Important Tax Reminder for Teens: Understanding Your Filing Obligations

In Canada, teenagers need to grasp their tax responsibilities early on to navigate earnings and filing requirements effectively.

There isn't a set age for teenagers or young adults to begin paying income tax in Canada.

Minors and even students must file taxes unless their income falls below a specific threshold. This requirement varies based on the type of income they receive.

If students earn income from employment below the personal threshold, they are not required to file taxes. The personal threshold is set when earnings exceed the basic personal amount, which stood at $15,000 in 2023 and $5,705 in 2024. Below this threshold, individuals are not required to file taxes.

However, if they operate a small business and if their income exceeds $3,500 in profits after deducting expenses, then they must file a tax return.

For example, suppose a 17-year-old operated a small business last summer, earning $5000 in income with $1200 in expenses. After deducting expenses, their net income is $3800, which exceeds the $3,500 threshold, so they must file a tax return, regardless of their school enrollment.

In summary:

All minors who are employed should file a tax return if their income exceeds the basic personal amount. If a teenager's earnings are below this threshold, they are not obligated to submit a tax return.

However, if they operate a small business and their net income exceeds $3500, they must file taxes.

Disclaimer:
“Please note that the information provided in this article is of a general nature and may not be accurate for your specific situation. The information is current as of the date of posting and is not intended to provide legal advice. It's always recommended that you consult with a professional accountant and lawyer for personalized guidance and advice."