Required materials step 1

• Lessons: Completing a basic tax return
  • Teacher overview (with answers and resource links) – Completing a basic tax return
• Quiz: Completing a basic tax return
  • Teacher overview (with answers) – Quiz: Completing a basic tax return
• Exercise: Completing a basic tax return
  • Teacher overview (with answers) – Exercise: Jonah quits the bakery
  • Teacher overview (with answers) – Exercise: Terry keeps track of tips
• Video – The one about doing your taxes
• Video – The one about tax rates
• Common tax terms
• T1 Income tax package
• Revenu Québec
• Optional equipment:
  • Computer
  • Projector
  • Printer

Warm-up exercises step 2

First exercise

Step 1: Explain to students that taxpayers in Canada do their taxes every year to calculate if they owe taxes (they have to pay the government) or if they are entitled to receive a tax refund (the government pays them).

Step 2: Ask students if they have ever done their own taxes or if they have seen their parents or legal guardians do theirs. For those who have, ask what they remember about the process. Give them a few moments to share their experience.

Step 3: Reassure students (particularly those who have had a negative experience, have been confused, or have had difficulties) that doing their taxes can be easy, especially once they understand the basic process.

Second exercise

Step 1: Inform students that the fastest and easiest way to do their taxes is electronically using certified tax software. There are many certified tax software they can choose from to do their taxes. Some of the software are free, and each is a bit different.

Step 2: Advise students that most software will:

• have them answer some questions about their tax situation
• ask them to input their personal and tax information
• complete the calculations and appropriate forms for them

However, they are responsible for ensuring the tax return they submit is correct, so it’s important for them to understand the steps involved.

Third exercise

Step 1: Ask students if they have ever filled out a government form before. For those who have, ask them to list some of the common elements they must provide on a form, such as their full name, address, and date of birth. Advise students that some forms may request additional information, depending on the type of form and the individual’s circumstances.

Step 2: Discuss how the tax return compares to other government forms. The tax return has a basic structure to complete and individuals will fill out different sections based on their personal situation.

Walk through the lessons step 3

Read through the lesson pages with the additional guidance provided below. Students can review material individually, in groups, or as a class.

Lesson A: Basics of a tax return

After finishing the lesson

Review the outline of each step of the tax return and point out the connections between them. For example, the total income calculated in Step 2 is used as the starting point for Step 3, and the federal tax calculated in Step 5 is a part of the total payable in Step 6.

Stress to students that if they choose to file electronically, the certified tax software may not go through the tax return step-by-step.

Lesson B: Providing your personal information

Before starting the lesson

Explain to students that their personal information is important because it ensures that their taxes, benefits, and credits are calculated accurately.

After finishing the lesson

Discuss with students what could happen if they report an incorrect social insurance number, name, or address. Indicate that this could cause processing delays or calculation errors.

Lesson C: Reporting your income

Before starting the lesson

Ask students what types of income they have received and whether or not they think it needs to be reported on their tax return.

After finishing the lesson

Highlight the importance of reporting all types of income, including tips received as cash and income from the platform economy. If they don’t, they could face penalties, interest, and fines.

Lesson D: Claiming your deductions

After finishing your lesson

Explain to students that although they claim different deductions in Steps 3 and 4 of the tax return, all these deductions reduce their taxable income and, therefore, the tax they may owe on their income. Reducing the taxes they may owe could make them eligible for a refund or increase the amount of their refund.

Lesson E: Claiming your non-refundable tax credits

Before starting the lesson

Explain to students that non-refundable tax credits are used to reduce the tax they may have to pay. Stress that these credits can only reduce their tax payable to zero, and any excess amounts will not be refunded. This means that being able to claim a high number of non-refundable tax credits does not necessarily result in a larger tax refund.

Compare non-refundable tax credits to a coupon. Using a coupon at the store reduces the amount you have to pay, but any remaining amount cannot be refunded to you.

After finishing the lesson

The way they claim non-refundable tax credits varies:

• some are automatically calculated (such as the basic personal amount)
• some are based on documents the Canada Revenue Agency (CRA) has access to (such as their CPP/QPP contributions or EI premiums on a T4 slip)
• some require supporting documents (such as receipts for their medical expenses)

Lesson F: Calculating your taxes

Before starting the lesson

Point out that students will need to use the taxable income from Step 4 of the tax return to calculate their tax payable.

Explain to students that Canada has a progressive tax system, which means you pay more tax as your income increases. However, each higher tax rate applies only to the income within that particular tax bracket . The higher tax rate does not apply to all of the total taxable income.

After finishing the lesson

Clarify that tax payable is calculated in two different steps of the tax return: federal tax in Step 5 and provincial or territorial tax in Step 6. If students choose to do their taxes using certified tax software, the software will complete these calculations automatically for them.

Remind them that residents of Quebec will calculate their provincial tax payable separately through Revenu Québec.

Advise students that the non-refundable tax credits reviewed on the previous page are calculated in these steps.

Lesson G: Finding out if you get a refund or owe tax

Before starting the lesson

Explain to students that Step 6 ultimately determines if they are entitled to receive a tax refund or if they will have an amount to pay to the CRA.

After finishing the lesson

Discuss income tax deductions with the students since many of them may be entering the workforce over the next few years. Advise them that their employer will ideally withhold enough income tax from their pay to cover their tax debt at the end of the year. Their employer will base the tax deductions on the employee's income and the tax information the employee provides their employer. They provide this information on a TD1, Personal Tax Credits Return.

Talk about how two individuals with identical information slips may have different results on their tax return. For example, if one individual is able to reduce their tax payable by claiming a deduction for child care expenses and a non-refundable tax credit for an eligible dependant, they may receive a larger tax refund.

Bring it all together step 4

Direct students to complete the quiz to assess their understanding.

Ask the students to compare the different elements involved in a tax return and to think about how these can affect their tax calculations.

Some of these elements are:

• income levels
• deductions
• non-refundable tax credits
• province or territory of residence
• refundable tax credits
• eligibility requirements

Remind students that it is important to review any tax return prepared with certified tax software since they are responsible for what they submit to the CRA.

Encourage students to go through each step of their tax return to ensure that:

• they entered all their information correctly
• the software completed all the calculations
• they did not forget to claim any credits they might be entitled to

Reassure students that they can correct any mistakes they may make when doing their taxes by contacting the CRA.