Preparing your income tax return

March 11, 2026

Filing your tax return is the responsibility of every Canadian resident who lives and works in Canada. This includes any individual who left Canada to live or travel abroad but is still considered to be a resident of Canada for income tax purposes, or individuals who have maintained residential ties to Canada. Newcomers to Canada who have left another country to settle in and become a resident of Canada must also file income tax. Income taxes are a mandatory payment to the government with the monies collected used to fund government programs and services like education, health care and the Canadian Armed Forces. Taxes individuals and businesses pay on earned income contribute to these funds.

Each year, Canadians calculate tax owed on an income tax and benefit return, which can seem overwhelming. By building a better understanding of income tax through planning strategies, it becomes more manageable and can result in effective tax savings. This is how Registered Retirement Savings Plan (RRSP) room is calculated. It’s also a qualifier for various government benefit programs like the goods and service tax/harmonized sales tax (GST/HST) credit, Canada child benefit (CCB) and Guaranteed Income Supplement (GIS), and determines the amount each person may be entitled to receive.

Filing dates for 2025

• February 23, 2026 – earliest day to file taxes online
• April 30, 2026 – deadline to file taxes
• June 15, 2026 – deadline to file taxes if you, your spouse or common-law partner were self-employed in 2025

Even if you are unable to pay any balance owing, it is important that you file your income tax to avoid the late-filing penalty charged by the Canada Revenue Agency (CRA). The late-filing penalty is 5% of your 2025 balance owing, plus an additional 1% for each full month that you file after the due date, to a maximum of 12 months.

Income taxes can be easier if you plan ahead and consider the following

• Stay informed about changes – The Government of Canada and the Province of Ontario regularly release budgets which can include changes to existing programs or creating new programs which can affect taxation.
• Keep track of carry-forward totals – This includes RRSP, Tax-Free Savings Account (TFSA), First Home Savings Account (FHSA) contribution room, charitable donations, unused tuition fees and capital losses. If funds were removed from your RRSP through the home buyers plan (HBP) or lifelong learning (LLL), ensure the minimum repayments (1/15th for the HBP and 1/10th of the LLL) of the original amount withdrawn are contributed back to your RRSP. This avoids any missed amounts being added to your taxable income for the year.
• Explore ways to reduce your marginal tax rate (MTR) – Canada uses a progressive tax system where higher income earners are taxed at increasing tax rates. Reducing your taxable income can bring you into a lower tax bracket which will lessen the amount of income taxes owing.

Ways to potentially lower your taxes

• Contribute to an RRSP – All contributions made into an RRSP are deducted from your taxable income.
• Income splitting through a spousal RRSP – The higher income earning spouse can contribute to a spousal RRSP which is used as a deduction to their own income, while building retirement savings for their spouse.
• Defer a bonus to a future tax year – Postponing the receipt of additional compensation will lower your current taxable income, in turn reducing the amount of income tax owing. This strategy can be especially beneficial if you expect to be in a lower tax bracket in future years.
• Canada Pension Plan (CPP) sharing – This allows married or common-law couples to voluntarily split their CPP entitlements to potentially lower their combined household taxes.

General tips and advice

• Collect tax slips – This includes all ‘T’ slips for employment, employment insurance and pension income as well as investment income. Other common tax slips can include the T2022 (Tuition and Enrollment Certificate), RC62 (Universal Child Care Benefit Statement) and RRSP contribution receipts.
• Keep records – It’s important to track details like capital gains and cash payments received through tips or gratuities.
• Be informed of tax credits – Tax credits are subtracted directly from the total income taxes owing and have a value equal to the stated amount, regardless of an individual’s tax bracket. Common tax credits include the basic personal amount, age amount, Canada training benefit, tuition amount for oneself or transferred from a child, disability amount, charitable donations, and expenses like childcare, moving costs and medical bills.
• Understand work from home deductions – If you are an employee who works from home, you may be able to claim a deduction for home office expenses. This could include rent, electricity, heat, internet and a portion of your utilities. According to the Canada Revenue Agency (CRA) you must meet one of these criteria:
  • Your home workspace is where you spend most of your time (more than 50%) doing work; or,
  • The home workspace is only used to earn employment income.

How to file your tax return

There are many options available for the completion of your tax return. You may choose to do your own taxes through tax software or the paper-based method or have a professional tax preparer complete and file your taxes on your behalf. Options to file your income tax include:

• Tax software for filing personal taxes – There are several tax software certified by CRA to help calculate and file your personal income tax electronically. Within the certified software there are choices for how you wish to enter your information, send your return to CRA and view your notice of assessment (NOA).
• SimpleFile - the free tax filing service of the CRA – This option is a free service offered by CRA to eligible individuals with a lower income and simple tax situation. SimpleFile can be accessed digitally (with or without an invitation), by phone or paper filing (latter methods require a CRA invitation).
• Use a professional tax preparer – If you feel unsure of the completion of your income tax return or if your situation is complex, you may choose to use a tax professional who will prepare your tax return and electronically send it to the CRA for a fee. Using a tax professional can help provide accuracy and can identify tax credits or deductions that may be overlooked.
• Paper tax return – Individuals may select to complete a return using the income tax package and send it by mail. With this method you take on the responsibility of keeping up to date on any income tax changes and completing all calculations. You must attach all supporting documents. This method might increase the chances of missing out on tax efficient opportunities.

Be sure your personal information is up to date with the CRA, including your name, address, marital status, dependents and banking information. Reporting changes in your marital status or dependents is critical as many benefits and credit payments are calculated based on adjusted family net income. If not reported, it could cause incorrect payments to be paid out which could lead to you having to pay back overpayments or cause you to miss out on receiving benefits you are entitled to.

If it seems overwhelming or if your situation is complex, seek the expert advice of a licensed taxation professional. Doing this will both ease your mind and ensure you’re taking advantage of benefits you are eligible for.

FirstOntario Credit Union in partnership with Credential Securities and Credential Asset Management Inc. has an experienced team of advisors specializing in various areas of wealth management including retirement planning, investment management, estate and succession planning, individual financial risk management and more. These professionals are here to help you plan for the future and reach your financial goals. Visit FirstOntario.com/Investments or call 1-800-616-8878 ext. 1700 to connect with a FirstOntario advisor and start growing your wealth today – your way.

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