jameswales

Just as I finally get my head around the logic and point of HMRC....I move!

My story:

I arrived in Nova Scotia in August, and have since had 3 jobs. I'm finally in something permanent. I've earned in the region of $9000 since my arrival, as I went a long period without work.

So, am I correct in hearing that unlike our April-April UK year, the income tax here works Dec-Dec?

Each employer of mine has taken Income Tax from my pay packets, so am I entitled to get a proportion of this back as I am earning under some kind of threshold? If so, what are the specifics? And no new residents get any other kind of tax benefit?

I'm basing all of this on the UK, so now need to learn how it works over here!

Cheers ma' Dears!

theotherlebowski

that's very strange, i was wondering about this aspect of canadian life myself today.

i was also wondering (further to the OP's questions above) if anyone can explain the need to file a tax return when it seems that, as an employee of a company, my taxes will be deducted at source and paid directly to the government meaning that both my employer and the gov have a clear paper trail on how much tax i've paid and what i've been paid after tax. me submitting a tax return seems like a redundant step in the process. (if i was to be self employed i can see the need but not if it's an automatic income tax payment made by my employer...)

this is a bit of a hefty question!


cheers.

fledermaus

The tax return thing is important as you won't get any monies due to you if you don't file and if you owe money and you don't file then this is an offence.

The deductions made by your employer are not as accurate as they would be in the UK as the way of notifying the tax people of any tax relief is after you have paid and not before. Plus you can claim for more things, medical expenses including specs, travel to hospitals for medical appts over a certain km are two that spring to mind.

There is a minimum income for tax, have a look on the Revenue Canada site for more information.

iaink

Its not complicated, honest. But you do have to file, especially if you hope to get access to some government programs like child tax credits etc.

Each employer should give you a T4 form reporting your annual income from them. When you finish working for them they should give you this or an equivalent form. Your current employer will do the same, probably in February or late january if my experience is anything to go by.

I plug the numbers into a cheap tax software program like tax freeway, and it calculates the rest.

Your first return will have to be on paper and sent in to the correct office (it tells you on the forms), but you can use the software to generate it and print it out.

If you dont want to pay the $10 for the software you can get forms from the internet, or post offices will have paper booklets.

Chances are you will be due a refund, they (CRA) will need a void cheque from you to set up the repayment. Unfortunatly paper returns always take longer, but once you have done it once its much quicker when you efile in future.

There are certain things you can claim to reduce what is deamed taxable income, or to generate tax credits. Kids sports expenses, Some designated savings(RRSPs), medical expenses (if sufficiently high), some business expenses (professional organisation membership for example), charitable and political donations are all typical of the stuff people claim.

For a newcommer there is not too much you can claim specifically that Im aware of. Im not sure if the moving expenses are eligable, there has been some debate in the past, but I think the answer to that is no because you were by definition not canadian resident at that time.

Zoe Bell

Or they just send you a rebate cheque.
Occasionally they send you them at random as well. I've just received a $300 odd dollar cheque from the CRA for some random rebate thingy.

theotherlebowski

thanks guys

it seems like a staggeringly inefficient and cumbersome system to me but then i'm not an accountant! seems like it's one thing systemically that the UK kind of got right...

iaink

True, but it takes longer in future.

Thats compensation for the recent introduction of the HST. You might want to not spend it all until you have paid for this years heating oil, which now has an extra 8% associated with it

iaink

Dont many people have to file returns in the UK now? Maybe I misunderstood.

It is what it is, no point railing against it. Besides, generally the way it works puts more money in your pocket.

theotherlebowski

i've never filed a tax return for my earnings as an employee and i'm 35. you have to if you're self employed but if you work for a company their payroll department deduct your tax requirements and pay HMRC what you owe. sometimes you'll get a rebate but more often than not you'll have to ask for it as they won't tell you you're due one.

different incomes are assigned a code and each code is weighted with a taxable amount. you earn x amount per annum and pay y amount of tax that's deducted at source and you never have to see any paper work. it's actually really nice as it means you don't have to cry into your calculator or spend any time or money on an accountant!

Almost Canadian

I don`t know if I agree with the highlighted bit. I agree that most employees obtain a rebate, but only because they have paid too much tax in the first place!

It assists, I believe, to think of the tax system here being similar to how it was before New Labour removed all the items one could claim against tax in the UK. Socialists would, of course, claim that it is abhorrent that one should be able to claim items against one`s tax each year, others disagree

Zoe Bell

Ha ! the joys of renting a condo with utilities included . I think the last cheque went most the way towards an Ipad. I think of it as more of my own personal economic stimulus package

Back on topic , filing tax returns here is very easy. the software makes it very simple . For example - put here what it says in box 5 of your T4.

iaink

It (sort of) works the same here, as long as you tell HR you are married with two kids aged x and y and fill out the appropriate form, which I guess most people never do. I wouldnt trust HR to get it right anyway, but thats another story.

However, if you stuff $10k in your retirement savings plan, or spend $500 on skating lessons for the kids, your deductions at source are not going to change, so you need to claim the appropriate tax rebate back.

As long as you dont owe tax you dont have to report. But if you dont report then you also wont get Child Tax benefit payments, or a rebate on any tax that you can claw back.

theotherlebowski

at least there's software out there that does the legwork for you

i guess i'm just used to never having to give a flying arseburger about my tax until it goes wrong! i hate numbers and will generally avoid dealing with them wherever possible and i also don't enjoy dealing with stonewalled beaurocracies that have all the sympathy of a dog mauled shoe.

but if that's how it is out there i'll have to nut up and deal with it (secretly hoping that someone in government has an epiphany and figures out a way to streamline things and remove the need for the taxee to account to the taxer what the taxer has taxed from from the taxee already)

Zoe Bell

I think you are over estimating the amout of contact you will be required to have with CRA. For the vast majority of people , you fill in the form , they send you a cheque ( or pay it into your account). End of story.

iaink

It will never happen, the north american mindset is to be very upfront and paranoid about taxation, and want to double and triple check that they are not being fleaced. Hence annual tax return paperwork and no tax included on shop sticker prices so that you are seing it crystal clear on the sales slip how much the government just lifted from your wallet.