Income tax refunds

You’re eligible for an income tax refund if the amount of income taxes withheld from you or paid by you during the year exceeds the actual taxes you owe. Although you may look forward to receiving a tax refund, it is not always good planning to get one. If you get a refund, that means the government has been holding your money and not paying you interest on it for many months.

Tax tip: If you expect to receive a refund after filing your return— for example, for support payments or other deductions— you can apply to the CRA to obtain permission to have your source withholdings reduced. In some cases, the TD1 form you file with your employer can be amended to provide for the reduced withholdings.

Although you won’t be penalized for filing a return late when you’re owed a refund, interest doesn’t begin to accrue on the refund amount until you file the return. For individual tax returns, interest on tax refunds doesn’t start to accrue until 30 days after the balance-due date (April 30) or 30 days after the actual filing date or the date the overpayment arose, whichever is later.

If you have made an error and you actually owe money, late-filing penalties and interest will apply on the balance owing. Therefore, regardless of whether you owe money or are receiving a refund, you should always file your return on time.