Tax season can often feel like a burden, but filing your taxes on time is essential for keeping your finances in check. Missing the deadline could mean missing out on various benefits and services that could significantly help your budget. From tax refunds to income-tested programs, delaying your tax filing could have a lasting impact on your financial situation.

Here’s why you should always make it a priority to file your taxes on time:

1. You Could Be Missing Out on a Refund

Many people hesitate to file their taxes because they fear owing the government money. However, the reality is that most people actually receive a refund. According to Canada Revenue Agency (CRA), two-thirds of taxpayers get a refund, with an average refund of $2,172. For those who filed their taxes late, the penalty could include additional interest and charges, but filing on time helps avoid this.

The government also made changes to tax credits and deductions in 2023, increasing the size of refunds for many individuals. While it’s not ideal to let the government hold onto your money for a year, a tax refund can provide some much-needed financial relief. You can use it to pay off debt, boost your emergency savings, or even treat yourself.

2. Tax Benefits and Credits

Your eligibility for several financial benefits and credits is determined by your income, which can only be verified when you file your taxes. For example, families with children are often familiar with the Canada Child Benefit (CCB), a financial program that helps lower-income families. If you don’t file your taxes, you won’t be able to receive this benefit, which can add hundreds of dollars to your monthly budget.

Programs like the Canada Workers Benefit (CWB) and the Guaranteed Income Supplement (GIS) also require tax filing. Filing late may delay the processing of your benefits, leaving you without crucial support when you need it the most.

3. The GST/HST Credit

The Goods and Services Tax (GST) and the Harmonized Sales Tax (HST) credit is another benefit that’s automatically calculated when you file your taxes. This credit helps modest-income households offset some of the tax they pay throughout the year. By submitting your tax return on time, you allow CRA to determine how much of a GST/HST rebate you’re eligible for.

4. Provincial and Territorial Benefits

In addition to federal benefits, your eligibility for various provincial and territorial programs also depends on your reported income. Programs like the Medical Services Plan (MSP) premium assistance in British Columbia or Fair PharmaCare, which helps with prescription costs, require you to file your taxes. If you don’t, you may have to pay the full price for services that would otherwise be subsidized.

This applies to a variety of services across Canada, from subsidized daycare and extracurricular activities to student loan applications. If you don’t file your taxes, you may lose access to these programs or pay more than you would otherwise need to.

5. Penalties for Filing Late

Failing to file your taxes can lead to costly penalties. If you owe money to the government, filing late could result in additional interest charges. However, if you file on time—even if you can’t pay the full amount—you can avoid these penalties. It’s always better to file, even if you can only pay part of your debt. CRA is one of the most powerful creditors in Canada, so it’s important to address what you owe as soon as possible.

If you’re struggling with your tax bill, contacting CRA to set up a payment plan can help reduce the stress and prevent further penalties. You can even seek advice from a credit counselor to figure out your best course of action.

6. Special Tax Considerations

If you received benefits during the pandemic, such as the Canada Emergency Response Benefit (CERB) or other COVID-19-related support, you may need to repay some or all of these funds. It’s crucial to address any pandemic-related tax issues promptly to avoid unexpected bills or penalties down the line.

7. How to File Your Taxes

If you’re unsure how to start your tax filing, CRA provides a wealth of resources to guide you through the process. They have an extensive FAQ section, and many people find it helpful to gather all necessary paperwork before they begin. If you’re still unsure, you can ask a family member, hire a tax professional, or use CRA-approved software to file online.

Remember, even if you’re unsure whether you owe money or will receive a refund, filing your taxes is essential. Not only will it help you avoid penalties, but it also opens the door to benefits and credits that can improve your financial situation.

Conclusion

Filing your taxes on time is more than just a legal obligation—it’s an essential step in maintaining your financial health. By staying on top of your taxes, you can secure benefits, avoid penalties, and make the most of any refunds. Don’t let the fear of owing or procrastination prevent you from staying on track with your finances. File your taxes on time and take advantage of the financial support that’s available to you.