When the tax season comes, it brings many terms that you do not use in day-to-day life. The most confusing is "tax return" and "tax refund". The terms used interchangeably very often, and while they both somehow similar, they are different. So what is the difference between a tax return and a tax refund?
In short, the tax return is the paperwork that you submit to CRA, but the tax refund is the money you get from CRA.
What is a tax return?
Every year before April 30, you must file your tax return to CRA. That information includes your income for the previous year, information about dependants and expenses, for example, moving expenses. If that is the first year you file your return, you send tax return using mail. But for all the following years, you can do it electronically using various tax filing software. The paper which you file or the electronic representation in tax software is called tax return.
What is a tax refund?
After CRA will asses your tax return, they will send you a notice of assessment. That notice stated if you have to pay taxes to CRA and what is the amount or if you overpaid and CRA owes you money. If CRA owes you something, they have to send you a tax refund. Usually, a tax refund comes in a way of a check into your mailbox, or if you provided your bank information to CRA, they would make a direct deposit.
A tax return is an information you file to CRA, and a tax refund is a payment you receive from them.
What is a tax credit?
There is also some confusion around tax credit. If you want to know what tax credit is and what types of tax credits exist, you can refer to the following post: refundable and non-refundable tax credits.
Do you need help filing your tax return?
It does not matter if you have experience preparing your tax return or have to do it the first time, our personal tax accountant can help you. We are experts in taxation and provided our services to plenty of clients. You can contact us for a quick phone call where we explain our services.