the GST/HST Credit for six months. Individuals and families already receiving the quarterly GST/HST credit would have automatically received an additional one-time lump-sum payment on November 4, 2022 as well.
If you sign up for direct deposit, you’ll get your benefit and credit payments the day that they are issued – no waiting for a cheque in the mail!
That’s cash in your pocket! Or, better yet, in your savings account!
[An individual using a laptop and calculator.]
One-time top-up to the Canada Housing Benefit
Nicole: Miguel watches the news and hears about important steps the government is taking to deliver support to Canadians who need it most, including students like himself.
Recently, the Government of Canada proposed new financial support measures to make life more affordable for Canadians. The proposed one-time top-up to the Canada Housing Benefit would provide a $500 payment to low-income renters facing housing affordability challenges. This includes Canadian renters who are at least 15 years of age at any time in 2022.
To learn more about the one-time top-up to the Canada housing benefit, including eligibility requirements, visit the web address on your screen.
Once available, applications for the benefit can be made through My Account, an online webform or over the phone with the CRA.
Refundable vs non-refundable?
Nicole: As Miguel is getting ready for university, he becomes interested in learning more about taxes and the 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 you 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 $600. The $500 non-refundable tax credit will reduce the taxes you owe to $0, but you will not receive a refund for the difference.
Common deductions and credits for students
Nicole: Miguel is starting his university studies soon and learns about the many tax deductions and credits that are available.
He is planning on moving away to attend university and hears about moving expenses that can deducted when filing your tax return. You can deduct 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.
Some of Miguel’s new friends have children and tell him about child care expenses that they can deduct. If you have a child, you can also deduct child care expenses if you or your spouse or common-law partner paid for someone to look after them so one of you could earn income, go to school, or conduct research.
Child care expenses are deductible only if, at some time in the year, the child was under 16 or had a mental or physical impairment.
Other than these deductions, there are also non-refundable tax credits that are available, including the Canada employment amount and interest paid on your student loan.
There are also tax credits 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.
For more information on deductions, credits, and expenses you may be able to claim as a student, go to the web address on your screen.
[A student holds a notebook outdoors.]
Disability tax credit
Nicole: 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 people with impairments, or their supporting family members, reduce the income tax they may have to pay.
If you are eligible for this credit, you or a supporting family member can claim up to $8,662. If you are eligible for the disability amount and were under 18 years of age at the end of the year, you can claim up to an additional $5,053.
Being eligible for the disability tax credit can also open the door to other federal, provincial, or territorial programs such as the registered disability savings plan and the disability supplement of the Canada workers benefit.
And on top of that, you may also qualify for provincial or territorial credits and benefits.
After learning about the DTC, Miguel shares what he learned with a relative who has a physical impairment and may be eligible.
[An individual using a laptop.]
My Account for individuals
Nicole: 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 your mail online, such as your notice of assessment, check your benefit and credit payments and statements, manage direct deposit, change your personal information, view any uncashed cheques, and more.
Along with doing your taxes every year, you must keep your personal information up to date to keep getting benefits and credits. This includes your address, marital status, number of children in your care and direct deposit information. You can update all of this information on your own through My Account!
The CRA has introduced a new look and feel to My Account! The new features and layout make it easier for you to securely view and manage your tax and benefit information online.
The streamlined and simplified online experience allows you to view more information at a glance, and the navigation and design improvements allow you to find information and complete tasks faster.
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 for My Account, go to the web address on your screen.
Miguel signs up for My Account as soon as he receives his notice of assessment. And now he’s set! He has learned a lot about the importance of filing a tax return and the benefits and credits available to him. Now he has all the tools he needs to file a tax return on time every year!
[A snapshot of the My Account “Overview” page.]
Nicole: In addition to My Account, 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 tax return with information the CRA has available at the time of your request, 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 on time from the CRA in the event of an emergency or unforeseen circumstances, such as a natural disaster.
Email notifications help 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 the web address on your screen.
Want to learn more about taxes?
Nicole: We would like to invite you to try out our new online interactive tool called Learn about your taxes.
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, completing a basic tax return, and the purpose of taxes.
It has resources such as videos, common tax terms, and links to websites where you can learn more.
And, there are lesson plans for teachers and facilitators.
[A snapshot of the Learn about your taxes – Canada.ca webpage.]
Learn about your taxes
Nicole: The learning tool has 6 modules and 22 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.
Even more topics will be added, including content on benefits and credits, the history of taxes, and more on how to protect yourself from scams.
Be sure to check it out!
[A snapshot of a Learn about your taxes – Canada.ca module.]
Did the CRA really contact you?
Nicole: Now, I want to talk to you about how to be scam smart and recognize different types of scams.
You should always be cautious if you receive communication that claims to be from the CRA.
When necessary, the CRA may need to legitimately contact you.
But scammers often attempt to imitate the CRA to try to steal your personal information. They may target you by telephone, text, instant messaging, email, or mail. Always be careful; the CRA will never ask you for your bank account number, credit card number, or 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.
[A cellphone showing an incoming call from “Government of Canada”. Text beside the phone reads “Is this the CRA calling?”]
Be Scam Smart
Nicole: Here’s how you can be scam smart:
- never be afraid to question why the CRA needs your personal information, so take a minute and think about it
- when in doubt, check My Account or My Business Account to see if you have mail or any amount owing: if you don’t, then make sure to delete the fraudulent communication you received
- you can also call the CRA to check on communications
and, go to the web address on your screen to learn more!
[Text on top of an individual’s head reads, “Listen to your voice of reason before you act”.]
Nicole: And that’s all for me! This is the end of our webinar. Thank you so much for joining us today and for following along in Miguel’s journey! We hope it was helpful!
Today’s presentation will also be posted on the CRA’s Individuals video gallery at canada.ca/individuals-video-gallery within a few weeks of our broadcast if you need a refresher. We also encourage you to visit our Upcoming Events page at canada.ca/cra-outreach-events to view and register for any of our upcoming webinars.
Thank you for listening and enjoy your day!
[A group of six students smiling on a stairway outdoors.]
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