As a taxpayer in Canada, you need to fill out and submit your T1 form to the Canadian government for the applicable year.
If you are filing your taxes for the first time or you simply need clarifications on what filling the T1 form entails, this guide will provide the useful information you need.
What is a T1 General form?
A T1 form is an extensive form that requires you to input the details of all income earned as a taxpayer in Canada.
Often referred to as the income tax and benefit return form, the T1 summarizes all income earned and any eligible tax credits, benefits, and returns.
It is important to note that even if you have no income for an applicable tax year, you are still required to file your tax returns with a T1 form as this allows you to gain access to any benefits or refunds you are entitled to receive.
The T1 form also indicates any amounts owing to the Canadian Revenue Agency (CRA).
Do I need to fill out a T1?
You would need to fill out a T1 form if you have taxes to pay on money earned either from paid employment, a business that is not registered as a corporation, or any other sources.
If you have received any Canada Workers Benefit (CWB) advance payments in the tax year or need to make claims on this benefit, you are required to complete and submit a T1 form.
Other claims on benefits such as the Canada Child Benefit (CCB), goods and services tax (GST) credit, harmonized sales tax (HST) credit, and the guaranteed income supplement (GIS) would also require a T1.
Most times, spouses or common-law partners would need to fill out a T1 form if the other party is filing for claims to certain benefits and credits.
Generally, if you have earned income from any source including taxable capital gains, outstanding Home Buyers’ Plan (HBP) or Lifelong Learning Plan (LLP) loan amounts, or pension benefits, you will need to submit a T1 form.
If you’ve already filed your return but need to make a change, you can use the T1 Adjustment form (T1-ADJ) instead of refiling your entire tax return.
When do I need to submit it?
Taxable returns and payments indicated on your T1 form are due by April 30 and you would need to submit your T1 by this date.
For some self-employed taxpayers, the deadline for filing a return is June 15 with any payments due by April 30.
If the applicable due date for the tax year falls on a weekend or recognized public holiday, you can submit your T1 tax form by the first business day after the due date.
There are applicable penalties associated with filing your tax returns late if you owe any amount to the CRA.
If you have any outstanding amounts owing to the Canada Revenue Agency, interest rates would start to compound and accrue by the first applicable business day after the deadline.
Can I do it myself?
You can fill and submit your T1 by yourself if you’re comfortable or you can hire a professional to complete it for you.
You can do this through an online or paper submission.
If your tax situation is not complex, you can access free tax filing help from the Community Volunteer Income Tax Program (CVITP), or the Income Tax Assistance – Volunteer Program in Quebec.
There are a number of paid and free software applications that enable you to fill out your T1 and file your taxes easily through an online platform.
These certified electronic platforms are made available through NETFILE, a secure service provided by the CRA to complete and file your return.
Of note is Simpletax (purchased by Wealthsimple a couple of years ago), which offers a maximum tax refund guarantee and allows you to choose what you want to pay!
If you are using a professional, you can authorize a representative with form AUT-01 to file on your behalf and to access your tax related information.
Keep in mind that there may be supplementary forms that you need to submit, for example those in the construction industry must submit a T5018, so using a professional may be the easiest way to ensure you are in compliance.
Breakdown of a T1 Form
The major parts of a T1 form are broken down into seven sections:
This section requires you to fill out details about you and your spouse or common-law partner if you have one.
Here, you would fill out personal details such as your social insurance number (SIN), residence status, marital status and contact details.
2. Total Income
You will need to fill out your total income when submitting your T1 form.
Your total income includes any employment income, foreign income, self-employment income, rebates, grants and royalties, pension income, employment insurance benefits, investment income, amongst others.
Basically, through this section, you report every source of income and provide your gross income for the applicable tax year.
3. Net Income
This section reports your income after all deductions and claims have been applied.
Depending on the source of your income, you may be eligible for certain common deductions such as professional and union dues, child care expenses, self-employment business expenses, and investment interest costs.
Keep in mind that there are also many specific tax credits available, such as the Ontario Focused Flow-Through Share Tax Credit for individuals who hold shares of a mining exploration company in Ontario.
4. Taxable Income
After your net income has been calculated, you can further reduce your taxable income by applying any other deductions that are allowable.
Examples of such deductions are Canadian Forces personnel and police deductions, security options deductions, Northern resident deductions, capital gains deductions, or net capital losses of other years. Your taxable income is the amount to which the applicable tax rate will be applied in order to determine your final tax amount.
5. Federal Tax
The federal tax section covers the amount of federal tax payable on taxable income, which depends on the amount of your taxable income, federal non-refundable tax credits, and net federal tax.
6. Provincial or territorial tax
You would need to complete this section of your T1 return form to determine any provincial or territorial taxes based on your residence information.
7. Refund or balance owing
The final section calculates any tax amount owing or tax refund due back to you from the CRA.
A negative amount indicates that you will be receiving a refund while a positive amount is the balance you owe in taxes.
The T1 Income Tax and Benefit Return form can be accessed through the Canadian government website.
If you decide to fill and submit a T1 form yourself, a glance at the form may seem intimidating as there is a lot of required information and steps to complete.
Using an approved electronic platform or the services of a tax expert can help make the process easier.