Can You Get a Tax Refund If You Have No Income? Exploring the Possibilities

The Federal Income Tax Act, which governs the Canadian tax system, allows individuals to skip filing tax returns when they have no income or if their income falls below the minimum required as set by the Canada Revenue Agency (CRA). However, the law does not stop you from filing returns, which is something you should consider as it gives you several benefits. Note that Canadian residents are subject to tax from wherever they are around the world, while non-resident Canadians are generally subject to tax on income they make from Canadian sources.

Can you get a tax refund with no income in Canada? The simple answer is yes – you can get a tax refund with no income or income below the set threshold. We will discuss what tax refunds are, the difference between taxable income and non-taxable income, the different tax credits you can receive, and the eligibility criteria for getting a “no-income” tax refund.

We will also look into the different filing methods and discuss the step-by-step guide to filing zero-income tax returns. We will outline all the forms you need to fill out, the personal information and documents you will require, and give you tips and strategies on how to maximize credits and deductions.

You can file tax returns by yourself, but we will see if other filing options are more advantageous and how you stand to benefit when you enlist the services of an experienced tax consultant.

Understanding Tax Refunds and Income

What are Tax Refunds?

Tax refunds are reimbursements you get from the state or federal government for any excess taxes you pay. A tax refund is the opposite of a tax bill, which refers to extra money the tax authorities owe you if your employer didn’t withhold enough deductions.

What is Payroll Withholding?

Your employer is obligated to withhold part of your salary as per the applicable tax regime and submit the same to the CRA. This is called payroll withholding. You then have to file returns at the end of every year. The amount you declare should tally with the payroll withholding; otherwise, you either get a tax bill in case of underpayment or a tax refund in case of overpayment.

An Example of an Income Tax Return

A common tax refund example in Canada is the child tax credit (CTC), which, as the term implies, you get with every extra child you get.

Who Gets Tax Refunds?

Anyone can be eligible for a refund. For example, if your annual salary is $100,000 and you prepaid $20,000 in taxes, if your tax due at the end of the year is $18,000, then you will get $2,000 upon filing.

However, tax refund equations look different for different individuals and are determined by factors such as your employment, the tax credits entitlement, and you and your dependents. You can use a tax refund calculator to calculate how much the CRA owes you. Tax calculators estimate how much you need to pay, which you get by adding up all your income sources, such as your employment, side hustle, and investment, subtracting tax deductions like RRSP contributions to get your taxable income, and then multiplying this with your tax rate to get how much you owe the taxman.

Why Did I Get a Tax Refund?

Did you get a tax refund, and are wondering why you got it? Here are examples of situations where you may get a tax refund.

• You may get a refund if you make an RRSP contribution.
• If you are a student, you can save your student loan interest and tuition credits as future deductions to get refunds when you are earning more.
• You can claim child care expenses if you are a parent to receive benefits for your children.
• If you are a senior and you share your pension with your spouse, you can get a refund.
• If you make an error in filling out the paperwork that is used in the estimation of the correct withholding tax.
• You may have forgotten to update the paperwork to reflect changes in circumstances, such as the birth of a child.
• If you are self-employed or a freelancer filing estimated taxes and afraid of underpayment penalties, you overpay your taxes; you may get a refund.

At what salary do you not get a tax refund, and what is the maximum tax refund you can get?

Tax refunds are available to everyone who has overpaid. The amount of refund depends on your total income, your tax credit claim, and how much you have already paid. So, there is no “maximum” tax refund or “salary caps” for tax refunds.

What are taxable incomes and non-taxable incomes?

Taxable incomes include salaries, wages, commissions, rental income, royalty payments, dividends, stock options and interests, and self-employment income. Fringe benefits are also taxable. These include company vehicles for personal use, gym memberships, and holiday gifts.

Non-taxable incomes include child support payments, welfare payments, most healthcare payments, cash rebates from manufacturers, dealers, and retailers, and inheritance, bequests, and gifts.

Eligibility for Tax Refunds with No Income

The Canada Revenue Agency (CRA) has been given powers under the Federal Income Tax Act to collect income taxes in Canada. The CRA has put in place general filing requirements, but can you file a tax return if you didn’t work? The CRA does not require those who did not earn an income, or those whose income falls below the set threshold, to file returns at the end of the financial year.

So, what are the thresholds set up by the CRA? If you are self-employed, you are not obligated to file returns if you did not make at least $400. Factors like age and filing status are also considered when determining the threshold.

Even if you do not have an income, it is still a good idea to file returns. You may just enjoy a no income tax refund and even access different government programs if you qualify.

So, what refundable tax credits are available to individuals with no income in Canada?

1. The Canada Child Benefit (CCB): Can you get a child tax credit if you have no income in 2023? As the term suggests, this CCB is paid to parents and guardians of children under 18 years in the form of tax-free monthly payments. This benefit may also include Child Disability Benefit and relevant provincial programs for parents with disabled children. The benefit only applies to Canadian residents who have filed their tax returns and completed Form RC66. For the 2022-2023 budget years, eligible families received $6,997 per child. The amount is dependent on the size and income of your family.
2. The Goods and Services Tax (GST) or Harmonized Sales Tax (HST) Credit: This benefit is automatically applied to those who are eligible (individuals with low or modest incomes). It is meant to help them offset the GST/HST they pay when they buy goods and services. If you qualify, you will receive credits ranging from $467 to $612 – the amount received depends on your family situation and net income.
3. Provincial credits: Some provinces have additional credits, a good example being the Ontario Trillium Benefit, where eligible families get $172 – $265. In Quebec, available tax credits include Quebec Family Allowance for families with kids below 18 years of age, which ranges from $389 to $2782 per family, the Quebec refundable cost of living tax credit which provides a credit of up to $600 for those making below $104,000, and the solidarity tax credit, whose payout is based on marital status and levels of income.
4. Eligible tuition credits: Under the Canada Training Credit (CTC) and tuition tax credits, some tuition fees are eligible for a tax refund if no income. You stand to get as much as $5,000 in tuition tax credits. Simply file your tax returns and the T2202 form, which will be provided by the school you are attending. Note that even when you do not need the credits at that moment, it is still important that you file returns so they can be carried forward. You can also transfer them to a common-law partner, a spouse, or a parent.
5. Basic Personal Amount (BPA). I have no income; what can I do? You can file and end up enjoying this tax credit, which is given by both provincial and federal governments. The federal amount was $14,398 for the federal government and $16,143 for Quebec.
6. Canada Dental Benefit: This benefit helps eligible families that earn below $90,000 and who have children below 12 get dental work.
7. Tax credits for low-income senior citizens: No income; can I get a tax refund? If you are a senior citizen with no income, you have several options. The Home Accessibility Tax Credit (HATC) is meant to assist senior citizens over 65 in doing renovations and home improvements for improved independence and mobility. The benefit can be automatically claimed on line 31285 on TurboTax. (We will discuss how to file a zero income tax return TurboTax below). The Age Amount Tax Credit is meant for senior citizens with a net income below $39,826 – the claim is worth up to $7,898. Other credits include The Quebec Independent Living Tax Credit and the split pension amount.

General Requirements for Filing Income Tax Returns

When to File – You are expected to file T1 tax returns by the 30th day of April each year. If you are self-employed, you have until the 15th day of June to file your returns. The CRA may call you (using an automated message) between the 3rd of April and the 29th of May to remind you to file.

Who is required to file personal income tax returns? All Canadians, even those living outside Canada, are expected to file returns. The exemption is if you don’t have an earned income. In that case, you are not obligated to file returns unless CRA issues a demand under subsection 150(2) or you had a capital gain during the financial year following property disposal.

What is no earned income, and what is an example of unearned income? Unearned incomes are incomes that you do not get from working – you are not to report these incomes. What are the three types of unearned income? Examples of unearned income include lottery winnings, inheritances, most gifts, money paid by Canada or by allied countries, Canada Child Benefit, GST/HST credit, and in Quebec, handicapped children supplement and family allowance payments. Others are compensation paid by a territory or province following a car accident or a criminal act, insurance payout following the death of a loved one, and strike pay.

What is considered earned income? Earned incomes are incomes you get from working. Common examples are salaries, wages, commissions, bonuses, and tips. They also include self-employment earnings and foreign employment income.

What is Required to File? – You will need to provide different artifacts over and above the paperwork you fill out. These include T4 slips if you are employed, employment insurance benefits, interest, dividends, mutual funds, social assistance payments, workers’ compensation benefits, and other relevant information slips. You will also need to provide additional documents like a Notice of Assessment/Reassessment, the sale of a principal residence, receipts of your rental income and expenses, and a disability tax credit certificate. You also need such receipts as RRSP contribution receipts, tool expenses, support for a spouse, child, or common-law partner, medical expenses, childcare expenses, adoption expenses, and moving expenses.

Requests and Demands to File – The CRA policy is to encourage compliance. Before adverse action is taken against a defaulter, a demand as stipulated under subsection 150(2) will have been sent. Only if you ignore these demands will you be prosecuted under 238(1).

Consequences of Failure to File – If you are obligated to file returns, and you fail to do so, subsection 238(1) stipulates that you are liable to a fine of between $1,000 and $25,000 and possible jail time (not exceeding 1 year). Note that the penalties are applicable for each financial year. Under paragraph 239(1)(d), the CRA can even charge you with tax evasion. If they prove it, you are looking at fines ranging from 50% to 200% of the evaded tax and up to 2 years of jail time.

The CRA may also indict you under subsection 239(2).

TYPE OF REFUNDABLE TAX CREDIT	ELIGIBILITY CRITERIAS	AMOUNT
The Canada Child Benefit (CCB)	No income in 2023 Paid to parents and guardians of children under 18 years May also apply to parents with disabled children Only for Canadian residents who have filed their tax returns and completed Form RC66	$6,997 per child (the amount is dependent on the size and income of your family)
The Goods and Services Tax (GST) or Harmonized Sales Tax (HST) Credit	Individuals with low or modest incomes	$467 – $612
Provincial Credits	Individuals with low or modest incomes Families with kids below 18 years of age	$172 – $265 (Ontario Trillium Benefit) $389 – $2782 (Quebec Family Allowance)
Eligible Tuition Credits	Some tuition fees are eligible for a tax refund if no income Filed tax returns and the T2202 form, which is provided by schools	$5,000
Basic Personal Amount (BPA)	Individuals with no income	$14,398 – the federal amount $16,143 – in Quebec
Canada Dental Benefit	Families with income below $90,000 Families with children below 12 years
Tax Credits For Low-income Senior Citizens	Senior citizens over 65 that do renovations and home improvements for improved mobility (The benefit can be automatically claimed on line 31285 on TurboTax) Senior citizens with a net income below $39,826	up to $7,898 (The Age Amount Tax Credit)

The Canada Child Benefit (CCB)

ELIGIBILITY CRITERIAS

No income in 2023 Paid to parents and guardians of children under 18 years May also apply to parents with disabled children Only for Canadian residents who have filed their tax returns and completed Form RC66

AMOUNT

$6,997 per child (the amount is dependent on the size and income of your family)

The Goods and Services Tax (GST) or Harmonized Sales Tax (HST) Credit

ELIGIBILITY CRITERIAS

Individuals with low or modest incomes

AMOUNT

$467 – $612

Provincial credits

ELIGIBILITY CRITERIAS

Individuals with low or modest incomes Families with kids below 18 years of age

AMOUNT

$172 – $265 (Ontario Trillium Benefit) $389 – $2782 (Quebec Family Allowance)

Eligible tuition credits

ELIGIBILITY CRITERIAS

Some tuition fees are eligible for a tax refund if no income Filed tax returns and the T2202 form, which is provided by schools

AMOUNT

$5,000

Basic Personal Amount (BPA)

ELIGIBILITY CRITERIAS

Individuals with no income

AMOUNT

$14,398 – the federal amount $16,143 – in Quebec

Canada Dental Benefit

ELIGIBILITY CRITERIAS

Families with income below $90,000 Families with children below 12 years

Tax credits for low-income senior citizens

ELIGIBILITY CRITERIAS

Senior citizens over 65 that do renovations and home improvements for improved mobility (The benefit can be automatically claimed on line 31285 on TurboTax) Senior citizens with a net income below $39,826

AMOUNT

up to $7,898 (The Age Amount Tax Credit)

Tips on Claiming Tax Refunds with No Income

Under Canadian law, you are required to file T1 tax returns on or before 30th April each year (and on or before 15th June if you are self-employed). However, this rule does not apply if you have not had any earned income for the year unless there is a demand from CRA to file under subsection 150(2) of the law or you have had a capital gain after disposing of capital property. It is always advisable to file returns, even if you haven’t earned income, to take advantage of the many tax refunds/credits available. So, how do you increase your chances of getting tax refunds?

Here are some tips for claiming tax refunds with no income:

File Returns in Good Time

If you have no income, note that you will not receive benefits unless you file returns. You must file your returns in good time (by the 30th of April or 15th of June if you are self-employed) to avoid late-filing penalties, to get refunds faster, and to avoid interest charges if you have a balance. Filing opens on the 20th of February each year. Note that the deadline to pay taxes is the 30th of April or the 1st of May when the 30th of April falls on a Sunday. Note that if you have a balance owing, you can get relief from the CRA in some circumstances.

Start Filing Returns After the First Year If You Are New in Canada

If you are new in Canada, be it a permanent resident, a refugee, or a temporary resident such as a student, you will not need to file returns to begin getting credits and benefits during your first year in the country. However, you will need to file returns to continue getting the credits and benefits after the first year of your stay. Your journey starts with getting the 9-digit SIN (social insurance number), which you will need to work in Canada to receive your credits and benefits and to open a bank account.

You can file your returns on paper or online. The online option takes 2 weeks to process, while the mail option usually takes 8 or more weeks. You should be aware of tax scams. Be on the lookout for people calling claiming to be from the CRA and requesting your SIN, bank account number, credit card number, passport number, and other personal info. CRA will never ask you to pay a fee using gift cards, credit cards, or similar services or threaten to deport, harm, or arrest you. It helps to be familiar with the Canadian tax system.

Gather your Documents

You will need to provide CRA with artifacts if you are to receive your tax credits. Common documents for those with an income include the Statement of Remuneration Paid (T4), Statement of Pension, Annuity, Retirement, and Other Incomes (T4A), and Statement of Investment Income (T5). If you have no income and want to claim some benefits, provide receipts of the claim amount (such as child support expenses) as well as the requested schedules, forms, and certificates. It is always worth keeping your documents and receipts for at least 6 years after filing your returns, as the CRA requests for review from time to time.

Check the Status of the Refund

You should check the status of your refund 8 weeks after you file. If there’s no response on the refund status after 8 weeks, contact the CRA for an update. Wait for 16 weeks if you live outside Canada. You can check the status of your refund on My Account – you will need to register first. You can also get the tax refund status from the MyCRA app or by calling 1-800-959-1956, which is an automated line available 24/7.

Change a Return If Necessary

If you have information that may change the result of your tax credit after you have already filed, do not file another tax return. You should wait for the Notice of Assessment before you request changes.

Note that you can only make changes going back 10 calendar years or less. You can change the return using the ReFILE service if you file electronically, using “Change my Return” on My Account for Individuals, or by sending Form T1-ADJ (T1 Adjustment Request) via mail with supporting documents.

Do Not Shy Away from Filing Formal Disputes

If you feel you deserved a certain tax return and it was not awarded by CRA, you can always file a formal dispute. This could be in the form of an objection against a determination or assessment, a CPP/EI decision appeal, applying for tax relief, or filing an appeal in court.

Familiarize Yourself with Applicable Tax Credits, Benefit Payments, and Deductions

You can only benefit from tax credits, benefit payments, and deductions if you know what is available for individuals who do not have an income. Some of the tax credits you may be eligible for even with no income are Canada Child Benefit (CCB) if you have kids below the age of 18, goods and services tax/harmonized sales tax (GST/HST) tax credit if you are over 19, the Canada Training Credit if you are a student, child care expenses deduction, Canada caregiver credit, Medical Expense Tax Credit (METC), and Canada Dental Benefit. Others are the Home Accessibility Tax Credit or HATC, First-Time Home Buyers’ Tax Credit, and climate action incentive payment or CAIP, among others.

Consider Filing Online

92% of Canadians file their returns online. This is because of the benefits this offers over other filing methods. Filing online is the easiest, fastest, and safest option. While processing paper returns takes up to 8 weeks, it only takes 2 weeks to process digital returns. Other benefits of online filing are that you don’t have to send receipts (but you should keep them just in case CRA asks for them), you get instance confirmation that the returns have been received, you can change the return through the ReRILE service, and you get refunds faster. CRA has several certified software that you can use to file your online returns.

Seek Help

Consider enlisting the services of a tax professional to assist you in getting the most out of tax refunds. A professional will advise you on what is due to you and the relevant lines you need to file during the online application.

Contact CRA If You Have Questions About Your Taxes and Benefits

If you have questions about your taxes and benefits, CRA has a helpful chat box that can answer most of your queries. You can also get general information from 1-800-267-6999 (Tax Information Phone Service), 1-800-959-1956 (Telerefund service), 1-800-959-8281 (Individual tax inquiry), or CRA’s website.

Avoid Common Mistakes People Make When Filing

Some people are not clear as to what constitutes income. You need not be formally employed – incomes from online business activities, tips, gratuities, part-time job incomes, incomes from the platform economy, and income from sales of services and jobs are all subject to taxation. You are also required to pay taxes even if you live outside Canada. Other common mistakes people make are listing personal expenses like wedding and funeral expenses, failing to keep personal information updated, such as your marital status and direct deposit details, and failing to support the income and expenditure of your business if you are self-employed or a sole proprietor.

Combine Online Filing with Direct Deposit for a Quick Refund

If you want to get your refund quickly, combine online filing with direct deposit. This allows you to get tax refunds in as little as 8 business days. Most financial institutions allow you to register for CRA direct deposit through them.

File a tax return when income is zero

If I make less than $5,000 a year, do I have to file taxes? You are not obligated to file returns if you do not make an income, or your income is below the CRA threshold. So, what is the minimum income to file taxes in 2023? The basic personal amount for 2023 is $15,000.

Below is a step-by-step guide on how to file zero-income tax returns online.

Filing Taxes Online

Online filing is the quickest, easiest, and safest way to file returns. CRA has certified several software programs for online filing, one of the most popular being TurboTax.

How to file zero income tax return TurboTax

    1. Create a CRA My Account

I have no income. What can I do? Begin by creating a CRA My Account. This works together with CRA’s electronic filing system called NETFILE. If it is your first time signing up for CRA, you can either register for your CRA My Account or access your CRA info through your bank if it is a CRA Sign-in Partner.

    2. Have your personal information at your fingertips

Have all your personal info at your fingertips before you start filing. This includes your SIN, the dates of birth of all your family members, your spouse’s or dependent’s net income when claiming credits like the Canada Caregiver Amount, and a Notice of Assessment from the previous year’s return. You also need the NETFILE access code and the installment payments you have made to CRA.

    3. Gather relevant paperwork

You also need all the paperwork before you can start filing returns. Employment forms include T4 and RL-1 forms, self-employment forms include T4000 and T5013, saving and investment forms include T5, T3, and T5008, and retirement forms include T4A, T4A(P), T4A(OAS), T4RSP, and T4RIF. The employment insurance and social benefits forms are T4E and T5007. If you have no income, fill out the zero-income tax return form.

Filing with TurboTax

Can you file taxes with no income but have a dependent? To file, log in to TurboTax, fill in your personal information, and click on continue on your personal info summary page. On the Get Started page of the income section, click on “Continue,” and when asked if you have the income to report, click on “Continue without Income”. Fill in the remaining sections. On the Review Page, click on the top left for Tax Refund for the year in question. Go to “View Detailed Tax Summary” for a detailed summary of the tax credits you are eligible for.

HOW TO FILE ZERO INCOME TAX RETURN TURBOTAX

Step 1: Create A CRA My Account	1 Sign up for CRA 2 Either register for your CRA My Account or access your CRA info through your bank if it is a CRA Sign-in Partner
Step 2: Have Your Personal Information At Your Fingertip	SIN The dates of birth of all your family members Your spouse’s or dependent’s net income Notice of Assessment from the previous year’s return NETFILE access code Installment payments you have made to CRA
Step 3: Gather Relevant Paperwork	Employment forms T4 and RL-1 Self-employment forms T4000 and T5013 Saving and investment forms T5, T3, and T5008 Retirement forms T4A, T4A(P), T4A(OAS), T4RSP, and T4RIF The employment insurance and social benefits forms T4E and T5007 Or zero-income tax return form

HOW TO FILE ZERO INCOME TAX RETURN TURBOTAX

Step 1: Create A CRA My Account

1 Sign up for CRA 2 Either register for your CRA My Account or access your CRA info through your bank if it is a CRA Sign-in Partner

Step 2: Have Your Personal Information At Your Fingertip

SIN The dates of birth of all your family members Your spouse’s or dependent’s net income Notice of Assessment from the previous year’s return NETFILE access code Installment payments you have made to CRA

Step 3: Gather Relevant Paperwork

Employment forms T4 and RL-1 Self-employment forms T4000 and T5013 Saving and investment forms T5, T3, and T5008 Retirement forms T4A, T4A(P), T4A(OAS), T4RSP, and T4RIF The employment insurance and social benefits forms T4E and T5007 Or zero-income tax return form

Maximize Deductions and Credits

You need not have an income to enjoy tax credits and deductions. You, however, have to file tax returns at the end of the financial year. What does “I want to maximize deductions and credits” mean? Maximizing deductions and credits requires careful tax planning. Some deductions need to be bunched, while others need to be itemized. For example, if your medical expenses are over the threshold, bunching them is the better option. So, how can I reduce my tax deductions in Canada? Below aretax tips for 2023 to consider.

Home Buyers’ Amount

Are you wondering how to get a $10,000 tax refund? You can get up to $10,000 if you want to buy a qualifying home, provided you did not live in another of your homes during the financial year under review.

Moving Expenses

Another of the tax credits to be aware of is moving expenses for those who have moved over 40 km for work, to establish a business, to establish a new residency, to join a post-secondary institution, or to be a full-time student.

Home Accessibility Tax Credit

If you are a senior, another tip on how to maximize tax deductions is to take advantage of the Home Accessibility Tax Credit. This tax credit is given if you are making renovations to help with accessibility, safety, and functionality, either at home or work.

Medical Expenses

What is the maximum tax credit in Canada? The applicable tax credits vary from one individual to the next and depend on the person’s situation, such as marital status, health, and if one has children. As an example, you can claim medical expenses, including prescriptions and dental visits, as you file your returns, provided the expenses were incurred within the preceding 12-month period.

Child Care Expenses

Do you get a bigger tax refund if you make less money? Not necessarily. The amount you get in tax refunds depends on such factors as the number of children you have. If you take your children to daycare centers, sleepaway camps, or day camps, or your children are taken care of by nannies or babysitters, you can claim childcare expenses.

Tuition Tax Credit

If I’m a student, how do I maximize my tax refund in Canada? There are tuition tax credits you can take advantage of, which are paid to post-secondary students older than 16 years who are in institutions offering skills needed for an occupation.

Other tax credits you can get when you file through TurboTax Canada are workers’ tax credits, self-employed business and home office expenses, disability tax credit, GST/HST New Housing Rebate, rental payments (tenants), property taxes (owners), spousal and child support payments, and charitable expenses, among others.