Have you recently received a deposit in your bank account labelled Canada RIT deposit? This is not something you typically see often in your bank account.
However, when it does appear in your bank account, you should know that it has something to do with your tax returns.
I am going to tell you everything you need to know about the Canada RIT deposit.
What is Canada RIT Deposit?
Canada RIT stands for Canada Refund Income Tax.
Canada RIT is not something that always shows when you get a refund for your taxes. However, it is something that can be a delight to see in your bank account when you eyeball your checking account and get additional credit without any recollection of signing up for something.
In all likelihood, the Canada RIT is a refund from the taxes you filed from the Canada Revenue Agency (CRA). The deposit can arrive in your bank account after you file your taxes. There are cases when you can see the deposit arrive in your checking account at any random time of the year.
If it does arrive unexpectedly instead of right after filing your taxes, it is not something that you need to worry about. Sometimes, you can receive the deposit because the CRA has reassessed your tax returns and deemed that you are viable for a certain amount in tax refunds. If that happens, you are also going to receive a Notice of Reassessment in the mail that will tell you about the refund.
While you can do all of this over mail, I recommend setting up a CRA My Account. Having the account provides you with instant and online access to your tax documents, any notices that you should receive, and the ability to perform various functions online that you would otherwise do by going to the bank or sending them mail. For instance, you can make all the payments online and receive notifications like the Notice of Reassessment with the outline of your tax refund through an online portal.
Canada RIT Example
The CRA can make the Canada RIT deposit for several reasons. Usually, it is not a substantial amount, but you should not be surprised to see a significant amount deposited in your account with Canada RIT as the description.
For Example: Person A has a CRA business account. Person A saw a deposit with the label of Canada RIT in their account a little while after filing their taxes. The amount could likely be a “Small Business Job Credit,” which can show up with the description of “Canada RIT.”
The amount can also appear in your CRA business account with a transaction description of “Job Credit 2020”. The small business job credit effectively brings down the Employment Insurance (EI) premiums from the current legislated rate of $1.88 to $1.60 per $100 of insurable earnings. Any company paying employer EI premiums equal to or less than $15,000 in those years is eligible for the credit. It is likely the case with Person A.
Naturally, when you see additional money show up in your account, you might want to celebrate. Getting a six-pack of beer might be a possible way to celebrate it, but you should be wary of spending it like that.
If you ever receive a deposit in your checking account with Canada RIT in the description, I would advise checking with your CRA My Account to determine why you have received the refund. Whether it is a substantial amount or a small amount, my recommendation would be using it to invest in securities or ETFs using a robo advisor. Here is a list of the top robo advisors in Canada that you could consider to use the refunds and make the most of your Canada DIT deposit.