Ahead of the deadline for Canadians to pay their taxes, one expert says there are certain considerations younger people should be aware of. 

Cindy Marques, certified financial planner and director at Open Access Ltd., said in an interview with BNNBloomberg.ca last week that one of the most important aspects for younger adults to maximize their return is to not incur a penalty. To do this, she said it is best to ensure they meet the April 30 deadline. 

“I don't think a lot of people are aware that there are two different deadlines the deadline to pay what you owe and the deadline to file. For most people, that's the same day, that's April 30,” She said. 

“Many young adults that I work with, they have some freelancing income, (a) side hustle of some sort, so (as a) sole proprietor they actually have a longer deadline to file June 15. But the deadline to pay what you owe is still April 30.” 

Marques said that some of her younger sole proprietor clients, meaning someone with self-employment income who is not incorporated, may be unsure about how much they will owe the Canada Revenue Agency and elect to file at a later date. 

“The penalties of filing late are so much worse than just filing on time and simply paying a bit of interest on a late payment of what you owe,” she said. 

“So if I could stress any one thing, it's to file your taxes on time, and if you don't know what your deadline is just assume it's April 30. File it on time, if you can't pay it right away, that's okay. But you're going to avoid a big nasty penalty for filing late.” 

Among her younger clients, Marques said she sees more people with multiple income streams from freelancing or running a “side hustle.” She added that gaining multiple streams of income can help younger adults offset higher living costs in larger cities like Toronto. 

“Their way of having an emergency fund is just multiple streams of income. So if one of them stops, while they might not have as much in savings, they at least have some consistent stream of income coming in in one way or another,” Marques said. 

“So that's just a reality that I'm seeing with younger adults.” 

Differing needs

According to Marques, younger adults can have differing needs when it comes to tax time. 

Particularly, she said younger adults have more “potential to receive a refund in a lot of cases. That's because they have a lot of leftover tuition credits that haven't been used from years prior.” 

“That's going to keep rolling forward year after year, whatever is left unclaimed. So I do see this opportunity to produce refunds more readily in younger adults than in older adults,” Marques said. 

Notable changes 

More broadly, Marques said all Canadians earning income should be aware of some of the tax changes this year, specifically as it relates to the Canada Pension Plan. 

One of the key changes is that CPP is that it now has a second earnings ceiling. Individuals earning $68,500 or less will not see any changes to their contribution levels. 

However, anyone earning more than that will be included in a second contribution level topping out at $73,200. Those in this group will pay four per cent more on the amount of money they make between $68,500 and $73,200. 

Earlier this year, John Oakey, vice president of taxation with Chartered Professional Accountants of Canada (CPA Canada), told BNNBloomberg.ca that the change could increase tax burdens for middle-income earners as well as their employers. 

“What this means for employers is if you were to hire somebody in 2024 and you were paying them $73,200, it's going to cost you 7.5 per cent for employment taxes,” Oakey said.

“And employees are paying seven per cent, so that's 14.5 per cent that's going to fund the CPP and EI between employees and employers … that’s a lot of tax to be paid, and a lot of administrative burden.”

With files from Jordan Fleguel