Filing taxes is a yearly activity that every responsible citizen needs to comply with. However, with the stringent schedules of lives, people often tend to forget the dates for filing taxes in Canada. There is also the lack of awareness about the dates which steers the person towards non-filing of these taxes on the stipulated deadline.
This blog will help you with the dates that you need to file taxes on in the present year, and also take you through the process of the same.
Filing Taxes in Canada
The tax filing season for 2021 started on 21st February 2022. This began with the reopening of CRA’s NETFILE and ReFile services. Based on the type of taxes that are needed to be filed, there are different deadlines that you have to keep in mind too. If you miss this deadline, you will incur penalties for filing taxes in Canada.
For the 2021 tax year, you needed to transmit the benefit returns and income taxes to the CRA from February 21, 2022. To make the process easier for yourself, you can utilize the nifty features of the different tax software that are available online.
On the other hand, you order the paper income tax package that the CRA can mail to you. In case you filed the tax return for the year 2020, you will automatically receive the T1 return for 2021, without placing the order.
The NETFILE service is operable for 21 hours a day, and the maintenance period for this electronic service is between 3:00 a.m. to 6:00 a.m. ET. A good example of efficient tax software is Wealthsimple Tax. If you combine this software with the NETFILE service, you can access the tax refunds at a more rapid pace.
Tax Return Deadlines for 2021 (Individuals)
The deadline for filing taxes in Canada for the year 2021 for individuals is 30th April 2022. Since this date is falling on a Saturday, the date is further decided as May 2, 2022.
If a partner, law-partner is self-employed, they need to file the tax return by June 15, 2022. No matter if you are self-employed or employed, you need to pay your taxes for 2021 by May 2, 2022. If not, you will be forced to pay penalties on the taxes as well.
Tax Return Deadlines for 2021 (Businesses)
For sole proprietors, the tax return deadline is 15th June 2022. In case you have a corporation, T2 tax return filing is to be done before 6 months following the end of the tax year. For instance: If the end of the tax year was 31st December 2021, the tax filing date in Canada will be 30th June 2022.
For corporations, the taxes can be paid through a decided number of installments. They can be deposited monthly (the last date of each month), or quarterly in the months of March, June, September, and December.
If an amount is still accruing after the end of the year, the same is to be paid in the course of 2 to 3 months after the tax year.
Filing Taxes in Canada for Free
There are several ways to file taxes in Canada for free. In the case of a simple return, a free tax clinic works the best. A free tax clinic is operated by volunteers where you can drop your tax documents easily. You can also book an appointment at these clinics in some cases.
Besides simple returns, paper tax returns are also free of cost. However, to enjoy this benefit, you need to be aware of how to use them. This will help you in avoiding mistakes and errors.
The processing time for paper returns is much longer than the simple returns. The refund for paper returns can extend up to 12 weeks. To use the File My Return service in Canada, you will get an invite from CRA if you qualify their criteria for the same.
There is also the alternative of phone line tax return service. Individuals who have a low or fixed income can use it in a simple tax situation. Lastly, the most preferred way of filing taxes in Canada is by utilizing any CRA-certified tax software.
Filing 2021 Taxes for Free
You are allowed to file taxes for free or by paying a fee with software that is verified for NETFILE. The tax software transmits your information to the CRA, and you receive confirmation about the acceptance of your return and you can access the Express Notice of Assessment after it.
You can also use tax software to autofill a form for tax and refunds are also processed within 2 weeks without much hassle. The most efficient tax software of 2022 are:
1. Turbo Tax
Turbo Tax is a very prominent tax filing software in Canada. It has a lot of features regarding tax filing for businesses and individuals, and also free options for a simple return. The following deductions, credits, and income do not come under the area of service by Turbo tax:
- Self-employed expenses and income.
- Employment expenses (lodging, meals, etc.)
- Medical Expenses
- Rental income and expenses
- Investment expenses and income
In case you have one or more of these in your 2021 tax return, you have to use the Deluxe or premier plan of the software. Turbo Tax has also introduced paid packages for people and a full-service package where an expert fulfills your tax formalities.
2. Wealthsimple Tax
Wealthsimple Tax is a popular free online tax software. It is CRA certified and it offers many features including:
- Auto-filling your return
- Guarantee for accuracy
- Maximization and optimization of refund
In case you purchase crypto during 2021, Wealthsimple has the feature that allows you to import transactions over 300 wallets and exchanges and calculate the profits and losses for the same. You can also use this software for stocks.
This service is free of cost, however, you can leave a tip once your returns are complete. If you are looking for audit and email support as well, you can upgrade the software.
If you are looking to file a simple tax return, you can do it for free on CloudTax. You have access to video tutorials, step by step guides to understand the various aspects of filing taxes. Besides that, you also enjoy chat support and an application that is functional on both iOS and Android. CloudTax also guarantees a maximum tax refund.
The free version of CloudTax does not provide services for rental income, employment expense reporting, and self-employed income. If you want to report these or need more features, then you can upgrade to CloudTax plus which costs $24.99, and CloudTax Pro which costs $29.99.
The Bottom Line
As the quote by Benjamin Franklin goes “In life, only two things are certain: death and taxes.” Paying tax has no alternatives. However, you can plan to file taxes in Canada in advance and minimize your tax burden.