How to do your taxes?

05 March 2024 by National Bank
A young woman prepares her taxes for the first time.

About to do your taxes for the first time? Whether you opt to do them yourself or entrust the job to a tax specialist, there are some basic notions you should be familiar with. Here are some of the most important ones.

Why do I have to do my taxes?

Because it’s mandatory. In Canada, taxes pay for services we all benefit from, everything from schools and roads to social programs like employment insurance and family allowance payments.

If your annual income is below a certain level, you may not have to pay taxes. But it’s still a smart idea to file a return, because you could receive money or qualify for tax benefits from different levels of government.

If you have a job, chances are your employer deducts a certain amount from your cheque for tax purposes. If too much is deducted during the year, the only way for you to get it back is by filing a return. Learn to make a budget to manage a potential tax refund.

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When should I do my taxes?

Every year. If you are an employee, the deadline for filing and paying any taxes you owe is April 30. Self-employed workers have usually until June 15.

What do I have to declare?

All of your income. Here are some examples of the type of income you have to declare:

Employment and self-employment income

You must declare all amounts paid by your employer or earned through self-employment, even money that you earned abroad.

If you’re an employee, your employment income is shown on the T4 slip your employer must provide you with.

If you worked on a contract basis as a self-employed person, each of your customers must provide you with a T4A slip whenever payment exceeds $500.

Registered education savings plan and scholarships

If you are a student and you or your parents withdrew funds from a registered education savings plan (RESP) in the form of an educational assistance payment (EAP) during the year, the amount must be reported on your tax return, not on your parents’. You will be issued a T4A slip (and a Relevé 1 in Québec) showing the amount, which is taxable.

If you were awarded a scholarship, it must also be declared as income. You will also be issued T4A and Investment income.

Do you have any investments? Investment interest and dividends must be declared as income.

If you don’t have any investments, it’s never too late to start saving.

How do tax rates work?

True or false: it is possible to pay less income tax?

True. There are two main ways to reduce your income tax bill: tax credits and deductions.

Tax credits

Tax credits are tax measures put in place by governments to help part of the population or a particular sector of the economy. They don’t reduce your taxable income, but they do reduce the amount of tax you have to pay.

If the sum of your tax credits is greater than what you have to pay in taxes, your balance will be positive, and you may receive money under certain conditions.

There are many tax credits available. Learn more about them on the Canada Revenue Agency website. You’ll see that there are several measures available to help students, including the tuition credit and the student loan interest credit. Other measures are for workers, including the Canada employment amount to encourage employees.


In the case of a deduction, you must incur an expense and provide proof of payment. You can report the expense in your tax return to reduce your taxable income.

For example, if you go back to school as an adult to finish your primary or secondary school education you can deduct your tuition fees.

Subject to certain conditions, you may also qualify for deductions for scholarships, moving fees, and your RRSP or your CELIAPP contributions.

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How to prepare to file your tax return in Canada?

Gather all your documents and keep them in a safe place

You’ll receive some documents by mail, and others electronically. Whether you do your taxes, or someone does them for you, keep your supporting documents.

Government revenue agencies have up to six years to request them after your return is filed.

Other documents that are useful for doing your taxes:

  • Invoices for education-related expenses
  • Moving bills
  • Charitable donation receipts
  • Receipts for medical expenses

If you’re self-employed, you can also deduct work-related expenses. Learn more about the ins and outs of taxes for the self-employed.

Update your information and sign up for direct deposit

To facilitate the tax reporting process:

Use the proper resources

  • Software and web applications
    Want to do your taxes yourself? There are software and web applications to help you every step of the way. Some of these tools even ask you questions to find out what credits or deductions you are entitled to. All calculations are performed automatically.
  • Government tools
    The federal and provincial governments make a wide range of information and resources available to you. The Canada Revenue Agency site has an entire page devoted to doing your tax return, with lots of useful links to help you.
  • Specialists and experts
    Many educational institutions and community organizations offer tax workshops where volunteers can help you and answer your questions. You can also have a specialist, such as an accountant, prepare and file your return for you.

You will have to file taxes every year for the rest of your life. Learn now how taxes work and develop good habits!

Are you wondering how taxes work?


I’ll explain in less time than it takes to run a kilometre on a treadmill.


We’re more likely to be running to an online sale…



The money you give the government to help pay for collective services, like schools, hospitals and roads.

Each time you get paid, your employer keeps part of your salary, instead of you paying a huge amount at the end of the year.

Go take a look at your pay stub.

Your annual income is made up of your salary but also any other income you receive,

like student loans or interest earned on investments.




Your taxable income is the part of your annual income on which you pay taxes.

Tax rate is the percentage of your income that you have to pay in taxes.

The rate can change and is different at the provincial and federal levels.


Is a kilometre the same length all over the country?




The more money you make, the more taxes you pay.

Because taxation works in brackets.


Just like a treadmill.


Yeah, let’s say your income is $65,000

You might pay 15% on the first $50,000 and 20% on the next $15,000.

In the end, you haven’t paid 15% or 20% but a combination of both, which is what we call your effective tax rate.


Can we bring the treadmill back down to 0%, please?


There are ways to pay less tax, like putting money into an RRSP or deducting the interest on your student loan.


Find out more from your financial advisor.


I think I ran 2 kilometres!?


Zero point two kilometres.

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