The Upside: 2026 tax season – Simplified

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Subtitles are AI-Generated.

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Welcome to The Upside. I'm Jordan Chevalier.

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With tax season now in full swing Canadians may be wondering how best

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to approach the filing process.

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Joining me today to share her top tax tips and which common mistakes you

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can avoid is Fidelity Director of Tax and Retirement Research,

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Michelle Munro. Michelle, it's great to have you.

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Great to be here, Jordan. Thanks for having me.

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Let's start with the big burning question, when are personal taxes due this

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year?

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Okay, quick hit.

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Thursday, April 30th, taxes are due.

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Thursday, so you're going to get it done before the weekend.

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Now, if you are self-employed, or married to a self- employed individual,

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have a self-unemployed spouse, you have until June 15th to get those

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taxes done but you still have to pay your taxes if you have any owing

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by April 30.

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All that is you really want to have it pretty much done by the end of April.

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End of day on April 30th, that's a good deadline to circle on the calendar.

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Gotta get 'em done. Or sooner. You don't want to leave it to the last minute

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because it is stressful for some people.

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That's a good note. I have a question here, people generally think of taxes and

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they say, I got a big tax return, look at all this money I got.

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Why should people be reframing that, is there another way to think about it?

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You're thinking, yay, I got a tax refund, yeah.

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But you actually, I don't want to damper anyone's excitement,

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you actually gave an interest-free loan to the government.

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Maybe you may not want to do that.

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On the flip side, if you owe taxes, well, that's

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you received an interest-free loan from the government.

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There are different ways of looking at it.

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Now, what usually causes a big refund?

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If someone says, well, I get a big refund every year, and Michelle is telling

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me that big refund might not necessarily be the best, how do we

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get that refund down closer to zero.

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Most Canadians are employees, they have T4

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income, withholdings at source, going to the government to cover

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off their estimated taxes.

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How they would get their taxes below that, typically is because they

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have some sort of deduction or tax credit.

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Some of the common deductions are Registered Retirement Savings Plan

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contribution, getting a deduction for that.

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Maybe a First Home Savings Account, getting a deduction for that,

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What else do we have, RRSP, maybe

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we have over withholding by our employer.

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We might have childcare cost deductions for

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credits, maybe medical expense credit, student

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tuition credits.

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What else, donation credits as well.

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There's quite a long list.

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So there are things that people can do to look at it if they always get a big

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credit to kind of move through and get that.

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I would actually suggest going through the tax return line by line and

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thinking, hey, does that apply to me?

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I think most software is pretty good now asking these questions, did

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you make any donation contributions?

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That covers if someone gets a very big refund.

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What if someone owes? The other side of the coin.

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If somebody owes to the government, maybe they don't have the cash right away,

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they weren't expecting to owe, what should they do?

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It can be a bit of a panic but what should they do?

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It is. That's why I always want to encourage people to

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at least start their taxes sooner rather than later so you

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have that peace of mind. Well, you're getting a refund, now you're going to

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speed it up and get your tax return in as quickly as possible.

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But if you owe money, well, file by the deadline

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because if you are late filing and owe money

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there's interest and penalties for late filing.

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The second part of that through our hypothetical scenario,

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well, we're filing and we owe money but we don't have

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that cash. Well, should we turtle and like go, ah?

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No. File on time because

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then you're not late and then call the CRA and say, well, this is

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how I plan to attack it.

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They have collections agents who will help you come up with a plan.

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That's interesting because some people, you know, maybe myself included, can

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think of the CRA as a little bit hard to reach and maybe there's there's no

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point in calling. But you're saying there are people there that can help you.

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There are sort of a payment plan process that you can go through over at the

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CRA.
Yeah, and just explain the situation and how you want to rectify it.

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Okay, that's very helpful.

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How can people also reduce future taxes?

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Let's say that this tax year has come and gone, people are looking ahead to

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next year, what are some of the reduction strategies people can

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employ?
Where we see it most common is that the employee situation,

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there's withholding, meanwhile, I'm making an RRSP contribution.

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It kind of feels good. At the end of the year I file my tax return, I

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get a big tax refund because of that RRSP contribution but

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it might have been better if I could reduce the withholding from my

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employer so then I would have more money in my

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pocket all year round. I could invest that.

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I could increase my lifestyle, what have you.

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To get that reduced withholding at source,

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employer source, we need to file a form.

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It's called a T21, sorry T1213.

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I had to peek. You

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complete that and you submit that to your employer and that gives

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them the certification to reduce withholding.

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That's very, very helpful. The three sort of major personal tax vehicles that

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people can put money into, you think of the FHSA, the TFSA

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and the RRSP, those are the three big ones that people can open.

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What are the differences there and when might someone want to prioritize one

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over the other. It's a big question.

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The reason I'm laughing is because we throw around all these acronyms

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in the industry so let's just simplify it a little bit.

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Let's start with Registered Retirement Savings Plan,

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RRSP, intended for retirement.

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It's also the one that's been around the longest.

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Make a contribution. You get a deduction for that contribution, so we

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say it's made with pre-tax dollars.

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Now, inside our RRSP we can invest, inside our RRSP, mutual

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funds, exchange traded funds, stocks, bonds, what have

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you. The earnings on those investments inside the

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RRSP are tax-deferred.

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Typically, when you're making a withdrawal in retirement,

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we make that withdrawal, then it's taxable.

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Tax deduction, deferred earnings, taxable

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withdrawal, RRSP.

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Tax Free Savings Account, second most popular one, it

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came in about 2009 so quite a while ago

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but still relatively new.

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We make a contribution to our TFSA, we don't get

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a tax deduction for that.

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But then inside our TFSA we can invest in all

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the same investments.

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All the earnings inside the TFSA are tax-free.

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We can make a withdrawal from our TFSA, it's tax-free as well.

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It's also more flexible.

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Let's say I need to take $1,000 out of my TFSA in 2026,

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I could re-contribute that in 2027, in a later year.

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There's a lot more flexibility with that.

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You need to be 18 to be able to open an account and there's limits.

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The last one is the First Home Savings Account, FHSA.

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The FHSA is intended for first-time home buyers.

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You have to meet certain criteria.

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Make a contribution to that, get a deduction for the

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contribution. Now, inside the account, same thing,

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mutual funds, ETFs, stocks and bonds.

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They will grow on a tax-free basis.

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When it comes time to buy a home, that first home, again,

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we have to meet certain criteria, that withdrawal is tax-free.

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The first Home Savings Account really combines the best

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of the RRSP, we're getting a deduction for our contribution,

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and we get a tax-free withdrawal for

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a qualified withdrawal from our First Home-Savings Account, the best

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of both. That was a long explanation.

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Your real question is, well, which is best?

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I'm here, I've got a couple dollars to throw in.

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What do I do?

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Well, it depends.

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If you already own a home you're probably not going to qualify for

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that First Home Savings Account so now you're down to a TFSA or an

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RRSP. Then I'm going to want to know are you

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saving for the future, for your retirement, or is this

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something like I'm saving for a rainy day, maybe vacation,

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two years down the road, something like that, so you want the TFSA, the

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flexibility that comes with that.

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I think most young investors who have not purchased a home

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yet, who are just getting started, would benefit from the First Home

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Savings Account because they're going to get that deduction,

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grow on a tax-deferred basis, make a withdrawal tax-free.

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I should also point out, talking about the deduction sometimes for young

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investors, maybe they're in a lower tax bracket today.

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They can make the contribution, let's say in 2026, but they don't have

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to make that deduction in 2026.

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They could claim that deduction in a later year.

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When we would do this is when we're in a higher tax bracket, so

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get a better tax benefit for that tax deduction.

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Michelle, is there any advantage if someone is saying, listen, I'm not thinking

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about buying a home this year or maybe in the next year but is there an

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advantage to opening up an FHSA or a TFSA and just letting it

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sit maybe with some minor sort of investments here and there?

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Great question. There's a nuance.

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Taxes are sometimes complicated.

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Ask questions. Listen to a podcast or a videocast like this.

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Let's start with the Tax Free Savings Account.

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As soon as you turn 18, so you turn 18 in

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2026, $7,000 of contribution room.

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If you don't open it, if you don't contribute to that, well, it will

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continue to grow. Let's say next year you can get caught

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up, $7,000 for this year plus whatever the new contribution

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is for 2027.

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There's flexibility there.

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First Home Savings Account, I'm sorry, don't shoot the messenger.

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It's a little more complicated.

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Here it is, you have to actually open the account and

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if you meet all the criteria, basically a first time homebuyer, a Canadian

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resident, et cetera, over age 18, as soon

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as you open the account, you have to open it at the financial institution,

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then you have $8,000 contribution room

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per year. In 2026 you open it, you don't have the cash

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to make the contribution but you do in 2027, you can get caught

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up in 2027.

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FHSA, you have to open the account even if you can't

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contribute to it.

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Very helpful nuance. There's some flexibility in sort of both areas there

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between the two tax vehicles.

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What if you are a student, let's say you're a student you're filing for the

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first time and you look at your annual income and it's only a

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couple thousand. Let's say you made maybe 7,000 or 8,000 on the year and you

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think, well, that's not worth it to file taxes.

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What should you do?

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You know you're below the basic personal credit, you know

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you're not going to owe taxes, plus you have tuition credits that you might be

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able to claim, maybe there's student loan interest you can claim against that,

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the list goes on.

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The question you're asking is, well, I know I'm not going to owe any taxes,

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should I file my tax return?

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The short answer is yes because RRSP

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contribution room is based on earned income.

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In our example we had $7,000, $8,000 of employment income, even

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though you may not be contributing to your RRSP you're going

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to be earning that contribution room which later on, future

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you is going to thank you for.

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As well, there's credits that are available.

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The biggest one I'm thinking of is the GST credit but there's other ones as

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well. I know when you're a student especially it's nice to be getting

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that quarterly cheque.

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Makes going out to the pub a little bit more fun.

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It sounds like the sort of overarching theme here is to get what you can do

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and do it early and sort of do it often and just get these kind of mechanisms

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running. Even if you're not taking full advantage it's still important to

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open them up and have them there for the future.

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Opening up our First Home Savings Account, if you have some

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funds, thinking about First Home Savings Account, TFSA, as well

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you want to be organized. Start those tax returns, we can get

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into the system, start accruing that RRSP contribution room,

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as well we might qualify for some credits as well.

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That's amazing. Michelle, before we wrap things up let's go through one final

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checklist here, things that people can be looking at.

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They're getting ready to do their tax return, they've watched the webcast, they

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feel informed, what do you want to leave the audience with?

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First of all, let's accumulate all those tax slips.

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Do you have a T4 slip, co you have any investment slips, a T3, a T5

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slip, investment income, so looking at all the income.

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Then we want to look for our deductions and credits.

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The common deductions are RRSP, First Home Savings Account,

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maybe childcare deductions.

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Maybe we have credits, medical, donations, tuition credits

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for students, accumulate it all.

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Go through the tax returns line by line.

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It will take 15 minutes maybe.

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Also you have a sense of, well, have I really captured everything?

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Compare it to last year's return as well.

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As well, most software asks lots of probing good questions to

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help you complete it.

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Now sort of March, April timeframe, this isn't really

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the tax planning time.

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This is where we just want to complete our return, get it done, get it into

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the system, get our refunds or make a payment where

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we're able if we have to.

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Tax planning, thinking about these things, we've touched on a

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fair bit, this is really a year-round activity.

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So you have to have me back, Jordan.

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That's right. We'll have you back, we can go into tax planning so that everyone

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is well prepared to go into filing season in the

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March and April period. Michelle, it was very nice to hear from you and thanks

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again for coming on the show.

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Great to be here. Thanks for having me.

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Just a reminder that The Upside webcasts do air daily so keep an eye on your

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I hope you'll join us next time on the Upside.

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I'm Jordan Chevalier.

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