{"id":2083,"date":"2011-04-06T19:47:22","date_gmt":"2011-04-07T00:47:22","guid":{"rendered":"http:\/\/www.cusjc.ca\/ottawainsight\/?p=2083"},"modified":"2018-12-10T13:13:40","modified_gmt":"2018-12-10T18:13:40","slug":"only-the-good-file-young","status":"publish","type":"post","link":"http:\/\/www.cusjc.ca\/ottawainsight\/?p=2083","title":{"rendered":"Only the good file young"},"content":{"rendered":"

Whether you babysit once a week or slug away at a summer job in the mall, tax advisers agree that you\u2019re never too young to report the amount of money you earn.<\/span><\/p>\n

\u201cEssentially you should start filing as soon as you have any kind of income,\u201d says Damian Laflamme, tax manager at the Ottawa accountancy firm Welch LLP.\"\"<\/a><\/p>\n

Last minute rush to file your return.<\/span><\/p>\n

Although it is unlikely that young people will generate enough income to owe the government anything, they should still be on the lookout for the benefits of filing sooner rather than later.<\/p>\n

\u201cIt may turn out that you owe money, but it\u2019s more likely \u2013 in the case of a young person \u2013 that you may be missing out on credits or money owed to you,\u201d says Laflamme.<\/p>\n

For just this reason, Carleton University\u2019s Sprott Accounting Students Association set up a tax clinic on campus at the beginning of March to help fellow students prepare their own personal income tax returns.<\/p>\n

\u201cThere are a bunch of credits that young people, as students, can be getting,\u201d says a volunteer at the clinic. \u201cFor instance, even if you\u2019re not working but you start claiming tuition, you have the option of carrying tuition credits forward. That way, when you do have a job later on, you can apply those credits to your taxable income.\u201d<\/p>\n

IT GETS BETTER WITH AGE<\/span><\/strong><\/p>\n

While your first return might not be very high, Adam Salahudeen, director of tax advisory services for the entire Wealth Management division of Scotiabank, says starting early can only help to put you in good stead for the future.<\/p>\n

For example, he notes that filing a tax return opens up more contribution room in a tax-free savings account. In this account, which can be opened at 18, contributions \u2013 and any interest gained on them \u2013 are not taxable.<\/p>\n

\u201cSo if I make a yearly contribution of up to $5,000 for 35 years, with a rate return of six per cent, I would have over half a million dollars saved before I\u2019m even ready to retire,\u201d says Salahudeen. \u201cIt\u2019s an excellent way to set money aside throughout your lifetime.\u201d<\/p>\n

And the same contribution room can be created in a Retirement Savings Plan, which is why Laflamme has his 16 year-old daughter \u2013 who just started working at a Shoppers Drugmart last year \u2013 already filing a return.<\/p>\n

\u201cShe couldn\u2019t be further away from retirement,\u201d explains Laflamme. \u201cBut when she does have a job and she does have a taxable income, she\u2019ll be able to contribute more to her RRSP.\u201d<\/p>\n

CHANGE THE HABIT<\/strong><\/p>\n

It also never hurts to start developing a good track record with the Canada Revenue Agency, the same way you might get a credit card when you\u2019re young to start building a good credit score.<\/p>\n

The people who wait until they think they are making enough money to warrant filing a return are usually the people who get burned by the CRA.<\/p>\n

\u201cThese are the people who are 25, 26 and going to tax lawyers and accountants saying they haven\u2019t filed their taxes for seven years,\u201d says Salahudeen. \u201cNow they\u2019re scared to start, scared of getting audited.\u201d<\/p>\n

He calls it the \u201costrich effect\u201d and the longer you wait, the worse it gets.<\/p>\n

Although the CRA does not give a precise age by which Canadians must file their first return, Laflamme urges his clients to start before any money is owed.<\/p>\n

\u201cIt\u2019s about making a good habit of filing on an annual basis,\u201d says Laflamme. \u201cIf you get into the working world but continue to think \u2018I don\u2019t need to file my taxes now\u2019 or \u2018I\u2019ll just file them next year,\u2019 you\u2019re going to run into a lot trouble.\u201d<\/p>\n

TAKE SOME CREDIT<\/strong><\/p>\n

For\u00a0those young people who remain unconvinced by long-term gains, there are some immediate payoffs to get those tax returns in.<\/p>\n

If you work and go to school at the same time, filing a return can help to ensure you\u2019re not paying tax unnecessarily. According to Laflamme, some employers may know to withhold income tax from your pay because they assume you won\u2019t reach the income level that requires you to owe anything, but others might not.\"\"<\/a><\/p>\n

It’s easier to do on a computer.<\/span><\/p>\n

\u201cA student may work over the summer and earn $10, 000 but, if they have personal tax credits or tuition credits outstanding, the tax they owe could be greatly reduced,\u201d says Laflamme.<\/p>\n

Another good example: if you\u2019re over the age of 19, you could be eligible for the GST or HST credit. This credit takes the form of quarterly rebate cheques issued by the government throughout the year.<\/p>\n

If you\u2019re a student living away from home you can also claim your rent under the Ontario Properties Act.<\/p>\n

Most students pay at least $2, 000 or $3, 000 a year for rent, and they can be getting at least some of that back even if they don\u2019t have any income.<\/p>\n

Still, according to Salahudeen, the greatest benefit from filing young is the benefit of time.<\/p>\n

\u201cTime to build up your savings and to build those good filing habits.<\/p>\n","protected":false},"excerpt":{"rendered":"

Once you hit 18, filing a tax return should become an annual ritual. If you don’t you may be passing up money from government, even if you pay no tax and aren’t working. <\/p>\n","protected":false},"author":146,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,5],"tags":[209],"class_list":["post-2083","post","type-post","status-publish","format-standard","hentry","category-news","category-personal-finance-2011","tag-rebecca-ryall"],"_links":{"self":[{"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/2083","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/users\/146"}],"replies":[{"embeddable":true,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2083"}],"version-history":[{"count":26,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/2083\/revisions"}],"predecessor-version":[{"id":4749,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/2083\/revisions\/4749"}],"wp:attachment":[{"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2083"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2083"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2083"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}