Tax season is creeping up again, and if you received federal benefit payments in 2024 — like the GST/HST Credit, Canada Child Benefit, Employment Insurance and more — you might be wondering how they’ll affect your income tax return.
It’s important to know that while some government payments are tax-free, others need to be declared on your 2024 tax return — and not knowing the difference could lead to a surprise when it’s time to file with the Canada Revenue Agency.
The good news? Some credits might even reduce how much tax you owe or help you snag a refund!
Canadians can officially start filing their 2024 returns online on Monday, February 17 this year, with the deadline for most people set for Wednesday, April 30. This is also the deadline to pay any taxes you owe, so make sure to note the date to avoid facing penalties.
Here’s the full breakdown of which federal benefit payments are tax-free and which ones you’ll need to claim on your 2024 income tax return.
GST/HST Credit
The GST/HST Credit is like a little bonus that comes every quarter. It’s a tax-free payment designed to help individuals and families with low or modest incomes offset the cost of GST or HST. Think of it as a way to ease the pinch from everyday spending.
The good news? You don’t need to include this payment on your tax return because it’s not taxable. However, if you want to get this credit, you have to file your tax return. The Canada Revenue Agency automatically checks your eligibility when you file, so skipping your taxes means missing out on these payments.
Filing on time ensures you keep receiving this helpful boost to your wallet!
Canada Pension Plan
The Canada Pension Plan (CPP) retirement pension is a monthly benefit that helps replace a portion of your income when you retire. Unlike most government payments, this one is taxable, so you’ll need to include it as income when you file your taxes. The CRA will send you a T4 or NR4 tax slip to use when filing your return.
It’s important to note that taxes also aren’t automatically deducted from your CPP payments. If you’d prefer to avoid a larger tax bill down the line, you can ask to have federal income tax deducted from your monthly payments online in your My Service Canada Account or by mailing in a form. Otherwise, you may have to make quarterly tax payments to the CRA to stay on top of your income tax obligations.
Planning ahead can make it easier to manage the tax side of your retirement income, so it’s worth looking into your options for tax deductions.
More about the Canada Pension Plan
Canada Child Benefit
Raising kids isn’t cheap, and that’s where the Canada Child Benefit (CCB) comes in. This monthly payment is designed to help eligible families cover the costs of raising children under 18.
The best part? CCB payments — including any related Child Disability Benefit amounts in your payment — aren’t taxable, so you won’t get a tax slip for them and you don’t need to include them on your tax return. But here’s the catch — to keep those payments coming, you and your partner need to file your tax returns on time every year, even if your income is tax-exempt or you didn’t make any money.
Miss the deadline, and your CCB payments could stop until you get things sorted out. So, if this benefit helps cover the cost of little ones in your household, make sure tax time is on your radar!
More about the Canada Child Benefit
Old Age Security
The Old Age Security (OAS) pension is a monthly payment available to Canadians aged 65 and older. Eligibility depends on how long you’ve lived in Canada after turning 18, not on your work history. You can receive OAS even if you have never worked or are still working.
Like with the CPP, OAS payments are considered taxable income, and taxes aren’t automatically deducted each month. If you want to avoid a larger tax bill later, you can request federal income tax deductions from your monthly payments through your My Service Canada Account or by sending in a form. Without this, you may need to make quarterly tax payments.
At the beginning of each year, you’ll receive a T4 slip (for those living in Canada) or an NR4 slip (for recipients outside of Canada) showing the amount you received the previous year. Be sure to include this slip when you file your income tax return.
Canada Workers Benefit
The Canada Workers Benefit (CWB) is a refundable tax credit that gives a financial boost to individuals and families earning a low income. This means that not only can it reduce the taxes you owe, but if the credit exceeds what you owe, the extra amount is refunded to you.
If you’re eligible for a refund through the CWB, you’ll get half of your credit when you file your return, and the other half will be split into three advance payments throughout the year through the Advanced Canada Workers Benefit (ACWB).
You don’t need to apply for these advance payments, but you do need to file your tax return so the CRA can assess your eligibility.
If you’re entitled to the CWB, you’ll see it on line 45300 of your tax return. The CRA will handle the rest, ensuring any advanced payments reach you without additional paperwork.
More about the Canada Workers Benefit
Employment Insurance
If you received Employment Insurance benefits in 2024 — including maternity or parental leave payments — you’ll get a T4E tax slip. This slip outlines the total benefits you received, the income tax already deducted and any repayments toward an overpayment, if applicable.
It’s important to know that EI benefits count as taxable income for the year they’re paid. For instance, if your claim began in late 2023 but payments only came through in 2024, that income is taxable for 2024. Some federal and provincial taxes are deducted at the source, but your final tax owed is calculated when you file your tax return.
If you’re concerned about owing taxes at the end of the year, you can request that more tax be deducted from your EI payments by contacting ESDC or visiting a Service Canada Centre.
More about Employment Insurance
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