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What is a T1 Tax Form? A Guide for Canadian Investors

Curious about what is a T1 tax form? For many Canadian investors, understanding this essential document is vital in navigating the Canadian tax system with confidence and clarity, ensuring compliance and maximizing returns.

In this guide, we’ll discuss the T1 form, including who should fill it out, when and how to file it, and its various sections. Plus, explore the benefits of Mortgage Investment Corporations (MICs) for tax efficiency and why investing with Amur Capital MICs could bring you tax-advantaged returns.

Amur Capital offers a simple way to grow your money and receive a stable and consistent return. Contact us now, and we’ll help you start in a few minutes.

Key Takeaways:  

1.     The T1 general income tax form, also known as the T1, is a comprehensive summary of an individual’s income and tax obligations for a particular tax year in Canada.

2.     The T1 form has five main parts: Identification, Total income, Net income, Taxable income, and Refund or balance owing. A positive number indicates a tax refund (CRA owes you money). In contrast, a negative number means a balance owed (you owe money to the CRA).

3.     By using the correct income tax form and leveraging the unique tax benefits of Mortgage Investment Corporations (MICs), Canadian investors can reduce their tax burden and earn consistent tax returns that are tax-free.

What is a T1 general tax form?

The T1 general income tax form, also known as the T1, is a crucial document issued by the Canada Revenue Agency (CRA) to all working individuals in Canada who need to file their personal income taxes. It summarizes all the taxes due for each calendar year, including your earnings (total income, taxable income, and net income) and any deductions, balance owing or refunds.

All Canadians must fill out this form and file it yearly to receive government benefits like the Canada Child Benefit, GST/HST refundable tax credits, and other benefits.

Who needs to file a T1

Every Canadian, including foreign workers residing in Canada, who is either employed by a company, self-employed or earning taxable income from investments must file a T1 every year. Business owners must fill out the T1 Business form (T2125 Statement of Business), while corporations must complete the T2 (Corporate Income Tax Return).

Where to get your T1

You can get a blank version of the current year’s T1 general form from CRA online. Remember to select the appropriate province or, if you are a non-resident, to get the correct tax form. If you have a CRA MyAccount, you can also find your T1 up to 11 years back that you filed. Anything older will need the CRA’s assistance to request a copy.

How to calculate your income tax as an investor

When filing your income taxes, you will need the T1 General to calculate your taxable income. The form has five main parts to fill out. These are:

 

Section

 

Description
IdentificationIn this section, you provide your name, address, marital status, social insurance number (SIN), and other personal details to help the CRA assess your identity and eligibility for certain benefits. For business owners, fill out the business identification section.

What to do: Start with your full legal name, address, and SIN. Make sure that all three match the registered information at the CRA. Then, indicate your marital status and information about your spouse or common-law partner, if applicable.

Total income

 

The Total Income Reporting section requires that you document all sources of income for the year, regardless of their source. Some commonly listed income sources are regular employment, CPP/OAS benefits, taxable dividends, rental income, taxable capital gains, and self-employment income. Non-citizens with work experience outside Canada must also declare their foreign income in this section.

What to do: Enter the specific type of income in the appropriate line of the form. Ensure you report your total income for the most accurate tax calculation. Some types of income, such as Taxable Capital Gains, require you to complete a separate Schedule form to determine the final amount before adding that amount to the T1 general form.

Net income

 

In this section, eligible deductions are subtracted from your total income to generate the net income. Applicable deductions include Registered Retirement Savings Plan contributions, childcare expenses, union dues, and moving costs.

What to do: To calculate net income, deduct eligible deductions from the total income.

Taxable income

 

The taxable income section determines your income tax, which is the income that the CRA will tax using the applicable rates for the calendar year. Depending on your situation, there are still deductions that you can claim on your income taxes.

What to do: Subtract all allowed deductions (net capital losses of other years, capital gains deduction, security options deductions) from the net income.

Refund or balance owing

 

The refund or balance owing section is the last part entered into the T1 form. This section allows you to determine whether you are eligible for a tax refund or have an outstanding balance to be paid.

What to do: A positive number indicates a tax refund (the CRA owes you money), while a negative number means a balance owed (you owe money to the CRA).

When and how to file your T1 tax form

The deadline for filing your annual tax return is April 30th of each year. You can file much earlier once you receive all the applicable tax forms. If you or your spouse/common-law partner is self-employed, you have until June 15th to file but must make the payment by April 30th if there’s a balance due.

Once you complete the T1 form, you can either upload the downloaded form to the CRA directly online or send it to your local CRA office.

Leveraging tax benefits with Amur Capital MICs

Investing in mortgage investment corporations (MICs) allows you to enjoy MICs’ unique tax advantages, specifically on being eligible for any registered plans. These accounts include the Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF), and Registered Education Savings Plan (RESP), which will allow tax-free or tax-deferred growth in your investment returns, depending on the account.

By investing in Amur Capital MICs and using any of the registered plans, investors can potentially reduce their tax burden while earning consistent returns from mortgages secured by Canadian real estate.

Contact our Investor Relations team today to get started.

FAQs

While they contain the same information, the T1 differs from the Notice of Assessment (NOA). The T1 general form is completed before you file, while the NOA is a post-filing summary the CRA provides.

The T1 provides a comprehensive summary of an individual’s income and deductions, which is the foundation for calculating the income tax.

If you have a CRA MyAccount, you can find your T1 up to 11 years back that you filed. Anything older will need the CRA’s assistance to request a copy.

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