Understanding Taxes

Did you login to your bank account and see MORE MONEY than you expected?

You will only receive your CRA taxpayer benefits deposits, IF you’re up to date with filing your annual tax returns.

Listed as EFT Deposit from CANADA as a direct deposit from Canada Revenue Agency benefits office, you can anticipate receiving these types of deposits monthly, quarterly, and sometimes annually based on your personal qualifications for various taxpayer benefits programs.

EFT Deposit from CANADA

Payments from Goverment

Many of my clients, like myself before becoming a tax professional, who were up to ten years behind in filing personal tax returns, and especially those who are self-employed (who will owe income tax), are unaware of the literal taxpayer benefits they could receive, for catching up on their tax returns.

Taxpayer Benefits vs. Tax Return / Tax Refund

Taxpayer benefits are completely separate payments from your annual tax return and the possible tax refund. They are calculated and processed in a separate CRA office; but they are only calculated IF you qualify, which is determined by the details of your annual income tax returns, once assessed.

If you’re up to date with your tax filing (you filed last year by your Spring deadline), then you will receive your annual benefits payments from July of this year to next June.

BUT if you’re multiple years behind in filing, up to 10 years late, and you qualify for benefits in any of these years > you will most likely receive the retroactive benefit payments in a bunch of lump-sum amounts, beginning about 4-10 weeks after your back years tax returns are filed and assessed by the CRA.

Paper-filed returns (2012-2016 cannot be efiled, and must be mailed to CRA), will often take longer to be assessed by the income tax office, and so the benefits from those years can be delayed as well.

Often, even if you owe income tax amounts to CRA for some or all years of the tax returns - especially if you have a lot of untaxed self-employment income - you will still be sent the qualifying benefits amounts in lump sums, in the weeks and months after you file.

Back years’ benefits are the primary reason why most of my clients (low-income, and self-employed) receive a surprising amount of money from the CRA after they catch up on filing old tax returns - ranging from $750 to $1,100+/year, or much more if the Canada Child Benefit is also included.

It’s not unusual for no-income and low-income clients who catch up on ten years of back taxes, to receive $10,000+ in back years’ refunds and benefits amounts.

This is one of the main reasons why the CRA has likely never really pressured you to catch up on filing your returns - according to research, from the 2020 tax year 58% of Canadian tax returns efiled had an average refund of $2,500+.

The CRA has pretty decent knowledge of who is most likely to owe them more income tax (self-employed, contractors, freelancers, and people who earn a lot of tips/cash), and often they’ll focus their attention on ensuring those taxpayers have filed their returns; before they expire, and the CRA loses their chance to collect on the amount owing.

Most benefit programs are paid only 1x payment per individual or family (the “head of household” or the person who files 1st for the year, will receive payments for the family).

The most common taxpayer benefits programs that my clients most often qualify for, include:

★ Climate Action Incentive (CAI) - to help offset carbon tax paid in consumer purchases. For all taxpayers, calculated based on household members; $373-$559+/year in quarterly payments. This is a taxpayer benefit (separate from income tax calculation), that from 2017-2021 was a refundable tax credit (paid from your income tax return, as a refund amount).

★ GSTC Goods & Services Tax Credit - to help offset the additional 5% GST to 13% HST on qualifying purchases. For low-income taxpayers & families, your qualifying amount increases as your income (spending on GST/HST) increases; $288-$456/year in quarterly payments.

★ Trillium Benefits - to help offset cost of living and social services in various provinces. For low-income taxpayers & families, your qualifying amount increases as your income decreases (but your housing/living costs are higher); $250-$1,100+/year, in monthly or annual payments.

★ Canada Child Benefits - to help offset the costs of having and caring for your own children. For all people who are responsible for the parenting of their biological children, depending on the number of children, their age and their abilities; $3,250-$13,000+/year, in monthly payments.

And, there are many other benefits programs you can qualify for, based on your age, location of residence, health, or volunteering/occupation, simply by filing your tax returns.

If you’d like my help to make filing your back-years of taxes (or fixing past mistakes) much less overwhelming stress and effort for you, send me a message. I have worked with more than 300 clients (mostly PALZ) over the last 2 years, and completed more than 1,000 tax returns, making me uniquely qualified to help catch up AND address your fears, while coming up with a plan to improve your financial future.

Before becoming a tax professional, I fell 10 years behind on my mixed employment/self-employment returns, due to ADHD and anxiety, and experienced ALL the nasty tactics the CRA will use to convince you to file: including having my bank accounts frozen and finally a 90-day deadline to file and claim my debt.

While anxiety and fear kept me from filing for a decade, finally claiming my existing past debt with CRA and putting an end to the pressure to file and increasing penalties, and ongoing interest was a HUGE RELIEF. It gave me freedom from the stress of not filing, the emotional and mental space I needed in my life to be able to see my own need to learn about taxes and personal & small business money management. And, the $7k+ that I received in back-years benefits in the following months, allowed me to take courses in taxes and accounting and begin a new profession. I am sure I would never have completed catching up on filing, if I hadn’t found a flexible and understanding tax professional to work with.

I hope you’ll let me share in the work to create this sense of accomplishment and relief (and regaining financial control) in your life!

Tax Fairy Godmother
Debbie Horovitch

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