After working in the mortgage industry for a couple of years, I’ve come to realize I’ve taken for granted the fact I was taught from a young age the importance of filing my income taxes with the Canada Revenue Agency; and more importantly, the importance of hanging on to my Notices of Assessment (they come in a brown paper envelope in the mail).
Since my Dad was an accountant, filing our income taxes was right up there in importance with decorating for Christmas. It could be tedious and time consuming, but the end result was satisfying nonetheless. But instead of a gift wrapped in brown paper under the tree, you get cash. Sounds good to me!
As you continue to work and make more income, you may end up with a balance owing to the government instead of a refund. I believe that this is the main reason why some people avoid filing their income taxes. They are worried about the outcome of a balance owing instead of a refund.
So how do we prevent this reaction? We teach our children from a young age to file their income taxes, as those first few years of working will no doubt result in a refund. Once you get used to receiving a refund, your income tax return is like getting a present instead of a lump of coal. Then eventually, when you do have taxes owing, it won’t be such a hard lump to swallow.
Finally, getting into the habit of keeping your Notice of Assessment is even more important as you get older, for instance, if you want to apply for a mortgage. Since the government trumps the bank in terms of debt repayment status, any mortgage lender will want to ensure that your income taxes are paid up to date before loaning you any money for a mortgage.
So remember, good things come in brown paper packages that you’ll want to keep!