Do You Need to File a Tax Return? – A Complete Guide by a Montreal CPA Firm Near You

Introduction

Many Canadians are uncertain about whether they need to file a tax return, especially if they have low income, are students, are retired, or believe that no tax is owed. Understanding who needs to file a tax return in Canada is essential because filing affects eligibility for benefits, refunds, and credits such as the GST/HST credit, the Canada Child Benefit, the Canada Workers Benefit, and provincial programs. Millions of Canadians lose money each year by not filing when they are entitled to refunds or benefits. At the same time, CRA imposes strict filing requirements on individuals who owe tax, dispose of property, receive certain kinds of income, or want to claim deductions. This guide explains exactly who needs to file a tax return in Canada and why filing is important even when income is low or zero.

Legal and Regulatory Framework

The obligation to file a tax return is governed by section 150(1) of the Income Tax Act. You must file a return if you owe tax, have a balance due, need to repay benefits, or want to claim a refund or credit. Individuals must also file when they dispose of capital property, when they receive self-employment income, or when CRA requests a tax return. Filing is mandatory for parents who want to receive the Canada Child Benefit, as CRA requires both spouses to file annually. Seniors must file to avoid interruption of OAS or GIS payments. Students must file to record tuition credits and carry forward unused amounts. Residents of Québec must file both federal and provincial returns. Even individuals with no income may file to access benefits or credits. These rules form the basis of who needs to file a tax return in Canada.

Key Court Decisions

Canadian tax courts have emphasized the importance of filing tax returns correctly and on time. In Plouffe v. Canada, the court confirmed that CRA is entitled to suspend benefits for individuals who fail to file their tax return, even if they otherwise qualify for payments. In Taylor v. The Queen, CRA reassessed a taxpayer who failed to report a deemed disposition; the court ruled that filing was required under section 150(1). In Karam v. Canada, the court upheld penalties for failing to file after CRA issued a formal request, confirming that once CRA demands a return, filing becomes mandatory regardless of income level. These cases highlight that determining who needs to file a tax return in Canada is grounded in CRA obligations, not personal assumptions.

Why CRA Targets This Issue

CRA monitors filing compliance because tax returns determine eligibility for federal and provincial benefits, analyze taxpayer behaviour, and ensure correct taxation. CRA flags individuals who stop filing suddenly, who receive T4 or T5 slips but do not file, or who previously claimed benefits but fail to update income. CRA also identifies individuals with real estate transactions, cryptocurrency trades, or self-employment activity who did not file returns. When CRA sends a request for a return and the taxpayer does not comply, CRA can issue an arbitrary assessment based on its estimates. Because benefits such as GST/HST credits and the Canada Child Benefit depend on accurate tax filing, CRA enforces strict rules about who needs to file a tax return in Canada.

Mackisen Strategy

At Mackisen CPA Montreal, we help individuals determine whether they are required to file and ensure that all returns are filed correctly and on time. Our approach begins with a complete review of income sources, financial transactions, benefits received, and previous filing history. We identify situations where a return is mandatory, such as real estate sales, RRSP withdrawals, or self-employment earnings. We also prepare returns for individuals with low or no income so they can access benefits and avoid interruptions to payments. When clients have missed returns for multiple years, we reconstruct income, collect supporting documents, and file all required returns. If CRA has issued an arbitrary assessment, we prepare adjustments and negotiate corrections. Our structured approach ensures that anyone who needs to file a tax return in Canada remains compliant and avoids penalties.

Real Client Experience

A young student believed they did not need to file because they had no income, but they lost access to the GST/HST credit and provincial benefits. We filed their return retroactively, restored benefits, and recorded tuition credits for future use. Another client who had not filed for several years was surprised to discover CRA had issued an arbitrary assessment for unreported investment income. We corrected the assessment, filed missing returns, and prevented collections action. In a third case, a retiree failed to file on time and had their GIS payments suspended. We filed the missing return, restored payments, and implemented reminders for future years. These examples demonstrate how important it is to know who needs to file a tax return in Canada.

Common Questions

Many Canadians ask whether they must file if they earned less than the basic personal amount. While no tax may be owed, filing ensures access to benefits. Others ask whether unemployment or social assistance counts as income. Some benefits must be reported, and filing may still be required. Another common question concerns real estate: taxpayers must file and report the sale of a principal residence even if the gain is exempt. Individuals also ask whether children or teenagers must file. Filing may be beneficial if they earned income or want to accumulate RRSP room. These questions highlight why understanding who needs to file a tax return in Canada is essential for financial planning.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps Canadians stay compliant while accessing the tax benefits and credits they are entitled to. Whether you are determining if you need to file, correcting past omissions, or optimizing credits and benefits, our expert team ensures precision, transparency, and protection from audit risk.