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An annual tradition, filing taxes is akin to spring cleaning. Now, typically the tax season runs from March through to the end of April, with any amount owing due at the end of April. But, of course, 2020 was no typical year. The mass economic shutdown, due to COVID-19, forced businesses to close and an increasing number of individuals to rely on assistance like the CRB program. As a result, tax time can be quite overwhelming.
Despite the complexity, it remains essential to file (and pay) your taxes on time. Of course, to do that, you need to know when to file. The deadline for filing is different depending on your situation. To help you better understand when to file your 2021 taxes, we’ve broken down the specifics for the most common situations. Let’s take a look.
When Can I File My 2021 Taxes In Canada?
Your tax deadline varies based on the type of tax return you’re filing. Typically, any amount owing becomes due and payable on the date of the deadline. To avoid interest, it’s important to know which category represents your return (and to file on time).
Individual Tax Return Deadline
The earliest you can file your tax returns electronically is February 21, 2022. The last day to file taxes for the 2021 year is Wednesday, April 30, 2022. Unless you have made other arrangements with Revenue Canada, this is the day any amount owing becomes due. After this time, it will begin to accrue interest.
Do you owe money to the CRA? Check out what you should do if you owe money to the CRA.
Self-Employed Tax Return Deadline
Those who are self-employed have a later deadline, the last day to file is Wednesday, June 15, 2022. The deadline also applies to the spouse of self-employed individuals.
Due Dates For Installment Payments
If you arrange to pay portions of your tax bill throughout the year, the payments must be submitted quarterly. The due dates are March 15, June 15, September 15, and December 15. Failure to meet these deadlines results in needing to pay a higher amount. This applies to both employed and self-employed individuals.
Due Dates For Final Tax Returns
This applies to those who are representing the estate of a deceased person. If you are the Executor of a will, it is your job to complete the final tax return of the deceased. If the person died before October 31, 2021, the deadline for the final return is April 30, 2022. If the person died between November 1st and the end of the year, the return is due six months after the death occurred.
What Happens If You Miss The Tax Deadline In Canada?
Missing a deadline is never a good thing — but missing your tax deadline is possibly the worst deadline to miss. In addition to the extra stress you face from racing the clock, filing your taxes late comes with costly expenses.
Late Tax Filing Penalty
If you miss your tax deadline, then Revenue Canada will charge you five percent of any amount owing. Every subsequent month, an additional one percent is added to the total. For those who are late filing for previous years, the penalty increases to ten percent upfront and an additional two percent every month. The maximum penalty period is 20 months.
Example: If you owe $2,000 on your income tax bill and you file two months late, you will get a late penalty of $100 (five percent of the total). If you pay the full amount within the month, you will owe $2,100.
Were you to pay three months late, the added penalty would increase. One percent of $2,000 is $20. It gets added to the total every month, raising the amount to $2,160.
Are you struggling to pay your taxes? Find out if bankruptcy is the right solution for your tax debt.
Late Tax Filing Interest
On top of the penalty fee, Revenue Canada will also charge interest on the amount owing. Due to the complexity of the 2020 year, interest relief is available for those who grossed $75,000 or less in 2020. To qualify, the individual must have received at least one COVID-19 relief benefit. The percentage of interest depends on the type of taxpayer. For individuals, it is five percent while corporate entities pay one percent in interest.
2020 Tax Changes You Should Know About
Since the 2020 fiscal year was so unusual, the tax-filing process is a bit more complex. New deductions have been introduced by the Canadian government. Additionally, there are specific filing protocols if you received benefits due to the COVID-19 crisis. To file your taxes correctly, it’s important to understand the specifics.
Home Office Expense Deduction
Due to the mass business shutdowns during 2020, more Canadians worked remotely than ever before. To account for the extra expense of working from home, the government streamlined the deduction process. If you worked over half of your hours from home, for at least four back-to-back weeks during 2020, you qualify for the deduction. It lets you deduct $2 for every day worked from home, though the amount is capped. You can claim a deduction total of $400 from your taxable income. If you use this approach, you don’t need to supply substantiating documentation.
T4A Slip For COVID-19 Benefits
If you received benefits such as the CERB, you will receive a T4A slip from Revenue Canada. Those in Quebec will receive an RL-1 with the amount received stated in Box O. While the tax was withheld at the source for CRB payments, the initial CERB benefit did not withhold any amount. As such, you may owe money to the government as a result of these benefits. Whether or not you owe depends on your overall tax return.
Canada Workers Benefit
This is a refundable tax credit that applies to low-income, working Canadians. Originally called The Working Income Tax Benefit, the name change also comes with a higher benefit to applicable recipients. The change to the Canada Workers Benefit (CWB) means that you can earn more and still qualify, while the credit itself increases by as much as $170.
Digital News Subscription Expenses
To encourage the journalism industry, Revenue Canada enables tax-payers to claim a non-refundable tax credit for digital news subscriptions. Provided you get your news through a qualifying news organization in Canada, you can claim it on your taxes.
Canada Training Credit
Those enhancing their education or learning a new skill for a job are able to claim the Canada Training Credit. This new tax credit is a refundable arrangement, available for 2020 and subsequent years. Provided that the fees and tuition were paid to an eligible educational institution, you can claim this credit. To qualify, you must be between the age of 26 and 65 at the end of 2020.
Have you received any COVID-19 benefits? Check out how to file your taxes if you received COVID-19 benefits.
Ways To File Your Taxes In Canada 2021
There are multiple ways to file your taxes, thanks in large part to evolving software in our increasingly digital world. Because of the convenience factor, it is easier to file your taxes in a way with which you are comfortable, be that on paper or online. Options include:
- Mail-In Paper Returns: If you are more comfortable with filing taxes in the traditional manner, you can still do your taxes on paper and mail them to the government. You can order the paperwork online or download it and print off the documents.
- CRA FIle My Return Service: A service available for low-income individuals, it lets you file your taxes using the automated phone service. Those who qualify will receive paper correspondence from Revenue Canada to inform them of this program’s availability.
- Filing Online Using Software: Using either EFILE or NETFILE, you can file your taxes online. EFILE is used by tax professionals working on your behalf. NETFILE is the program approved by Revenue Canada that lets you file your own taxes. There are many different software programs available, ranging in cost-effectiveness and user-friendliness.
- Voluntary Tax Clinics: The Community Volunteer Income Tax Program has clinics throughout the country, meant to help those with lower income and basic tax returns. Experienced tax professionals facilitate the returns; and, due to the ongoing pandemic, the services are available by online video, telephone, and dropped-off paperwork.
There are many ways to file your taxes, even if you’re cutting it close to the deadline. If you are working on a budget, there are many no-cost ways to file. Many approaches take little more than a few minutes, provided you have a straightforward return. The added ease of filing can help you avoid missing a deadline.
When Will You Get Your Tax Refund?
If you electronically file your taxes before the deadline, the CRA will generally provide your tax refunds within 2 weeks. However, if you file by paper, your tax refund can take up to 8 weeks to reach you. Do keep in mind that these numbers are estimates and the CRA does not guarantee you will receive your refund within the period mentioned. Moreover, if the CRA requires additional information or if you’re getting audited, your refund may be delayed further.
What happens if the tax due date falls on a holiday or weekend?
Do I have to file my taxes?
What’s the deadline for my RRSP contributions?
How do I pay my taxes?
What happens if I don’t get my T4 slip on time?
Per the Income Tax Act, it is every Canadian’s legal responsibility to file and pay their taxes. Everything from the public healthcare system to roads to schools is funded using these taxes. By filing your taxes on time, and paying any owed amount promptly, you’re not only doing your civic duty, but you are also saving yourself from hefty penalties and interest costs. The sooner you file your taxes for 2020, the sooner you can plan for any owed amounts. It’s easier than ever to file your taxes. Once the task is done, you can rest easy knowing that you are settled up for earnings in the previous year.
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