VANCOUVER, March 6, 2017 – Why do you want to file a personal income tax return? How do you file your return? Do I need to report income from outside of Canada? To help new Canadians better understand their income tax returns, the Chartered Professional Accountants of British Columbia (CPABC) has prepared answers to some commonly asked questions.
1. Why should I file an income tax return?
There are many reasons as to why you should file an income tax return. If you want to take advantage of the tax free savings account, you should file a return if you are 18 or older even if you do not have any taxable income. This is because the Canada Revenue Agency only tracks TFSA contribution room for those who file their tax returns. You might also want to report your taxable income on a tax return in order to build your RRSP contribution room and become eligible for greater RRSP deductions in a future year.
In addition, you might be eligible for the federal GST/HST Credit and the B.C. Sales Tax Credit. The eligibility is determined by application for the GST/HST Credit through filing a personal income tax return every year. Low-income seniors can also re-apply for the Guaranteed Income Supplement by filing an annual personal income tax return. Even if you have no taxable income, you might still be required to file a tax return and pay CPP, if your net self-employed income is in excess of $3,500.
2. I have unused tax credits from my 2015 tax return, can I apply them in my tax return this year?
If you were unable to use certain deductions or tax credits from a previous tax year, you might be able to use them for the 2016 tax year. Some common items include:
3. Do I have to report any foreign source income and property?
If you are a Canadian resident and have received income from foreign sources, you must report this income in Canadian dollars on your tax return. This includes pension income from foreign pension plans and US social security benefits. You must report the amount of foreign income before deducting any tax that was withheld at the source. However, if you have paid tax on that same income in a foreign country, the amount of foreign tax paid might be eligible for a foreign tax credit or deduction on your Canadian income tax return. Some foreign source income might also be exempt from tax in Canada, or in the foreign country, under international tax treaties.
You must also indicate on your personal income tax return if you own specified foreign property with an aggregate cost of $100,000 or more. Shares of non-Canadian companies held in a non-registered Canadian investment account are specified foreign property, so the reporting requirement can apply to you even if you don’t own any property outside Canada.
Learn more about income tax filing with CPABC’s RRSP and Tax Tips at www.rrspandtaxtips.com.
NOTE TO JOURNALISTS: Local CPAs are available for interview. Infographic is available for reprint.
Please credit Chartered Professional Accountants of British Columbia (CPABC) for use of the content and include the following disclaimer: Tax rules relating to these RRSP tips are complex. This is not intended as tax advice and you should not make tax decisions based solely on the information presented in these tips. You should seek the advice of a chartered professional accountant before implementing a tax plan or taking a tax filing position.
About CPA British Columbia
The Chartered Professional Accountants of British Columbia (CPABC) is the training, governing, and regulatory body for almost 35,000 CPA members and 5,500 CPA students and candidates. CPABC carries out its primary mission to protect the public by enforcing the highest professional and ethical standards and contributing to the advancement of public policy. CPAs are recognized internationally for bringing superior financial expertise, strategic thinking, business insight, and leadership to organizations.
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For more information or to arrange an interview, contact:
Vivian Tse, Public Affairs Specialist