How does it feel when you get a tax refund? Surely, the feeling would be pretty good! Isn’t it?
Yes, we have a reason why we are talking about tax refunds here. RIT means Canada Refund of Income Tax, which is also referred to as Canada RIT deposit. It implies a taxpayer has received a payment from the CRA (Canada Revenue Agency) department. So, if you are reviewing your banking accounts’ transactions and find a direct deposit with the note ‘Canada RIT’ or RIF /RIT on your bank statement, then it is considered a tax refund issued by the CRA after filing your tax return. In this article, we will learn more about Canada RIT deposit, what it means and how you can use it. Let’s go!
What is Canada RIT Deposit? (2022)
The common questions we have observed people asking across the web include: Is Canada RIT deposit good? Should I be worried about it? Is the government reassessing my tax? Has CRA made an error?
All these queries are understandable. However, what can be better than receiving the funds unexpectedly from the government after filing your tax return.
Firstly, an RIT deposit does not mean you are in trouble, neither its any mistake from the Canada Revenue Agency (CRA).
It is absolutely good for you as you are getting the money back that the government of Canada owed you. However, it can mean that your taxes are reassessed. If such a situation occurs, you will likely receive a notice of reassessment on your CRA account or via email.
All the individuals working in Canada have income tax deducted at source from every month’s salary they receive from the organization they are working for, the same way it happens in India.
The employer sums up the tax paid at the end of the financial year and the amount is transferred to your T4 slip in the ‘Income Tax Deducted’ box. When the financial year ends, if the employee’s total tax paid is more than the income tax they are liable to pay, it implies the employee is supposed to receive the tax refund. However, if it is less than they were supposed to pay, the employees or taxpayers won’t receive any RIT deposit. Instead, they will pay it to the Canadian government.
What is CRA?
CRA is the revenue service of the federal government and most provincial and territorial governments. Primarily, the role of CRA is to administer taxes, ensure compliance on behalf of the government across Canada, and monitor tax benefits and related tasks. Thus, CRA is consistently contributing to the economic and social well-being of the residents of Canada.
Can anyone receive Canada RIT Deposits?
All Canadian individuals or companies/businesses who file taxes in Canada can receive RIT deposits in their accounts.
The amount you receive as an RIT deposit may vary depending on your annual income, the income tax you already paid, and the tax deductions you qualify for. It is imperative to file income tax to get RIT benefits even if you do not have any employment income to report.
Doing this will help you fetch several federal and provincial benefits you receive that are assessed using your annual tax filing. For instance, income-tested monthly benefits for families with children under 18, GST/HST payments, etc.
Is Canada RIT Taxable?
Canada RIT is not taxable as these deposits will not be considered your income in the next year. So, the next financial year’s ITR must be filed without including the RIT funds. If you received Canada RIT more than you expected, it signifies that you have paid more taxes than you were supposed to pay. In contrast, if you received less RIT, it implies you paid less income tax than you should have paid. It may also imply that you need some more tax deductions or use more tax-saving instruments/investments in your return.
Canada RIT Dates
There are no fixed dates that confirm the payment schedule for Canada RIT deposits. However, it is perceived that Canada RIT is paid after the CRA is done accessing your tax returns.
Once it is done, you can expect the tax refund (RIT) within 14 working days after you have filed your tax returns. This condition is only applicable if you have filed your tax return electronically. Sending your filed return to the income tax department via post or email will take more than 7 to 8 weeks for the RIT to be credited to your account.
However, the scenario of the RIT is somewhat different for those living outside Canada (non-residents), as they may not see the income tax refund until 16 weeks from the date they have filed their income tax return.
In general, Canada RIT shows us between February and June, which is considered the tax season. Therefore, all individuals are expected to file their income tax returns by the end of April every financial year. However, if an individual is self-taxed, the deadline for filing the income tax is 15th June.
The CRA has the full right to review an individual’s income amounts, deductions, and credits applied anytime, even after the income tax return.
How to make the most of Canada RIT Deposit?
Some people consider RIT easy money, and they quickly spend it on their shopping, traveling, buying a car, or any useless stuff that won’t add any value to their lives.
Firstly, the RIT is not easy money; it is your money. The only difference is that the taxpayer is issued this money after filing the tax return. Instead of using the crucial amount of RIT on unnecessary items, use it on something that is overall beneficial for you and secure your future.
Considering it an interest-free loan that you provide to the CRA could help you further invest this money for several years and make it an emergency fund. Or you can also treat these savings like your retirement fund.
The best thing to do with the RIT you receive every year is to invest the entire amount in your RRSP or if possible TFSA accounts. Investing your money now will accrue interest over the years and add up to a tidy sum.
Can the CRA make mistakes in paying tax refunds?
If you think CRA has wrongly misinterpreted the facts or applied the law incorrectly, even after all the relevant documentation is provided from your side, you can file an objection or notice against CRA.
However, the probability of making mistakes in paying tax refunds at CRA’s end is negligible.
Canada RIT and Other Compelling Government Deposits
Want to maximize your annual income? Check out all the benefits you can make use of these government schemes, being a Canadian RIT recipient:
1. Canada FPT
Canada FPT covers a wide range of benefits administered by the CRA, including:
- BC Climate Action Tax Credit
- Goods and Services Tax/Harmonized Sales Tax (GST/HST)
- Canada Child Benefit (CCB)
One can avail of the benefits under any of these programs. However, all these programs have different eligibility criteria and payment dates. It depends upon the number of persons living in your family, how much income you earn every month, and other factors based on which you will be qualified for one of these programs.
2. Canada Pro Deposit
This government scheme is a 2-in-1 deposit for Alberta Child & Family Benefits (ACFB) and Ontario Trillium Benefit (OTB). Both the benefits can be availed by the low-medium income earners residing in Alberta and Ontario.
The primary objective of this scheme is to aid and improve the living conditions of individuals/families categorized under low-income groups.
3. GST/HST Credit
Once you meet the requirements, you become eligible for receiving the goods and services tax/harmonized sales tax (GST/HST) credit, which the CRA administers on behalf of the Federal Government.
Besides providing provincial/territorial perks, the GST/HST credits are paid quarterly.
Other provincial and territorial programs include:
- Northwest Territories’ cost of living offset
- Saskatchewan low-income tax credit
- Nova Scotia affordable living tax credit
- Yukon government carbon price rebate – individuals
- Newfoundland and Labrador income supplement
- Prince Edward Island sales tax credit
- New Brunswick harmonized sales tax credit
4. Canada Workers Benefit (CWB)
It is a refundable tax credit issued by the CRA in Canada. The primary purpose of introducing this tax credit policy is to aid the low-income groups working in Canada and help them meet their regular cost of living.
The CWB scheme comprises 2 benefits; a basic amount and a disability supplement. The basic amount is administered to every Canadian that meets the eligibility requirements of CWB. Your net income, married status, and total family members/dependents will determine how much basic amount you will receive on CWB.
In contrast, the disability supplement is administered to the beneficiaries of Canada Workers Benefit qualifying for the disability tax credit.
It all depends on your requirements, as you have an option to avail of the CWB scheme benefit by grabbing a lump-sum deposit or a quarterly deposit.
Also Read: Personal Financial Planning For Beginners
1. What is Canada RIT?
Canada RIT is a Refund of Income Tax. It is the amount of money a taxpayer received after the income tax return has been filed. The only situation in which RIT is applicable for the Canadian government to pay is when an individual has deposited more tax than he was supposed to for the current fiscal year. The amount in excess (paid by the taxpayer in advance) is returned to the taxpayer.
2. What made me eligible for getting Canada RIT deposit?
Filing your tax returns makes an individual eligible to receive Canada RIT deposits.
3. How many weeks/months does the RIT take to reach the bank account?
After filing the tax returns, it may take up to 8 weeks for the taxpayers to receive the tax refund in their bank accounts. If the income tax is filed electronically, the process expedites, and the RIT is paid off within 2 weeks.
4. How can I get information about Canada RIT deposits?
Want to know how to fetch the information on Canada RIT deposits? The best and most effective way to do so is by visiting CRA’s official website and navigating to the CRA My Account.
5. What is the CRA Reassessment Period?
The reassessment period is for 3 years, which means your tax return can be reviewed again anytime within 3 years of filing your income tax return.
6. Do I Need to Report Canada RIT While Filing My Tax Returns?
If you notice an RTI while exploring your bank statement, it is good news that you have received the money back that belonged to you only from the Canadian Revenue Agency.
One need not report RIT while filing their next year’s return as it is the refund issued against the surplus amount you already paid to the government. The CRA already has all records regarding the RTI, as they are the ones who are releasing these payments.
7. What is a RIF?
RIF is a retirement Income Fund and is typically the other name of RIT, which is a tax refund. It is generally called RIT/RIF.
8. When RIT/RIF on your Bank Statements shows up, what does it mean?
Once you become eligible for a tax refund on your income or business tax return, you can get a RIF in Canada. Remember, this refund will only be applicable if you file the income tax return.
9. What needs to be done If I receive Canada RIT deposits?
If you receive a Canada RIT into your account, you need to verify that you were actually entitled to get the particular sum of money. To do this, you can log in to your CRA My Account and see why and how much you were supposed to receive the credit deposit from the Canadian government.
Even if you do not have a CRA account, you can call the officials working in the Canadian tax department.
Once you receive Canada RIT Deposit, you are free to do whatever you want with it. However, the best thing would be to utilize it by investing it further into a high-interest savings account or other lucrative investments such as mutual funds, SIPs, blockchain assets, stock markets, real estate, etc.
Feel free to leave comments in case you have any doubts. Keep reading for more such money making content at moneymint!
Source Reference : https://moneymint.com/what-is-canada-rit-deposit/