The tax related requirement is to have COMPLIED with CRA tax filing requirements for 3 of the previous 5 tax years.
Years checked [Yes] (required to file, yes) and [Yes] (filed, yes) count.
Years checked [No] (required to file, No) and [Yes] (filed, yes) count.
Years checked [No] (required to file, No) and [No] (filed, No) count.
That is because all those are years in which the individual complied with CRA rules for who must file a tax return.
Actually, only if the applicant checks [Yes] (required to file, Yes) and [No] (filed, No) is that a year that will not count . . . the individual was required to file under CRA rules but did not, so that is not a year the individual complied with tax filing rules.
Citizenship Applications Made in 2020:
For an application made during the tax year 2021, the relevant five tax years are precisely as you list them: 2016, 2017, 2018, 2019, 2020.
Based on what you list here, you met the tax filing requirements for at the least the four years 2016 through 2019, including 2016 and 2017 since you were not required to file a return for those years.
I am not sure when Canadian residents are required to file a tax return for 2020. For most years, for most but not all Canadian tax filers, the tax filing deadline is April 30 of the following tax year, but Covid-19 delayed the deadline for 2019 returns and probably (I have not checked) does so this year, for 2020, as well. Nonetheless, the soonest a Canadian is REQUIRED to file a tax return for 2020 (unless for some reason the taxpayer receives a request for one sooner, which is very unlikely), will be April 30, 2021.
Thus, for any citizenship application made between now and April 29, 2021, the applicant can check [No] NOT REQUIRED to file a return for 2020, and thus a [No] have NOT FILED check for 2020 will still count 2020 as a year in compliance with the tax filing requirements.
In a more practical, for what looks best approach, not a bad idea to wait to apply AFTER filing this year's return . . . assuming you are someone in a position to file as soon electronic filing is available, AND assuming that will be comparable to previous years (measures in response to Covid-19 can put a wrinkle in things). It is almost always good to wait and apply with more physical presence days IN Canada.
Similarly, overall and generally, even though compliance for three years meets the requirements, looks much better to be in compliance for all years.
REMEMBER: A year counts toward one of the three years in compliance if the individual has filed a return for that year, OR was not required to file a return for that year. That is, for a year to count under the citizenship qualifications, that only requires the filing of a return for a year in which CRA rules require the individual to file a return. Thus, some PRs may qualify for citizenship without ever having filed any tax return, and many will be able to count years they did not file a return.
Note: some forum participants assert that just being resident in Canada means the individual must file a return, but this is NOT true for everyone.
At the other end of the spectrum, some forum participants say that if the tax was paid for the year, such as through withholding by an employer, a tax is not owed and the individual is not required to file a return, and this too is
WRONG (as long as the tax was paid there is no penalty, but the law still requires filing a return). Those who assert the latter fail to recognize the difference between when a tax is "owed" versus when a person has "to pay tax," failing to recognize that those who are obligated to pay a tax for a given tax year are by virtue of that alone generally required to file a return EVEN IF NO tax PAYMENT is "OWED" because it has been paid, again such as where the individual has fully paid the tax through employer withholding.
HOWEVER this is not the proper forum for questions about who must file a tax return . . . for that question first review the information available at the CRA at
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/you-have-file-a-return.html
