Tax Tip 2024 – CRA to Process T1s Starting February 19

Evelyn Jacks

It’s official:  February 19 is the date CRA will start accepting 2023 tax returns for processing. So now is the time to mark your tax filing day on the calendar, especially if you don’t have any income to report at all.  In last year’s filing season, using stats up to January 15, 2024, CRA notes over 32 million tax returns were filed, with close to 20% of them being “nil returns” filed to claim tax credits. Here’s why all adults – especially low or no income earners - will want to file a 2023 T1 asap and the 9 key taxfiling profiles you’ll want to correspond with early if  you are a tax or financial pro working with investors:

Nil Income Filers.  Even those with no income – especially 18 year olds or newcomers to Canada – will want to file a tax return early this year to claim refundable tax credits like the federal GST/HST Credit, the Canada Child Benefits, the Climate Action Incentive and access to the Canada Dental Benefit or the new Canada Dental Care Plan.  Certain provincial government programs are also subject to income testing from the reporting on tax returns, including Pharmacare plans.   

Low income earners.  Even if income is not taxable, lower earners should file a tax return in 2019 and later years in order to earn the notional Canada Training Credit – an annual credit of $250 per year to be claimed when eligible tuition fees are paid. Age and income limitations will limit who can earn the credit.  Lower income earners can also qualify for the Canada Worker’s Benefit, and the Refundable Medical Expense Supplement if medical expenses are claimed. 

Investors.  There are a host of other reasons to file a T1, especially for investors of all ages. Parents and grandparents should know that certain investments can qualify for increased government incentives based on income-testing through the tax system:  The RDSP (Registered Disability Savings Plan), RESP (Registered Education Savings Plan) are good examples.  Grants and bonds are available from the federal government to supplement these.

Anyone with earned income, on the other hand, including young people who earn babysitting or yard care money can start building up RRSP contribution room by filing a tax return. They are the investors of tomorrow and RRSP contributions can help maximize tuition transfers to supporting individuals down the line. 

The RRSP of course will reduce net income for adults claiming important refundable credits mentioned above.  That makes it a critical line of defence in cash flow planning. An added bonus:  the RRSP will give taxpayers access to the Lifelong Learning and Home Buyer plan as a source of funding as well. 

Non-registered account holders.  For other investors who have funds in non-registered accounts, always file to secure the carry-over benefits the taxpayer is entitled to from the tax system, even if the taxpayer has no income at all:

1. To record losses for use in reducing past or future income: non-capital losses can occur from employment, self-employment and rental ventures as listed on Form T1A Capital Loss Carry Back, whereas capital losses occur when the disposition of assets results in a loss. Generally, it is possible to offset similar losses incurred in the current tax year, the three previous years and 20 years in the future in the case of non-capital losses or indefinitely in the case of capital losses.  
2. For Pension Income Splitting Purposes:  Taxpayers are splitting pension income and filing an election on Form T1032.   Amending or revoking elections is possible for up to three calendar years after the filing-due date for the year that the election applies. 
3. Other optimizations.  There may also be opportunities to transfer certain provisions – the age amount, the disability amount, the pension income amount, the disability amount or the amount for children – using Schedule 2.  Also, optimizing medical expenses and charitable donations between spouses can provide household tax benefits. 

Make a Difference.  Tell your clients to file a T1 early this year to benefit from refundable tax credits and social benefits, but also, to shore up much needed cash flow in inflationary times.