You might have noticed that you received some money in your bank account that says "Canada RIT", but what does that mean, and what is it? RIT in Canada stands for "Refund of Income Tax", with some calling it "Return Income Tax" or even just "Refund Income Tax". This money is your tax refund from your tax return. It’s sometimes labelled as a RIT/RIF transaction on your bank account statement.
The money from a Canada RIT deposit isn't just free money or a gift from the government. Instead, this is your hard-earned money that you already paid in taxes throughout the year. The amount of your refund depends on how much tax you paid as well as your personal circumstances, such as dependents or other deductions. You're getting a tax refund because you paid more taxes than you were obligated to, and the government is returning the balance.
There isn’t a set date for when Canada RIT deposits are sent out. Instead, when you get your Canada RIT deposit depends on when you filed your taxes with the Canada Revenue Agency (CRA), how you filed it, and if the CRA needs to take a closer look.
For example, if you file your tax return online with EFILE or NETFILE, you can expect to get your tax refund in two weeks. For paper returns that are mailed in, it could take eight weeks. Tax returns that are selected for a manual review will be delayed.
You’ll be able to see the status of any Canada RIT deposits, if you are entitled to one, by visiting the CRA website and using their “My Account” feature. This feature gives you up-to-date information on where your tax return is and when your deposit will be made. Direct deposits allow you to receive your tax refund much faster. The deposit may be named Canada RIT. Some other codes may include EFT Credit Canada and Canada Fed Deposit.
|March 6||May 14|
Since you can expect to receive a Canada RIT deposit around two weeks after you have filed your income tax return, the earliest you can see a Canada RIT deposit is around March 6, and the latest is around May 14.
If you have a later filing deadline, such as if you’re self-employed, then you might receive your Canada RIT deposit later if you file later.
It’s possible to receive a Canada RIT deposit even if you haven’t recently filed your taxes. This could be due to a CRA audit or review that went in your favour, or it could be because of an adjustment the CRA made to your taxes from previous years.
CRA reassessments can happen at any time, up to three years after the original Notice of Assessment was sent. If the result of the reassessment is that you have overpaid your taxes, then you’ll get a refund payment. You’ll also get a Notice of Reassessment if this is the case.
When receiving a Canada RIT deposit, you can expect the money to be sent via direct deposit or paper cheque. If you’ve chosen to have your refund sent electronically, then it will go into the bank account that is connected to your CRA profile. For those who receive a paper cheque, this will be mailed directly to your address on record with the CRA. If you’d like to receive your Canada RIT deposit faster, then make sure that you’ve updated your CRA profile with your correct direct deposit details.
Anyone who files a Canadian tax return can receive a Canada RIT deposit if they have overpaid their taxes. If you pay taxes but don’t file a tax return, you won’t be able to receive a Canada RIT deposit, and you might be missing out on credits and refunds. If you owe tax and don’t file a return, you could be charged penalties.
No, Canada RIT deposits are not taxable. They are a return of taxes that you have overpaid, so they are not considered to be income. In fact, the ideal scenario is not to get any tax refund at all. That's because it means you have paid exactly the right amount of taxes throughout the year, meaning no overpayment and no underpayment. You’ll be able to use the money now instead of sending it to the government and then waiting to get your money back again at tax time.
If you frequently get large tax refunds, you can ask your employer to decrease your tax withholdings so you don’t have to wait until the end of the year for your money. This way, you’ll be able to use your money sooner rather than later.
Canada RIT deposits are your money, so you can do whatever you wish with it. You can use this money right away for items such as bills, groceries, or even vacations. Or, you can save your tax refund for longer-term goals like retirement savings.
If you're looking for a responsible way to use your Canada RIT deposit, consider investing it in a savings or retirement fund. Investing this money into something that will generate returns over time can help you build wealth and prepare for the future. Popular options are TFSAs and RRSPs. Investing your RIT back into an RRSP allows you to reduce your taxes, possibly allowing you to get an even bigger tax refund next year.