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Most Canadians are likely of the view, having just gone through the process of pulling together various sources of information on income and deductions and having dutifully prepared and filed an income tax return for the 2025 tax year, that they can happily put the subject of income taxes to one side for the next several months.

Most Canadians are likely of the view, having just gone through the process of pulling together various sources of information on income and deductions and having dutifully prepared and filed an income tax return for the 2025 tax year, that they can happily put the subject of income taxes to one side for the next several months.

While that’s no doubt a welcome thought, the fact is that it’s not too early to start planning with respect to 2026 income taxes: to the contrary, the earlier such planning starts, the better the outcome is likely to be.

By this point, about halfway through the tax year, most Canadians have a fairly accurate idea of how much their income for 2026 will be and know, in a general way, the kinds of deductions and credits which they will be able to claim on their return. As well, since the income earned and deductions claimed by most Canadians doesn’t vary greatly from year to year, the results obtained when the return for 2025 was assessed by the Canada Revenue Agency are quite likely to be similar to those that will follow from the filing of the 2026 return next spring.

Doing a mid-year review, instead of waiting until December (or worse, until tax filing time next spring) gives the taxpayer the chance to put into place any adjustments needed to help ensure that there are no unpleasant tax surprises when the return for 2026 is filed next spring. And, while the deadline for implementing most tax saving strategies may be December 31, it’s also the case that opportunities to make a significant difference to one’s current-year tax situation diminishes as the calendar year progresses

The results which followed the filing of the 2025 return can, in fact, alert the taxpayer to the need to pay more attention to their tax situation for 2026.  Most taxpayers hope for (and in fact do receive) a refund while others are disappointed to find out that they owe additional taxes and therefore have a tax bill (on which interest may be accumulating) to pay. While the taxpayer’s reaction to those two situations may be very different, the reality is that both such outcomes signal a need to address tax planning issues for 2026.

Where there is a tax balance owing on filing, it signals that taxes were underpaid throughout the year, and the taxpayer is required to make up that shortfall by remitting additional tax amounts owed to the CRA. Conversely, getting a tax refund is often viewed by taxpayers as receiving “free” money. That’s not the case. Where the taxpayer receives a refund, it usually means that taxes were overpaid throughout the year, thereby providing the federal government with an interest-free loan of the taxpayer’s money. All taxpayers pay income tax throughout the year, and when that system works as it should, the amounts paid accurately reflect the taxpayer’s tax liability for the year, and so there is neither a significant tax amount owed or a significant tax refund received on filing. Carrying out a mid-year review of one’s tax situation for 2026 can help ensure that result when the return for 2026 is filed with the CRA next spring.

The first step in doing that review is figuring out how much one’s tax bill for 2026 is likely to be. Where income amounts and available deductions and credits are very similar for 2025 and 2026, the amount of tax owed by the taxpayer for 2025 (a figure that can be found on Line 43500 of the Notice of Assessment) is likely to be very close to their tax liability for 2026.

Where income for 2026 is likely to be significantly greater or lower than that received in 2025 (for instance, where a taxpayer retired at the end of 2025), or the taxpayer will have significantly greater tax deduction or credit claims (for instance, a large RRSP contribution or much higher than usual medical expenses) for 2026, taxpayers can use tax return preparation software for the 2025 tax year to get an idea of how much tax will be payable for 2026. Although the tax brackets and tax credit amounts used by tax return preparation software for 2025 will differ from those in effect for 2026, those differences won’t make a significant difference to the total tax bill. If anything, using 2025 tax return software to calculate the tax bill for 2026 will result in a slight overestimate of that tax bill, owing to the indexation of tax brackets and credit amounts, as well as a decrease in the federal tax rate applied to the first income bracket for 2026.

After getting a sense of how much tax is likely to be payable for the 2026 tax year, the next step in doing a review is to determine how much income tax has already been paid to the CRA for 2026 (remembering that by this point in the year, approximately one-half of the tax bill for 2026 should already have been remitted to the CRA).

There are two ways of paying income taxes throughout the year. The majority of Canadians (including all employees) have income taxes deducted from their paycheques and remitted to the federal government on their behalf – a process known as source deductions. Taxpayers who do not have income tax deducted at source – which would include self-employed individuals and, frequently, retired taxpayers – make tax payments directly to the federal government (four times a year, in March, June, September, and December) through the tax instalment system.

Where the individual involved pays tax by instalments, the solution is simple. They can simply change the amount of remaining instalment payments to be made in 2026 so that the total instalment payments made over the course of this year accurately reflect the total tax payable for the year.

The situation is a little more complex for employees, or anyone who has tax deducted at source. Where a taxpayer finds that source deductions being made will not be sufficient to cover their tax liability for the year (meaning a tax bill to be paid next spring) the solution is to have those source deductions increased. No one likes paying more taxes, but where taxes are owed the only choice involved is to pay them now or pay them later. Spreading out that payment over the rest of the tax year is much less painful than being hit with a large tax bill (as well as interest charges when that tax bill can’t be paid in full and on time) when the return for the year is filed next spring.

Take, for example, an employee who, after filing the return for 2025, received a bill indicating that an additional $1,000 in taxes was owed. Assuming that their income and the amount of tax deducted from their paycheque doesn’t change, it’s likely that a similar amount will be owed when the return for 2026 is filed. If that taxpayer is paid biweekly, there will be about 13 paycheques between the end of June and the end of the year. Increasing the amount of tax deducted from those paycheques by about $75 per paycheque will mean that the $1,000 in taxes owing is paid to the Canada Revenue Agency by the end of the year – thereby avoiding that large tax bill when the return for 2026 is filed in the spring of 2027.

To increase the amount of tax deducted from their paycheque, the employee needs to obtain a TD1 form for 2026, which can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/forms-publications/td1-personal-tax-credits-returns/td1-forms-pay-received-on-january-1-later.html. On the second page of the Form TD1, there is a section entitled “Additional tax to be deducted”, in which the employee can direct their employer to deduct additional amounts at source for income tax, and can specify the dollar amount which is to be deducted from each paycheque, on a go-forward basis.

No one particularly likes thinking about taxes, at any time of year, but ignoring the issue definitely won’t make it go away. The investment of a few hours of time now, and putting in place any needed adjustments, can mean greater peace of mind (and reducing the risk of facing a large tax bill) when the return for 2026 is completed and filed next spring.

It’s no secret that Canadian households have, over the past few months and years, been subjected to a series of financial and economic “hits” which have left many such households struggling to maintain their financial stability, or even to meet everyday expenses out of current income. In difficult financial times, individuals and families can and do adjust by cancelling discretionary expenses like an annual vacation, or postponing large expenditures like a new car or a bigger house. What has made the past few years so difficult is that the most significant cost increases have affected precisely the kinds of expenditures which are completely non-discretionary and cannot be deferred – specifically, the cost of food, shelter, and energy.

It’s no secret that Canadian households have, over the past few months and years, been subjected to a series of financial and economic “hits” which have left many such households struggling to maintain their financial stability, or even to meet everyday expenses out of current income. In difficult financial times, individuals and families can and do adjust by cancelling discretionary expenses like an annual vacation, or postponing large expenditures like a new car or a bigger house. What has made the past few years so difficult is that the most significant cost increases have affected precisely the kinds of expenditures which are completely non-discretionary and cannot be deferred – specifically, the cost of food, shelter, and energy.

A recent report by the Office of the Superintendent of Bankruptcy (available at Insolvency Statistics in Canada—First quarter of 2026) shows that many Canadian individuals and families have reached a point where meeting their regular financial obligations is no longer possible and they have declared personal bankruptcy. During the first quarter of 2026 (January to March), the number of personal bankruptcies in Canada rose by 8.5% when compared to the same quarter of 2025. More significantly, perhaps, is the fact that personal bankruptcies for the first quarter of 2026 are at their highest level since the same quarter in 2009 – during the 2008-09 financial crisis.

The significance of these numbers is two-fold. First, bankruptcy statistics are what is known as a “lagging indicator”, in that they represent a measure of conditions which have already occurred or are ongoing – in this case, the significant financial stress being experienced by Canadians. The fact that personal bankruptcies have increased to such a degree and that they are, by historical standards, at such a high level undoubtedly means that many other individuals and families are struggling to avoid having to take the same step.

It makes for a gloomy picture, but the fact is that a declaration of bankruptcy is the very last option to be used by individuals and families who can no longer meet their financial obligations. There are, in fact, many solutions and strategies available to individuals and families who are trying to cope with current economic conditions before a declaration of bankruptcy needs to be considered – and most of those solutions and strategies are available free of charge.

The best first step to be taken by individuals or families who are in financial difficulty is to seek out the services of a non-profit credit counselling agency. Almost every community of any size has a credit counselling agency which can assist individuals and families who are encountering such financial difficulties with strategies to help manage their situation. And, where such an agency does not exist locally, their services can usually be provided online.

Such credit counselling agencies operate on a not-for-profit basis and provide their services at little or no cost to individuals or families. Each such agency is a member of Credit Counselling Canada (to be a member of Credit Counselling Canada, an agency must be accredited and must operate only on a not-for-profit or charitable basis); a searchable listing of member agencies and their locations can be found on the Credit Counselling Canada website at https://creditcounsellingcanada.ca/locate-a-counsellor/?cc=ON. An outline of the kinds of services which are provided by such agencies is available on the same website at https://creditcounsellingcanada.ca/.

While these agencies are called credit counselling agencies, the services which they provide are much broader than the name implies. The services provided include helping clients to develop a realistic budget based on their current financial circumstances and providing advice on money management. In addition, where individuals and families are in financial difficulties, it is often the case that they take on additional debt to cope, and keeping up with that debt eventually becomes impossible, adding another layer of financial stress. Where clients are carrying unmanageable amounts of debt, credit counsellors can help to create a debt management plan (DMP). That DMP could include a voluntary agreement set up by a credit counsellor between an individual and their creditors. People who sign up for a DMP make one lump payment each month to the non-profit credit counselling agency, which then sends all of those funds directly to the individual’s creditors. In most cases, that agreement enables the individual or family to pay off debt over a longer period of time (thus improving cash flow and relieving some financial stress) and sometimes at a lower rate of interest.

It is sometimes the case that the financial circumstances of an individual or family are such that the steps which ultimately need to be taken are outside the ambit of a credit counselling agency – steps like a consumer proposal or bankruptcy. In those circumstances, the agency can provide a referral to a qualified professional in that field.

Where an individual or a family feels overwhelmed by financial stress, it’s inevitable that they will be vulnerable to approaches which promise to make their financial problems disappear. And, unfortunately, there are individuals and companies which are willing to take advantage of that vulnerability – for a fee.

The website of the Financial Consumer Agency of Canada (an agency of the federal government) at https://www.canada.ca/en/financial-consumer-agency/services/debt.html  and https://www.canada.ca/en/financial-consumer-agency/services/debt/debt-settlement-company.html contains a warning about using the services of such “debt settlement companies”, making the following points:

• Companies or agencies can’t guarantee they will solve your debt problems.
• Companies or agencies can’t quickly and easily fix your credit score.
• Companies should not (as they sometimes do) encourage you to take out a high-interest loan to pay off your debts.
• Companies and agencies may misrepresent services they offer as being part of a government program.

These warnings are based on the fact that debt settlement companies are for-profit businesses, not non-profit service providers. They collect fees from consumers who are in financial difficulty, sometimes making unrealistic commitments with respect to what they can accomplish. For instance, while such companies may promise to negotiate with creditors in order to reduce any amount owed, or the interest rate payable on existing debt, the fact is that creditors are not obliged to speak to or negotiate with a debt settlement company with respect to another person’s debts. Debt settlement companies may promise to “fix” a poor credit rating or credit report, but they have no actual power to do so. And the fees charged by such companies will almost certainly have to be paid, even when they don’t actually produce the results they promise.

Between February and May of 2026, just over 30 million individual income tax returns for the 2025 tax year were filed with the Canada Revenue Agency (CRA).  And, while each one of those returns was different with respect to income reported and deduction and credit claims made, the steps taken by the CRA after receiving each such return was the same. For each return filed, the CRA reviewed the income amounts reported and the tax deduction and credit claims made and then issued a Notice of Assessment (NOA) summarizing its conclusions with respect to the taxpayer’s tax situation for the year.

Between February and May of 2026, just over 30 million individual income tax returns for the 2025 tax year were filed with the Canada Revenue Agency (CRA).  And, while each one of those returns was different with respect to income reported and deduction and credit claims made, the steps taken by the CRA after receiving each such return was the same. For each return filed, the CRA reviewed the income amounts reported and the tax deduction and credit claims made and then issued a Notice of Assessment (NOA) summarizing its conclusions with respect to the taxpayer’s tax situation for the year.

When all goes well, the figures listed and the tax result obtained on that NOA will agree with the numbers submitted by the taxpayer on their return. In most cases (just over 17.5 million for the 2026 filing season), the filing of the return will result in a tax refund owed to the taxpayer, while for others there will be a tax balance owed.

Matters get more complicated where the CRA is not in agreement with the information provided or the claims made by the taxpayer in their return and, especially, where the CRA finds that additional tax must be paid by that taxpayer. When that happens, the taxpayer has to decide whether to dispute the decisions made by the CRA as outlined in the NOA for the year.

There are a lot of reasons why the CRA may disagree with the taxpayer, and in many cases disputing the CRA’s findings really doesn’t make sense. While the use of tax return preparation software has minimized both the risk of making a clerical or arithmetical error on the return and the possibility of the taxpayer claiming a tax credit to which they are not entitled, those errors can still occur.  And, where that has happened and the CRA correctly identifies the error, there’s really nothing to be gained by disputing their conclusions.

In many other cases, however, the taxpayer may genuinely feel that the conclusions reached by the CRA are simply incorrect. Our tax system is very complex, and the rules governing the circumstances in which a particular deduction or credit can be claimed are very detailed. In many cases, there can be a genuine question about whether, for instance, a business expense or an out-of-pocket medical cost can be claimed for tax purposes. Where the taxpayer believes that a claim made should have been allowed but was not, the next step to take is to find out why.

To do so, it’s best to contact the Agency directly for an explanation of their decision. Taxpayers can call the Individual Income Enquires line at 1-800-959-8281, where client services agents who have access to individual tax files can provide additional information about the Agency’s decision. Taxpayers who call that line should ensure that they have a copy of the NOA and/or their tax return for the year, as they will be required to provide information from that return (at a minimum, their name, social insurance number, address, and probably one or more figures from the return) before any confidential tax information can be discussed or disclosed.

Where the matter can’t be resolved to the taxpayer’s satisfaction by talking to the CRA, it’s then time to consider filing a formal dispute. Filing that dispute online through the CRA’s My Account service is, by far, the easiest way to do so. However, in order to use My Account, the taxpayer must be registered for that service.

At one time, registering for My Account was a fairly lengthy process, involving a wait for the CRA to send a security code to the taxpayer by regular mail, but changes to CRA procedures have streamlined that process. Essentially, a taxpayer who wants to register for My Account without waiting for a security code to be sent by mail needs to take a real-time picture of themself with an accepted government-issued photo identification document (for instance, a Canadian passport or driver’s licence). That photograph is then submitted online to verify the taxpayer’s identity and, once that is done, access to the taxpayer’s CRA accounts is available. Detailed information on the available options to become registered for My Account and the procedures to be followed can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/e-services/cra-login-services/register-cra-sign-in-services.html.

Taxpayers who are using My Account to file a Notice of Objection can do so by logging in online at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html. Once logged in, it’s necessary to click on the “File a formal dispute” from the listing on the left-hand side of the page. The taxpayer then provides information with respect to the assessment being disputed and the reasons why the assessment is being disputed and submits those reasons by clicking on the Submit button at the bottom of the "File a formal dispute” page. Taxpayers who are disputing their tax assessment through My Account can also scan and send supporting documents relating to that dispute to the Agency.

While filing a dispute through My Account is certainly faster than mailing (or faxing) a hard copy of the Notice of Objection, not all taxpayers want to use that option. Taxpayers who choose instead to file their objection using a hard copy of a Notice of Objection form can find the most current version of the CRA’s standardized T400A Objection on the Agency’s website at T400A Notice of Objection - Income Tax Act - Canada.ca.

Taxpayers aren’t obligated to use the CRA’s official Notice of Objection form – any written communication which makes it clear that the taxpayer is objecting to their Notice of Assessment will do. Nonetheless, there’s no reason not to use the standardized form, and there are benefits to doing so. Using the T400A form will make it clear to the CRA that a formal objection is being filed, will present the necessary information in a format with which the Agency is familiar, and will also mean that no required information is inadvertently omitted. It’s also helpful to include a copy of the Notice of Assessment which is being disputed. Taxpayers should also consider ensuring proof of both delivery and time of delivery by sending the form or letter to the Appeals Intake Centre in a way which provides for tracking and proof of delivery.

There is a single Appeals Intake Centre, and the mailing address for that Centre can be found on the CRA’s Notice of Objection form. A Notice of Objection can also be faxed to the Appeals Intake Centre, and the fax numbers for the Centre are available on the CRA website at File an objection – Income tax – Canada.ca. Finally, taxpayers can contact the CRA at its objection enquires phone line in order to get information about the status of their appeal; the toll-free telephone number for calls from within Canada to that line is 1-800-959-5513. Taxpayers who filed their objection through My Account can find out the status of their appeal by checking the “Progress Tracker” feature on that service.

Filing a Notice of Objection, by any method, formally advises the CRA that the taxpayer is disputing the Agency’s determination of their tax liability for the taxation year in question. Not incidentally, the filing of an Objection also brings to a halt most efforts undertaken by the CRA to collect taxes which it considers owing for the taxation year under dispute (although, if the taxpayer is eventually found to owe an amount in dispute, interest on that amount will have accumulated in the interim). Where the taxpayer files an Objection, the CRA’s collection efforts are, in most cases, suspended until 90 days after the date the CRA’s decision on that Objection is sent to the taxpayer.

There is a time limit by which any Objection must be filed, albeit a reasonably generous one. Individual taxpayers must file an Objection by the later of 90 days from the mailing date of the Notice of Assessment (the date found at the top of page 1) or one year from the due date of the return which is being disputed. So, for tax returns for the 2025 tax year, the one-year deadline (which is usually, but not always, the later of those two dates) would be April 30, 2027 (or June 15, 2027 for self-employed taxpayers and their spouses). As with most things related to taxes, it’s best not to put it off. At the very least, if the taxpayer is ultimately found to owe some or all of the taxes assessed by the CRA, interest will have accrued on those taxes for the entire period since the filing due date and, if the filing of the Objection is delayed, the CRA may well have already commenced its collection efforts.

In the course of making its decision, the Agency may or may not contact the taxpayer for further discussions of the issues in dispute. Should the taxpayer be contacted, they may be asked to provide representations outlining their position, in writing or at a meeting. Through such representations and meetings, it may be possible for the taxpayer and the CRA to come to an agreement on the taxpayer’s tax liability. In either case, the CRA will either confirm its original assessment or change it. If the original assessment is changed, the CRA will issue a Notice of Reassessment outlining the changes. If the taxpayer continues to disagree with the CRA’s position, the next step is an appeal to the Tax Court of Canada. Once matters reach this point, it’s generally a good idea to consult a lawyer before deciding to file an appeal.

Detailed information on the objection process is available on the CRA website at File an objection – Income tax – Canada.ca. The Agency also publishes a useful pamphlet entitled Resolving Your Dispute: Objection and Appeal Rights under the Income Tax Act; the most recent release of that publication can be found on the CRA website at P148 Resolving your dispute: Objection rights under the Income Tax Act – Canada.ca.

While the view of many Canadians, especially at tax return filing time, is that our tax system exists solely to take money out of their pockets, the reality is far more nuanced. It is certainly true that Canadian tax laws cast a very wide net, in which very few sources of income escape taxation. The reality is also, however, that a substantial amount of tax revenue received by the federal government is returned to Canadians through tax credit and benefit programs. Amounts paid under those programs are received tax-free and this year, changes have been made to some programs which increase the amount provided to Canadian individuals and families.

While the view of many Canadians, especially at tax return filing time, is that our tax system exists solely to take money out of their pockets, the reality is far more nuanced. It is certainly true that Canadian tax laws cast a very wide net, in which very few sources of income escape taxation. The reality is also, however, that a substantial amount of tax revenue received by the federal government is returned to Canadians through tax credit and benefit programs. Amounts paid under those programs are received tax-free and this year, changes have been made to some programs which increase the amount provided to Canadian individuals and families.

The tax credit and benefit program year generally runs from July to the following June, meaning that the upcoming benefit year will begin in July 2026 and end in June 2027. The reason for that timing is that eligibility for (as well as the amount of) most federal and provincial tax credits and benefits is based, at least in part, on individual or family income for the previous year. Consequently, the determination of whether an individual or family is eligible for such benefits during the 2026-27 benefit year is based on income amounts earned and reported on the tax return for 2025. It follows, then, that in order to receive such benefits during the 2026-27 benefit year it is necessary for all individuals, and both parents within a family, to file a return for 2025.

Unfortunately, a substantial number of eligible recipients don’t receive benefits to which they are entitled, simply because they haven’t filed a tax return for the previous year, leaving potentially hundreds or thousands of dollars in tax-free income unclaimed each year. As well, many Canadians who do receive such benefits but who then fail to file a tax return each year can see their benefit payments stop, even though they remain eligible to receive those benefits. Eligibility for federal and provincial credits and benefits begins, therefore, with filing an annual tax return. And, while the 2025 return filing deadline for most individuals of April 30, 2026 has passed, it’s not too late to file a return. While late filing of a return may result in delayed payment of benefits, eligibility for those benefit payments will not be lost.

It should be noted, as well, that while the federal government refers to these benefits under the umbrella term “child and family benefits”, it’s wrong to conclude that benefits are only available to parents and/or married individuals. Of the three benefit programs outlined below which will be in place during the upcoming benefit year, only the Canada Child Benefit/Child Disability Benefit program requires that a taxpayer be a parent, and none of the benefit programs require that a taxpayer be married or in a common-law relationship. As well, each of these tax credits/benefits are what are termed “status” credits/benefits, in which eligibility for and the amount of the credit/benefit is based on the taxpayer’s Canadian residence, income, marital status, and (for the Canada Child Benefit/Child Disability Benefit only) number of children. Unlike other deductions and credits claimable under our tax system, there is no requirement for an individual or family to make any expenditure of funds for any purpose in order to be eligible for the following credit/benefit programs.

GST/HST Credit/Groceries and Essentials Benefit

The GST/HST credit is a non-taxable amount paid four times a year (on the fifth of July, October, January, and April) to lower- and middle-income individuals and families, to help offset the cost of the goods and services tax/harmonized sales tax (GST/HST) that they pay. Generally, the credit is available to Canadian residents who meet all of the following criteria:

• aged 19 years of age or older; or
• under age 19 and
  • have or had a spouse or common law partner; or
  • are or were a parent and live (or lived) with their child.

A number of changes to the GST/HST tax credit were announced in the 2026 federal budget; those changes will mean increased payments under the program for eligible Canadians.

The first change is a renaming of the GST/HST tax credit. As of July 1, 2026, that program will be renamed the “Canada Groceries and Essentials Benefit” (CGEB). The change is one of name only, as the tax-free status, eligibility criteria, and payment schedule for the CGEB remain the same as for the former GST/HST tax credit.

The second change involves an increase in the amount of benefit which will be paid starting with the 2026-27 year. Benefit payments for that year, and until 2031, will be increased by 25%. Following that change, maximum benefits payable under the GEGB program for 2026-27 will be as follows:

• $679 for single individuals;
• $890 for individuals who are married or have a common-law partner; and
• $234 for each child under the age of 19.

Finally, the federal government will be providing a one-time “top-up” payment of the current GST/HST benefit. That payment will be made in June 2026, starting around June 5. The payment will be made to all Canadians who received a GST/HST benefit payment in January 2026, and will be equal to 50% of the total GST/HST credit payments received by such recipients during the 2025-26 benefit year. The amount of the top-up payment will range from $267 (for single individuals without children) to $717 (for single parent or two parent families with four children). Information on the one-time top-up payment is available on the federal government website at One-time GST/HST credit top-up payment - Canada.ca.

Detailed information on the new Groceries and Essentials Benefit can be found on the CRA website at Canada Groceries and Essentials Benefit - Canada.ca.

Canada Workers Benefit

The Canada Workers Benefit (CWB) is a refundable tax credit paid to lower income Canadian residents who are aged 19 or older or are married or have a common-law spouse or child with whom they live, and who have “working income” of at least $3,000. For the purposes of the CWB, such working income can be from employment or self-employment.

The amount of CWB which an individual or family can receive depends on marital status and net income. The basic amounts payable for the 2026 benefit year, and the net income levels at which eligibility for that basic benefit is eroded, are as follows.

• $1,665 for single individuals
  The single individual benefit is reduced if adjusted net income is more than $27,392.
• $2,869 for families 
  The family benefit amount is reduced if adjusted family net income is more than $31,251.

In order to apply for the CWB, a recipient must file their tax return electronically and follow the instructions provided for the particular tax return preparation software, or, if filing a paper return, must complete and file a Schedule 6 with that tax return.

More detailed information on the CWB, including the availability of advanced payments of the Benefit, can be found at https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-workers-benefit.html.

Canada Child Benefit

The Canada Child Benefit (CCB) is a tax-free monthly payment made to eligible families to help with the cost of raising children under 18 years of age. The CCB is paid to the parent who is primarily responsible for the care and upbringing of the child or children, and the amount varies with the age and number of children.

The CCB is also a means-tested benefit, with the benefit amount being reduced as family net income increases. CCB amounts paid during the 2026-27 benefit year are based on family net income for 2025.

The maximum amounts payable for the benefit year running from July 2026 to June 2027 are as follows.

For each child:

• under 6 years of age: $8,157 per year ($679.75 per month)
• 6 to 17 years of age: $6,883 per year ($573.58 per month)

Where family net income for 2025 is less than $38,237, recipients will receive the maximum amount outlined above for 2026-27, with no reductions.

Individuals and families who may be eligible for the CCB will have their eligibility automatically assessed when they file their tax return for 2025: there is no requirement to file a particular schedule or other application. More information on the CTB is available on the federal government website at https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit-overview.html.

Child Disability Benefit

Families who have children under the age of 18 for whom the federal disability tax credit can be claimed, and who are eligible to receive the Canada Child Benefit, will also receive the Child Disability Benefit (CDB).

For the 2026-27 benefit year, the CDB is equal to $3,480 for each eligible child, with the benefit amount being reduced where family net income is greater than $82,847. There is no requirement to apply for the CDB, as that benefit will automatically be issued to any family that has an eligible child for whom they are already receiving the Canada Child Benefit.

More information on the CDB is available at Child disability benefit - Canada.ca.

While the number and variety of federal child and family benefits, and the varying eligibility criteria for each, can be confusing, the necessary determinations and calculations are done by the federal government. The only step which need be taken by an individual is the filing of an annual tax return. Taxpayers who wish to find information on the benefits for which they may be eligible (and to obtain an online estimate of the amount of those benefits) can refer to the Canada Revenue Agency website at https://www.canada.ca/en/revenue-agency/services/child-family-benefits.html and Tax credits and benefits for individuals - Canada.ca, where detailed information on each such benefit program can be found.

Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.

Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.

They can be accessed below.

Corporate:

Issue #76 Corporate

Personal:

Issue #76 Personal

The 2026 Spring Economic Update delivered by the Minister of Finance on April 28 included a number of targeted tax relief measures for Canadian individual taxpayers. Some of those measures are summarized below.

The 2026 Spring Economic Update delivered by the Minister of Finance on April 28 included a number of targeted tax relief measures for Canadian individual taxpayers. Some of those measures are summarized below.

Changes to Disability Tax Credit certification program

Canadians who are affected by a severe and prolonged impairment in physical or mental functions which significantly restricts their ability to carry out one or more basic activities of daily life can claim a non-refundable federal tax credit. For 2026, the amount of that Disability Tax Credit (DTC) is $10,341, which provides a reduction in federal tax of up to $1,448. Such individuals can also claim a similar credit for provincial tax purposes, with the amount dependent on the taxpayer’s province of residence.

The DTC is a valuable credit for those who are eligible, and obtaining a valid DTC certificate also enables such individuals to have access to a number of other benefit and credit programs for disabled individuals. However, the administrative process of obtaining such a certificate is often very difficult and time-consuming. Under current rules, a qualified medical practitioner must complete a lengthy form which requires not just the patient’s diagnosis, but extensive details on how their disability affects and restricts their ability to carry out activities of daily life. That form must be submitted to the Canada Revenue Agency as part of the application for a Disability Tax Credit Certificate, and a significant amount of time can elapse before a decision on that application is made and communicated to the individual. And, of course, individuals who do not have a family doctor may not have anyone who can complete the necessary medical assessment which is a required part of their DTC Certificate application.

The 2026 Spring Economic Update proposes changes to the DTC certification program in two areas. First, the listing of the types of impairments which can be certified by a medical professional other than a medical doctor has been expanded. Following that change, which is effective for DTC certificates issued after 2026, occupational therapists, physiotherapists, speech-language pathologists, and podiatrists will be able to certify additional specified types of impairments for purposes of a DTC Certificate application.

The second change provides that where an individual has been diagnosed with any one of a lengthy list of medical conditions (including such conditions as Alzheimer’s disease, severe intellectual disability, paraplegia, schizophrenia, or traumatic brain injury), a DTC application will require only that a medical practitioner certify that the individual has that medical condition. Unlike the current application, there will be no requirement for the medical practitioner to provide a detailed summary of how that medical condition affects the ability of an individual to carry out basic tasks of daily life. This change is effective for the 2026 and subsequent tax years.

The measures contained in the 2026 Spring Economic Update with respect to the Disability Tax Credit are purely administrative in nature and do not change the disability criteria which must be met to qualify for the DTC. The CRA will continue to have authority to ask for additional information to verify that these criteria are met.

Additional information on the changes to the Disability Tax Credit certification process can be found on the Finance Canada website at Tax measures: Supplementary information | Spring Economic Update 2026.

Changes to Home Buyers’ Plan

The federal Home Buyers’ Plan allows an eligible first-time home buyer to withdraw up to $60,000 from their registered retirement savings plan (RRSP) on a tax-free basis. (Eligible home buyers purchasing as joint owners can each withdraw up to $60,000.) All amounts withdrawn from an RRSP under the HBP must be repaid to that RRSP over a 15-year period, with such repayments starting in the second year following the year the withdrawal was made. Where amounts are not repaid as required, they are included in the taxpayer’s income for the year.

In the 2024 Federal Budget, changes to the HBP were announced which would permit HBP participants to defer any repayment of funds to their RRSP until the fifth year following the date of withdrawal. That change was effective for withdrawals made between January 1, 2022 and December 31, 2025.

In the 2026 Spring Economic Update the government announced that the ability to defer repayments under the HBP until the fifth year following the year of withdrawal would be extended to apply to HBP participants making a first withdrawal under the Plan up to the end of 2028.

More information on the changes to the HBP is available at Tax measures: Supplementary information | Spring Economic Update 2026.

Labour mobility deduction for tradespeople

Eligible tradespeople working in the construction industry are able to claim a deduction for expenses incurred in connection with one or more temporary work-related relocations. Under existing rules, such individuals can claim up to $4,000 in eligible temporary relocation expenses per year, with the deduction for each such temporary work relocation limited to 50% of employment income earned at that temporary location. As well, to qualify for the deduction, a “distance rule” provides that the individual must take up temporary lodging in Canada which is at least 150 kilometres closer to the temporary work location than their ordinary residence.

Effective for the 2026 and subsequent tax years, changes have been made to increase the maximum annual deduction from $4,000 to $10,000 (with that amount to be indexed annually after 2026). As well, the distance rule has been modified to provide that the individual’s temporary lodging in Canada must be at least 120 kilometres closer to a temporary work location than their ordinary residence.

Information on the changes can be found on the Finance Canada website at Tax measures: Supplementary information | Spring Economic Update 2026.

For most taxpayers, the worst-case outcome when completing their tax return for the previous year is finding out that they owe an additional tax amount to the federal government. However, for Canadians who are receiving Old Age Security (OAS) benefits, there can be additional bad news. For such Canadians, one of the calculations made as part of preparing a tax return is a determination of whether the taxpayer received OAS benefits during the previous year to which they were not entitled. If that’s found to be the case, the taxpayer will be required to repay a portion of benefits already received – and likely already spent.

For most taxpayers, the worst-case outcome when completing their tax return for the previous year is finding out that they owe an additional tax amount to the federal government. However, for Canadians who are receiving Old Age Security (OAS) benefits, there can be additional bad news. For such Canadians, one of the calculations made as part of preparing a tax return is a determination of whether the taxpayer received OAS benefits during the previous year to which they were not entitled. If that’s found to be the case, the taxpayer will be required to repay a portion of benefits already received – and likely already spent.

Many OAS recipients – especially those who have only recently begun to receive such benefits – are unaware that OAS benefits received may have to be repaid to the federal government, and even fewer are aware of exactly how and when they could become subject to that repayment requirement. To understand that process, and how it is administered, a bit of background is helpful.

The Old Age Security program is one of the two major public retirement income programs in Canada – the other being the Canada Pension Plan. The two programs differ in two significant ways. First, while the Canada Pension Plan is funded by employer and employee contributions, OAS benefits are financed entirely out of general federal government revenues. Second, CPP retirement benefits are based on contributions made throughout the recipient’s working life and are unaffected by their income while receiving those retirement benefits. Recipients of OAS benefits can, however, be required to repay some or all of those benefits where their net income exceeds a prescribed threshold.

That “OAS recovery tax” or clawback, as it is universally known, is administered on a one-year time lag basis. Anyone who received OAS benefits during 2025 and had net income for that year over a specified dollar amount threshold will be required to repay a portion (or all) of the OAS benefits which were received during 2025.

The federal government becomes aware of an individual’s net income for 2025 only once the tax return for that year is filed, usually by April 30 of 2026, when information on that return will disclose that OAS benefits received must be repaid. That repayment does not have to be made when the return is filed: rather, the overpayment is recovered by reducing the amount of OAS benefits paid to the recipient throughout the next benefit year.

For example, an individual who received OAS benefits during 2025 and had net income for the year over $93,454 will be subject to the clawback. They must repay OAS amounts received at a rate of 15 cents (or 15%) of every dollar of income over the clawback income threshold, as in the following simplified example.

The OAS clawback threshold for 2025 is $93,454.

If the individual’s net income in 2025 was $98,500, then repayment would be 15% of the difference between $98,500 and $93,454:

$98,500 - $93,454 = $5,046

$5,046 x 0.15 = $756.90

The individual would have to repay $756.90 of OAS benefits received.

Consequently, in the following benefit year (which covers OAS benefit payment dates from July 2026 to June 2027), OAS benefits received will be reduced by $63.08 per month ($756.90 divided by 12 months).

The OAS clawback is a perpetual irritant to those affected by it, perhaps because of the sense that they are being penalized in retirement for having lived frugally or been good managers of their finances during their working years, in order to put aside savings for a financially comfortable retirement, or to leave an inheritance for their children. While any sense of grievance can’t alter the reality of the OAS clawback, there are strategies which can be put in place to either minimize or even eliminate one’s exposure to that clawback. Like most individual tax planning, many of those planning considerations are better addressed earlier in life, prior to retirement: however, it’s not too late, once one is already receiving OAS, to take advantage of strategies to avoid or minimize the clawback in future years.

In all cases, no matter what strategy is employed, the goal is to “smooth” one’s income from year to year, so that net income for each year comes in under the OAS clawback threshold and, not incidentally, minimizes exposure to the higher federal and provincial income tax rates which in most cases apply once taxable income approaches  $100,000. Some of the available strategies are outlined below.

Managing the amount and timing of RRIF withdrawals

Taxpayers who have a registered retirement income fund (RRIF) and are age 65 or over must make a minimum required withdrawal (MRW) from that RRIF each year. The amount of the MRW is a percentage of the total amount in the RRIF and is based on the taxpayer’s age.

As the name suggests, the taxpayer has no options when it comes to the MRW, which must be made each year in the required amount, with that amount included in taxable income for the year.

Once the MRW is made, however, any additional RRIF withdrawals during the year are entirely the choice of the taxpayer, and that choice can be made, or changed, at any time. Taxpayers can and should monitor both the amount and the timing of those withdrawals. All amounts withdrawn from an RRIF are fully taxable in the year they are withdrawn, without exception, and such funds can never be re-contributed to the RRIF. As well, all such withdrawals will be included in net income for purposes of determining the taxpayer’s eligibility for OAS and a number of other tax credit and benefit programs.

From a financial planning perspective, the optimal annual withdrawal from an RRIF is the amount which, when combined with other retirement income sources, enables the taxpayer to live a comfortable lifestyle while minimizing the amount of income tax they must pay, or their exposure to the OAS clawback.

Retirement income needs fluctuate over time, with expenses usually higher in the earlier retirement years and then decreasing. As well, life circumstances change (a spouse dies, a family home is sold to downsize to a smaller and less costly residence) and retirement income needs change as a consequence of those changed life circumstances. Many taxpayers set the amount of annual RRIF withdrawals when the plan is set up at age 71 and that arrangement simply remains in place. However, optional RRIF withdrawals should be based, not on a fixed, unchanging amount, but the amount which fits current life circumstances and income requirements.

Consequently, a withdrawal plan in which the MRW is made at the beginning of the calendar year and further withdrawals are made on an as-needed basis will ensure that the taxpayer has sufficient funds to support a comfortable retirement while minimizing the risk of negative tax and clawback consequences that can follow where amounts in excess of annual income requirements have been withdrawn unnecessarily from the RRIF.

Similarly, where a large, one-time RRIF withdrawal is planned – whether early in retirement to pay for long-deferred travel plans or, in later years, to finance home renovations needed to accommodate changed health circumstances – splitting that withdrawal between two taxation years (for instance, one-half in December of 2026 and one-half in January 2027) will minimize net income and consequently exposure to both a higher tax rate and the OAS clawback in both years.

Sheltering investment income within a Tax-Free Savings Account (TFSA)

Taxpayers who are over the age of 71 have relatively few available means to shelter income from tax. Investment income earned within an RRIF is of course not taxable as it is earned, but all RRIF withdrawals, whether they represent amounts saved or investment income earned, are fully taxed on withdrawal. As well, investment income of any kind subsequently earned on such withdrawals will become taxable income in the year that investment income is earned.

Practically speaking, the best strategy (and for those over age 71, the only strategy) to shelter investment income earned on amounts withdrawn from an RRIF is to contribute those RRIF withdrawals to a Tax-Free Savings Account (TFSA), to the extent that the taxpayer has contribution room. Unlike RRIFs and RRSPs, a TFSA can be opened and held by a taxpayer of any age. Amounts contributed to a TFSA are not deductible from income, but all investment income earned within the TFSA accumulates free of tax. Finally, any and all amounts withdrawn from a TFSA (whether original contributions or investment income earned) are not taxed on withdrawal, and are not included in income for purposes of the OAS clawback.

Especially where amounts withdrawn from an RRIF are substantial, the amount of investment income earned throughout the year on those withdrawals can have a real impact on an individual’s tax liability. Contributing RRIF withdrawals to a TFSA where such funds can be invested, and withdrawn as needed, will eliminate that liability.

Detailed information on how to determine one’s contribution limit and on the rules governing contributions to and withdrawals from a TFSA can be found on the Canada Revenue Agency website at Tax-free Savings Account (TFSA) - Canada.ca.

Pension income splitting

For married taxpayers, pension income splitting is likely the most valuable strategy available to minimize both tax liability and exposure to the OAS clawback.

Using pension income splitting, the spouse who has income over the OAS clawback threshold re-allocates the “excess” income to their spouse on the annual return, and that income is then considered to be income of the recipient spouse, for purposes of both income tax and the OAS clawback. To be eligible for pension income splitting, the income to be reallocated must be private pension income, which is generally income from an RRSP or RRIF, or from an employer-sponsored pension plan. CPP and OAS benefit amounts do not qualify for pension income splitting.

There are two reasons why pension income splitting is a particularly attractive strategy for avoiding or minimizing the OAS clawback. First, there is no need to actually change the source or amount of income received by each spouse, as the reallocation of income is “notional”, existing only on the return for the year. Second, no decision has to be made on pension income splitting until it’s time to file the return for the previous year, meaning that spouses can easily calculate exactly how much income has to be reallocated to produce the desired result. More information on the kinds of income eligible for pension income splitting, and the mechanics of the process, can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/pension-income-splitting.html.

Detailed information on the OAS clawback can be found on the same website at https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/repayment.html.

When the filing of the required annual tax return goes entirely as planned and hoped, the taxpayer will have prepared a return that is complete and correct and filed that return by the required filing deadline. The Canada Revenue Agency (CRA) will issue a Notice of Assessment indicating that the return is “assessed as filed”, meaning that the CRA agrees with the information filed and the amount of tax payable determined by the taxpayer. While that’s the outcome everyone is hoping for, it’s a result which can be derailed in any number of ways.

When the filing of the required annual tax return goes entirely as planned and hoped, the taxpayer will have prepared a return that is complete and correct and filed that return by the required filing deadline. The Canada Revenue Agency (CRA) will issue a Notice of Assessment indicating that the return is “assessed as filed”, meaning that the CRA agrees with the information filed and the amount of tax payable determined by the taxpayer. While that’s the outcome everyone is hoping for, it’s a result which can be derailed in any number of ways.

By April 19, 2026, around 19.5 million individual income tax returns for the 2025 tax year had been filed with the CRA. And, inevitably, some of those returns contain errors or omissions that must be corrected.

Nearly 95% of the returns which have already been filed for the 2025 tax year were filed by EFILE or NETFILE, meaning that the return was prepared using tax return preparation software. The use of such software significantly reduces the chance of making a clerical or arithmetical error, like entering an amount on the wrong line or adding a column of figures incorrectly. However, no matter how good the software, it can work only with the information that is provided to it. Sometimes taxpayers who file their returns early then receive a tax information slip that should have been included on that return (or, more frequently, locate a tax information slip that had been received but was overlooked). It’s also easy to make an inputting error when transposing figures from an information slip (a T4 from one’s employer, for instance) into the software, such that $76,326 in income becomes $73,626 or $66,326. Whatever the cause, where the figures input are incorrect, or information is missing, those errors or omissions will be reflected in the final (incorrect) tax payable figure produced by the software.

When the error or omission is discovered in a return which has already been filed, the question which immediately arises is how to make things right. The first impulse of many taxpayers is to file another return, in which the complete and correct information is provided, but that’s not the right answer. There are, however, three separate methods by which most mistakes or omissions made in an already filed tax return can be corrected; each such method has its own requirements, limitations, and time frames for processing.

The 95% of return filers who used tax return preparation software to file their return can use that same software to change the return. (All tax return software programs certified for use by the CRA include that option, known as "ReFile".) The ReFile service is available seven days a week but is offline for maintenance from 3 a.m. to 6 a.m. Eastern Time each day.

The types of changes which can be made using ReFile include the most frequent sources of filing errors, including reporting income (such as a T4 slip or tips), claiming a deduction, credit, or expense (such as childcare or medical costs), or adding a missing tax slip (such as an RRSP contribution receipt). There are, however, limitations to the kinds of changes which can be made to an already filed return online. Specifically, it’s not possible to apply for benefits or credits, make or revise an election, allocate a refund to other CRA accounts, or update personal information, including a mailing or email address, direct deposit information, marital status, or name.

In addition, taxpayers cannot use ReFile to make a change to a return for the 2020 or earlier tax years, a bankruptcy return, an optional T1 return for a deceased taxpayer, a return filed with the incorrect province or territory of residence, or a return for a non-resident. More information on how to make a correction in an already filed return using ReFile can be found on the CRA website at Changing a tax return - Personal income tax - Canada.ca.

The second online option is available to taxpayers who have registered for the CRA’s “My Account” service. Those taxpayers can make a change or correction on their already-filed return using the “Change My Return” feature in My Account. The steps needed to do so are as follows:

1. Sign in to your CRA account.
2. Select Individual if you are changing your own return or Representative if you are changing someone else's.
3. Select Tax returns.
4. Find and select Change my return.
5. Select the tax year you want to change and follow the steps.
6. Save your confirmation number and summary of changes for your records.

As with ReFile, there are situations in which the Change my Return website feature cannot be used to correct a mistake in an already filed return, including the following:

• A return for the 2015 or earlier tax years;
• A bankruptcy return (or any year before the year of bankruptcy);
• An optional T1 return for a deceased taxpayer;
• A return filed with the incorrect province or territory of residence;
• Certain international and non-resident returns.

Where neither ReFile nor Change my Return can be used to make a correction on an already filed return (or where the taxpayer prefers not to use an online option), filing the request using hard copy to be sent by mail to the CRA is still possible. The paper form to be used is Form T1-ADJ E (23), which can be found on the CRA website at T1 Adjustment Request (canada.ca). Those who are unable to print the form off the website can order a copy to be sent to them by mail by calling the CRA’s individual income tax enquiries line at 1-800-959-8281. Detailed instructions on how to complete and submit a T1-ADJ E (23) can be found on page 2 of that form.

Taxpayers who are unsure of which method they may (or may not) be able to use to make a change on their return can find assistance through the “Confirm which option you can use” service on the CRA website. That feature, which is available on the CRA website at Changing a tax return - Personal income tax - Canada.ca as both a series of interactive questions and in a text document, will let the taxpayer know whether it’s possible to make the change online, or whether their request must be sent by mail.

No matter which method was originally used to file the return, or whether the correction is made online or in hard copy, there is one invariable rule. In all cases, it’s necessary to wait until the Notice of Assessment for the (incorrect) return already filed is received.  Corrections to a return which are submitted prior to the time that return is assessed simply can’t be processed by the Agency.

Once the Notice of Assessment is received, and an adjustment request is made, it will take at least a few weeks before the CRA responds by issuing a Notice of Reassessment, based on the new information provided by the taxpayer. The current estimates for a response from the CRA are two weeks (for non-complex adjustment requests filed online) and up to 12 weeks for those submitted in hard copy. Not surprisingly, requests which are submitted during the CRA’s peak return processing period between March and July will likely take longer.

Sometimes the CRA will contact the taxpayer, even before a return is assessed (or reassessed), to request further information, clarification, or documentation of deductions or credits claimed (for example, receipts documenting medical expenses claimed, or childcare costs). Whatever the nature of the request, the best course of action is to respond promptly, and to provide the requested documents or information. The CRA can assess only on the basis of the information with which it is provided, and it is the taxpayer’s responsibility to provide support for any deduction or credit claims made. Where a request for information or supporting documentation for a claimed deduction or credit is ignored by the taxpayer, the assessment will proceed on the basis that such support does not exist. Providing the requested information or supporting documentation can usually resolve the question to the CRA’s satisfaction, and its assessment of the taxpayer’s return can then be completed.

The Canadian tax system is what is termed a self-assessing system, in which taxpayers take the initiative to complete and file a tax return each year. In that tax return they provide information on income earned during the previous year, claim any tax deductions and credits to which they are entitled, and arrive at an estimate of tax owed for the year. In most cases the filing of that tax return will result in a tax refund paid to the taxpayer, while a minority of taxpayers will have a tax balance owed for the year, which must be paid on or before April 30.

The Canadian tax system is what is termed a self-assessing system, in which taxpayers take the initiative to complete and file a tax return each year. In that tax return they provide information on income earned during the previous year, claim any tax deductions and credits to which they are entitled, and arrive at an estimate of tax owed for the year. In most cases the filing of that tax return will result in a tax refund paid to the taxpayer, while a minority of taxpayers will have a tax balance owed for the year, which must be paid on or before April 30.

By and large, it’s a system which works remarkably well, as the vast majority of Canadians do file a return and pay any taxes owed on a timely basis. The cost of not doing so can, however, be steep, especially where a tax amount is owed on filing. Where there is a tax balance owed and payment in full is not made by the April 30 deadline, the Canada Revenue Agency will begin levying interest charges on any unpaid amount, starting May 1. Interest amounts payable to the CRA can mount up very quickly, for two reasons. First, the interest rate charged by the CRA is, by law, higher than ordinary commercial rates. For the second quarter of 2026 (April 1 - June 30) the rate charged on unpaid tax amounts is 7%. More significantly, all interest charges levied by the CRA on unpaid taxes are compounded daily, meaning that each day, interest is charged on the previous days interest. It’s not hard to see how interest costs can accumulate quickly.

Where a tax amount is owed and the taxpayer does not pay that amount and also does not file their tax return for the year, the news gets worse. In such circumstances, an immediate late-filing penalty is imposed, equal to 5% of the outstanding tax amount owed. A further penalty of 1% of that tax amount owed is then levied for every full month that the return is late, to a maximum of 12 months. If the taxpayer has a history of late filing or late payment, penalty amounts increase to an immediate 10% late-filing penalty, plus 2% per month, to a maximum of 20 months. In a worst-case scenario, the total penalty amounts imposed can reach 50% of the tax amount owed – and that doesn’t include interest charges which will be levied on both the outstanding tax amount and on all accumulating penalty charges.

Where a failure to meet one’s tax obligations is simply the result of carelessness or negligence on the part of the taxpayer, it’s really not possible to avoid such charges. Sometimes, however, taxpayers fail to meet their tax obligations for reasons that are entirely outside their control. When that happens, the CRA may be willing to extend relief by forgiving interest and penalty charges, in whole or in part, through the Agency’s Taxpayer Relief Provisions.

It's important to note, at the outset, that while the CRA has issued guidelines on the circumstances in which interest and penalty relief may be provided, the decision to provide such relief is entirely discretionary on the Agency’s part – there is no right to interest and penalty relief. Second, while interest and penalty relief may be made available to the taxpayer, no relief is provided with respect to actual tax amounts owed. No matter how dire the circumstances, tax amounts owed must always be paid.

The guidelines issued by the CRA on when interest and penalty relief may be available fall into two general categories. The first addresses taxpayers who are unable to meet their tax obligations as the result of extraordinary circumstances, whether those circumstances are personal (including, for instance, a death in the family or personal illness or a serious accident) or are events or circumstances which affect a number of taxpayers. Such events and circumstances include extreme weather events or natural or man-made disasters, like floods and wildfires. Nearly every year for the past several years Canadians across the country have had to leave their homes, sometimes for an extended period of time, as a consequence of wildfires or spring floods. At such times meeting one’s tax obligations is understandably a very low priority and, in the worst case scenario, the weather event or disaster which forced an evacuation may also result in the destruction of the taxpayer’s home, including their financial and tax records, making it difficult or impossible to file returns or determine or pay tax amounts owed.

Finally, in a situation which is becoming a reality for an increasing number of Canadians, the CRA is prepared to consider providing interest relief where the taxpayer is experiencing significant financial hardship. As every Canadian knows, the cost of living (especially the cost of food and energy, both completely unavoidable expenses) has increased significantly over the past five or six years. According to Statistics Canada, the cost of groceries rose by 30.1% in the five years between 2021 and 2026. This year, the 21.2% month-over-month increase in the cost of gasoline for April 2026 was, according to Statistics Canada, the largest such gasoline price increase on record.

The CRA’s guidelines, as outlined on the Agency’s website, indicate that it will consider waiving or cancelling interest charges, in whole or in part, where the taxpayer cannot pay those charges due to financial hardship, where paying interest amounts owed would make it difficult for the taxpayer to provide basic necessities, such as food, medical help, transportation, or shelter for a prolonged period of time, or where interest charges make up the majority of the amount owed and the taxpayer is unable to make a reasonable payment arrangement with the CRA.

Regardless of the reasons or circumstances (i.e., natural or man-made disaster, adverse personal or family circumstances, or financial hardship) which have prompted the taxpayer to submit an application for relief, the process of filing that application is the same. Taxpayers who have registered for the CRA online service My Account can file their application using that service. Those who are not registered for My Account, or would prefer filing a paper application, can find the current version of the required form on the CRA website at Form RC4288, Request for Taxpayer Relief – Cancel or Waive Penalties and Interest. The address to which the completed form should be sent (which will depend on the taxpayer’s province of residence) can be found on the last page of Form RC4288.

Regardless of the circumstances which led the taxpayer to make an application for interest or penalty relief, the CRA requires that the taxpayer provide documentation of the reasons for the application. The nature of that documentation will, of course, differ, depending on the reason that the application was made.

In order to receive relief in situations of financial hardship, a taxpayer must be able to provide the CRA with detailed information on their current financial situation. That financial situation is outlined on a prescribed CRA form which is available at Form RC376, Taxpayer Relief Request – Statement of Income and Expenses and Assets and Liabilities for Individuals. In addition to the information submitted on that form, the taxpayer must also provide supporting documentation, such as a current mortgage statement, property tax assessment, or rental agreement, along with statements for loans and recurring bills and credit card and bank statements for the past three months.

Where the application is made owing to serious illness or accident, the taxpayer should provide a doctor’s certificate indicating the type of illness, expected length of treatment, any hospitalization dates, and the effect that the medical condition might have had on the taxpayer’s ability to meet their tax obligations. Where there has been a death in the family, the CRA requests that a death certificate or obituary be provided.

Finally, where the taxpayer has been unable to meet their tax obligations because of a man-made or natural disaster, the CRA will be looking for insurance reports or fire or police reports documenting the time, place, and impact of that disaster.

Whatever the reason for the application, or how it is filed, the Agency will review the information submitted and make a determination of whether to cancel interest and/or penalty amounts owed, in whole or in part. The factors considered by the Agency in determining whether to grant relief will, of course, depend for the most part on the circumstances giving rise to the application. In general, however, the Agency will consider the taxpayer’s tax return filing and payment history, whether the taxpayer knowingly let a balance owing exist (resulting in additional interest charges), whether reasonable care was taken in the management of the taxpayer’s tax affairs, and finally, whether the taxpayer acted quickly to correct any delay or omission.

The CRA’s self-imposed “service standard” on straightforward taxpayer relief applications is to make a decision within six months (180 days) after the application is received. However, not surprisingly, the Agency is currently receiving a higher than usual number of applications, such that the average processing time for applications is now closer to 14 months.

Where the taxpayer’s request is denied by the CRA, they can request that the decision be reviewed. If that decision is also negative, the only recourse is to ask a judge to review the CRA’s decision. In the great majority of cases, however, the cost of taking that step is likely to be greater than the amount of interest and penalties at issue.

In all cases, the best course of action for the taxpayer is to be proactive – to contact the CRA as soon as the taxpayer is aware that filing of a required return, or paying taxes owed in full and on a timely basis, will not be possible. Taking the initiative and moving quickly to resolve the problem will both minimize the amount of interest which will accrue on unpaid taxes and will count in the taxpayer’s favour when the CRA considers whether to allow an application for waiver of those interest and penalty charges.

Taxpayers who are unsure of whether their particular circumstances will qualify for relief under this program can use a self-evaluation tool provided on the CRA website at https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes/cancel-waive-penalties-interest/self-evaluation-learning-tool.html. To use that feature, the taxpayer provides detailed information (which is not   saved or submitted to the CRA) about their situation and is provided with information about whether that situation could qualify for taxpayer relief and/or if there are other federal programs which might provide a better option.

Detailed information on the Taxpayer Relief Provisions is available on the CRA website at https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes/cancel-waive-penalties-interest.html.

Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.

Two quarterly newsletters have been added – one dealing with personal issues, and one dealing with corporate issues.

They can be accessed below.

Corporate:

Issue #75 Corporate

Personal:

Issue #75 Personal