What Are the Advantages of Filing Income Tax And Benefit Return When You have NIL Income or No Tax payable?

Even if you do not have any income during the year or it is less than the basic personal amount, it is still advantageous to file your Income Tax and Benefit Return due to the reasons mentioned below. Basic personal amount refers to the amount of income that a tax payer can make without paying any tax and it keeps on changing from year to year

Following are the benefits that one can expect to receive from tax return filing:

1.      Canada Child Tax Benefit is a Federally run program which allows tax free payments to parents who have children under 18 years living with them. It is allowed only in case if both parents file their taxes each year despite having NIL Income in the year. This benefit depends on the income of the parents, number of children and the provinces in which the taxpayer lives.

2.      You will be entitled to Universal Child Care benefit per child when you are in receipt of Canada Child Tax Benefits and you have children under 18 years of age living with you. This benefit is taxable in the hands of the lower income earning spouse.

3.      GST Credit is again a federal program, which grants tax free payments on a quarterly basis to the taxpayers who have filed their taxes each year. It is based on income and the rule is that the higher the income, the lower the amount of entitlement and vice-versa.

4.      You may be entitled to provincial benefits like Ontario Child Care Supplements when you file your tax returns each year. These are again tax free payments.

5.      There are certain other provincial tax free benefits that you may be entitled to when you file tax return such as Ontario Trillium Benefits which depends on the amount of rent or property tax paid during the year. Ontario Trillium Benefit payments are for taxpayers living in Ontario and depend on the income of the taxpayer.

6.      If you have small salary income or income from business, you must file your tax return since filing of the tax return will create an RRSP (Registered Retirement Savings Plan) limit in the following year and creating an opportunity to save money in RRSP and get a tax rebate.

7.      In case if you are claimed as a dependant on someone’s tax return (e.g. son or daughter claiming you), filing of your own taxes will make it easier for CRA to verify the dependant claim made by your near and dear ones.