When you file your taxes, you may have a lot of questions. Perhaps you're wondering, what is the average tax refund in Canada? Or maybe you want to know how long it will take to get your refund.
Fortunately, you can speed up the timeline by filing your taxes early and ensuring they're correct. That way, you won't have to worry about delays. Keep reading to learn more about receiving your tax refund in Canada.
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When it comes to federal taxes, Canada has a few tax brackets with different rates. For 2021, the tax rate for income up to $49,020 or less is 15%.
Income between the above number and $98,040 has a tax rate of 20.5%. The next bracket is 26%, which applies to income between $98,040 and $151,978.
If you make between that amount and $216,511, the last part of your income will face 29% in taxes. Finally, income over $216,511 faces a tax of 33%.
Note that the tax bracket only applies to the income in that group. For example, if you made $50,000, you would need to pay 15% on the first $49,020. You'd only pay 20.5% on the remaining $980.
If you make more, it can be harder to calculate how much you owe in taxes. But knowing the brackets can help. Then, you can subtract what you owe from what your employer deducted to get an idea of your Canada tax refund.
When to File Your Taxes?
Make sure you file your taxes before April 30, which is the deadline for most people.
If you owe any taxes, you will also need to pay those by the end of April to avoid any late payment fees. However, you shouldn't have to pay taxes if you have a tax refund.
What Is A Tax Refund?
A tax refund is the amount of taxes you overpaid to the Government. In other words, if the Canada Revenue Agency (CRA) collects too much tax from you during the year, they'll return that money to you in the form of a tax refund.
If you're expecting a return, you must file the appropriate paperwork with the CRA. In this case, you'll file the T1 General form, also known as the "Entitled Income Tax and Benefit Return." This document is the primary tax form Canadians use to file personal income taxes.
Filing your taxes doesn't necessarily result in a refund.
If you owe taxes, you will not receive a refund if the owed tax amount is greater than the return. That's why it's important to claim as many eligible deductions as possible.
The earlier you file your paperwork, the quicker you'll receive your return.
Average Tax Refunds in Canada in 2022
According to the Canadian government, the average tax refund is $2,086 in 2022. The data comes from 17,417,471 returns that people filed between February 10 and October 03.
However, you may get more or less money. Consider a few factors that can affect your refund.
If you worked a traditional job, your employer had to withhold your taxes for you. In this case, your employer could have withheld more than you owe, so you would get a return. However, if your employer didn't withhold enough, you may get a smaller return.
If you worked for yourself in 2021, you are responsible for paying your taxes. You may owe all of your taxes now unless you paid them each quarter of the year.
Many Canadians can take advantage of some tax deductions, which could increase your return. Whether you own a home, have children, or paid for private health insurance, you can deduct certain expenses on your tax return.
You should also consider how much you earned last year. If you earned less than you expected, you could get a bigger tax refund. On the other hand, earning more without paying more upfront may grant you a smaller refund.
Whether you or an employer paid income taxes for you, that can affect your return. If you didn't make $1,573 in Canada last year, you can't get that much back.
The same is true if the amount of taxes you or your employer paid was less than that.
What Happens After You File Your Tax Return?
Before you can get your average tax refund, consider the process. The exact steps can vary based on how you file your taxes.
Filing by Paper
If you file your taxes by mail, the Canada Revenue Agency (CRA) will send you a Notice of Assessment and your refund eight weeks after they receive your return in the mail. Some things can delay this, but it should go through as long as your return doesn't have any issues.
Filing your taxes by paper can be useful if you work with an accountant or if your taxes are too complicated. You can complete your return on paper or do it on your computer before printing it out and mailing it.
You can file online through the CRA website or with partner tax software. Then, you can make sure you file your taxes correctly, increasing your Canadian tax refund.
Not only that, but you can get your refund in less time by not waiting on the mail. Using direct deposit for your refund can also help.
Filing as a Non-Resident
If you just moved to Canada, you will need to mail your tax return. Then, it can take about 16 weeks before you get your tax refund, whether you get the average refund or not.
How Long Does It Take to Get Your Tax Refund?
There are many ways to file your tax return so the date will vary depending on what way you filed it:
ONLINE - If you filed online using NETFILE, it can take up to 2 weeks to receive your tax refund.
DIRECT DEPOSIT - Signing up for a direct deposit on CRA My Account will take you 7 weeks.
MAIL - It takes 8 weeks or more if you filed by mail.
NON-RESIDENTS - Can wait as long as 16 weeks for paper-filed tax refunds.
If you want to get your refund as quickly as possible, remember to e-file before the deadline and choose direct deposit as your delivery method.
Use any certified tax software. Canada's preferred electronic filing services are NETFILE and ReFILE. You don't have to download anything.
If you're behind on your taxes, you may not be eligible for electronic filing.
How to Get Your Canada Tax Refund Faster?
If you have any issues, do your best to fix them sooner rather than later. You should also set up a direct deposit so that you don't have to wait for a cheque to come in the mail.
While you won't receive your refund immediately, you can take control of your taxes to avoid delays.
How to Check Your Canada Tax Refund Status
After you file your Canada tax refund, you can check its status on the CRA website or by contacting the CRA. Checking the status can be helpful if it has been a long time since you filed.
Now, you don't need to check the status every day as that can be time-consuming. However, checking it once a week can help you stay up to date, and you can make sure the CRA has all of the info they need to process your tax return.
Use the MyCRA App
The MyCRA app is an excellent option if you want to check your refund status on the go. You can sign into the app using your My Account with the CRA.
There, you can make sure the CRA has the correct mailing address and bank account information. That way, you can get your refund as a cheque or through direct deposit.
Logging in Online
If you have an account, you can also log into it on a computer. The My Account portal has all of the same features as the app, so you can check on your refund status, update your contact information, and ensure your direct deposit is correct.
However, you can also modify your tax return. If you realize that you made a mistake and entered the wrong income amount or didn't include all of your expenses or deductions, you can edit that.
While editing your return can delay your refund, it's important to change it so that you can receive the biggest refund possible. And if you happen to owe taxes, you can use the portal to pay your balance.
Call the CRA
If you don't have an account with the CRA, you can call them to check on your refund. You can call (800) 959-1956 to reach the telerefund line or (800) 267-6999 to reach the tax information phone line. When calling, make sure you can provide the following:
Date of birth
Social Insurance Number (SIN)
Other account details
Calling can be a good option if you can't log into your CRA account or if you have yet to set it up. You may also want to call if you have specific questions regarding your return that your online account can't answer.
What Can Delay Tax Refunds?
After you submit your taxes, you may not receive your refund in the normal timeframe. Unfortunately, multiple factors can cause a delay, so you may need to wait.
While you can control some of these factors, you can't change all of them. Still, you should understand why the CRA may hold off on sending your tax refund.
You Owe a Balance from a Prior Year
As you pay taxes over the years, you may end up owing more instead of having a refund. Owing taxes can happen if you earned more than you expected and you or your employer didn't pay enough in taxes throughout the year.
You can use your current refund or pay the balance in full. That way, you can get more money back.
Your Return Has Errors
If you aren't comfortable doing your taxes, consider having an accountant look over them. An accountant can help you go through all of your tax forms and ensure you include everything.
Then, you can make sure you receive all of the deductions available, such as health insurance. More deductions can increase your tax refund.
The CRA Chose You for an Audit
You never know when the CRA may decide to audit your taxes. If they do, that could delay your refund. The CRA will send you a letter telling you about the audit and what it will cover.
Then, you may have to submit receipts to verify your income and expenses. In some cases, the CRA may schedule a time to visit your home and view these records.
While it can be stressful, try to stay calm during the audit. Give any information the CRA needs, and you should be fine as long as you didn't lie on your return. Then, you can get the refund you deserve after they verify everything is correct.
You Changed Your Contact Info
If you move or change your phone number or banking information, you should tell the CRA as soon as possible. Then, they can update their records and send any notices and letters to the correct address.
If you have issues with your return, the CRA also needs to be able to contact you. Then, you can avoid any delays in your refund.
Why You May Not Get Your Full Refund?
Perhaps you have no problem getting your refund, but it isn't as much as you think. Some factors can affect the amount you will receive, even if your taxes look good when you submit them.
But you may not always have control over these factors. Either way, you should know a few reasons why the CRA may hold some or all of your refund.
You Owe a Balance on Your Taxes
Whether you work for yourself or earn more than you project, you could owe on your taxes. The CRA may want to keep your refund until you pay the money you owe, or they may apply the balance that you owe. You can still get part of your refund, but it may be less than you expect.
You Have Government Debts
If you have student loans, immigration loans, or another form of government debt, the CRA may hold your refund. As long as you don't need the money, not receiving your full refund can be a good thing.
Once you pay them off, you can obtain your full Canadian tax refund each year.
Fortunately, you won't have to worry about this with credit card debt. The delay only applies to money that you owe the Canadian government.
Your Refund Is Small
The CRA won't pay refunds that are $2 or less, so they may hold the balance until the next year. That way, you can still receive the money.
It can be frustrating not to receive your refund, especially when the balance is so low. But you can contact the CRA to ask about obtaining the money if you need it.
You Owe Sales Tax
If you have a sole proprietorship or a partnership, you may not receive your refund if you owe sales tax. The CRA will hold off on sending you your refund if you owe any Goods and Services Tax (GST) or Harmonized Sales Tax (HST).
Make sure you keep track of the taxes you owe for your business and pay them accordingly. That way, you can make sure you receive as much of your Canada tax refund as possible.
What Should You Do With Your Tax Refund?
What's the best way to spend your tax return? Should you spend it on one important purchase or save it for the future? Thinking about these questions is the first step toward responsible spending. This article will guide you on how to spend your tax refund responsibly.
Understanding Tax Refund in Canada
Have you filed your taxes? Are you wondering, what is the average tax refund in Canada? A lot goes into it, such as your income and expenses.
Errors can also affect how much money you receive as a refund. Make sure the CRA has the correct contact information so that you can obtain the money you deserve.
Do you want to set up a bank account to receive your tax refund? Visit Insurdinary to learn about the best bank accounts in Canada.