How to become a taxpayer (CRA)?

Question

This is specific to CRA but may be similar for the IRS.

If someone has never filed a return - are they obligated to ever do so or have they never become a taxpayer?

I know that once you become a taxpayer you are obligated to file every year but I wanted to know if the first filing is even required by law.

Thanks.

Answer 1

If you have to pay tax or have earnings on which CPP contributions must be paid, you must file a tax return or become a taxpayer.   That is required by the tax law.  You will usually have to pay tax if your taxable income exceeds the amount of the basic personal exemption.

Even if you are not required to file a tax return, it will often be to your advantage to do so, for some of the following reasons:



- You have had tax withheld from your income, and want to receive a refund.



- The federal government and some provinces have refundable tax credits, which are payable to you even if you have no earnings and have paid no tax.  This means they will send you a cheque for the tax credit!  



- You want to apply for the GST/HST credit - If you are 18 years of age or older, you should file a tax return even if you have no income, in order to apply for the GST credit.  By filing your tax return, you are applying for these benefits.



- You have unused tuition, education and textbook amounts that you would like to carry forward to use in the future.

Answer 2

There are various reasons why you may have to file a tax return.    You can ask CRA or a local tax advisor if your situation requires a tax filing.  The fact that you filed a tax return in the past does not obligate you to file a return in the future.   It may be in your best interest to file a return even if one is not required, since you may be entitled to some tax benefits.

Answer 3

You are correct that this is similar in the US and Canada.  This is a coomon urban/internet myth, the myth that someone is not required to pay taxes because (take your pick of myths):

They are not taxpayers

Taxes are voluntary

Taxes are only applied to 'real persons, and you are not one unless you choose to become one

It's all false, and despite what you can find on so called tax avoider websites, these clowns regularly get charged and convicted.

Every Canadian is required to file a tax return if they earn ANY income.  Now, if you never earn an income, you would never need to file.  But unless you figure out how to breath air, or ahve wealthy parents, that just isn't going to happen, is it?

File the return, or go to jail.