Is there a teenager in your family—perhaps a child, grandchild, niece or nephew—working part-time during the summer or after school? Helping them file a tax return can be a simple but powerful way to start building future wealth by unlocking potential tax advantages.

Many teens choose not to file a tax return if taxable income is below the basic personal amount—$16,129 in 2025 (federally). What’s often overlooked is that even modest earnings can generate valuable Registered Retirement Savings Plan (RRSP) contribution room.

Take Saya, for example. At age 14, she begins work as a lifeguard and earns $5,000 each summer. Her aunt helps her file a tax return, allowing her to accumulate RRSP contribution room at a rate of 18 percent of earned income. For Saya, this means $900 in RRSP room for each summer of work. Even if she doesn’t contribute to her RRSP, the unused RRSP room carries forward indefinitely. By age 22, after graduating from university, Saya has accumulated $8,100 in unused RRSP room. When she starts a full-time job, assuming a 30 percent marginal tax rate,* she contributes the full $8,100 to her RRSP, saving $2,430 in taxes ($8,100 x 30%). At an average annual return of 6 percent, this contribution alone could grow to nearly $75,000 by the age of 60. Not a bad start for someone just beginning their career!

There may be other benefits:

• Lifelong Financial Habits—Supporting kids in filing their taxes at an early age can help instill lifelong financial skills and good wealth management habits.

• Income Splitting—If you own a business, paying younger family members for reasonable services rendered can transfer funds to those in lower tax brackets.

• Future Access to RRSP Funds—RRSP contributions may be accessed later as an interest-free loan, including up to $60,000 under the Home Buyers’ Plan for an eligible first-home purchase, or up to $20,000 through the Lifelong Learning Plan for eligible education or training. With rising housing and education costs, every bit helps.

^{*Illustrative. Tax rates vary depending on income and the province of residence.}