Taxation-Canada

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Residency

  • If you are living in Canada, you most likely are a resident of Canada for tax purposes (even if you are not a permanent resident from an immigration point of view).
  • To understand the implications of being a tax resident of Canada, please read the BE Wiki article called Tax Residency.


Income Tax

  • The Federal and Provincial governments both charge income tax.
  • The two levels of government set their own rates of income tax, but they are administered and collected jointly by the Canada Revenue Agency (CRA).
  • For newcomers to Canada, CRA offer this useful web page: [1]
  • Generally, the rules relating to Provincial income tax follow the Federal ones, but there are occasional differences.
  • The tax year for individuals is the same as the calendar year, that is, January 1st to December 31st.
  • Individual tax payers have to submit their income tax returns for the previous tax year by April 30th.
  • All tax residents of Canada who owe tax have to submit income tax returns.
  • Employees have to submit income tax returns.
  • If spouses both earn income, they each have to submit an income tax return.


Filing Obligation

  • Every tax resident of Canada is required to file an income tax return if they owe tax.
  • Please note that an employee has to file an income tax return.
  • Even if you don’t owe tax, it is worthwhile filing a return, as you may be eligible for a refund. Many means-tested benefits cannot be claimed if you don’t file a return.


Tax Year

  • The tax year is the same as the calendar year, that is, January 1st to December 31st.


Due Date

  • Income tax returns, together with any balance owing, must be filed by April 30th of the following year.
  • If you, or your spouse, are self-employed, you can delay filing until by June 15th, but any tax owed must have been paid by April 30th.

T Slips and Receipts

  • Most transactions that have tax consequences will generate an information return (a T slip) each year.
  • These are mailed in February.
  • An employee will get a T4 showing wages and deductions, an investor a T5 showing interest earned, etc., a student a T2202 showing education credits, and so on.
  • You need to keep all T slips to help you calculate your income and to attach to your income tax return form.
  • In addition, keep receipts for:
    • medical and dental expenses
    • transit passes
    • care of your children while you were working
    • tuition for self and dependents
    • children's sports activities
    • contributions to savings plans for which there is a tax break (Registered Retirement Savings Plans and Registered Education Savings Plans)
    • union or professional dues
    • tools and clothes (e.g., steel-toed boots) that you need for work
    • policitical donations
    • charitable donations
    • moving expenses incurred with respect to a move that took place within Canada for the purposes of securing new employment
    • home renovation expenses (2009)
  • If in doubt, keep a receipt.
  • It's better to have too many receipts and not be able to use some of them than to be without a receipt that you could have used to reduce your tax burden.
  • In the case of charitable donations, spouses can combine their receipts, and both spouses' expenses can be claimed by only one of the spouses. You may find that it is more beneficial for the spouse with the higher income to claim all charitable donations.

Filing Methodology

  • You can fill in a tax return on paper (it is available in post offices from February each year, or you can download it from here) and mail it to the CRA.
  • You can use tax preparation software.
    • If your affairs are simple the tax preparation software can be a good option.
    • Once you are in the system, the software can file your return on-line.
    • Note that the first income tax return that you submit in Canada can now be filed online: http://www.cra-arc.gc.ca/newcomers/
    • The NETFILE page of CRA's website provides a link to a list of "certified" tax preparation packages that are compatible with CRA's system.
    • A nice feature of tax preparation software is that it enables you to play around and preview different scenarios. For example, you can see what would happen to the amount of tax you owed if you contributed X number of dollars to an RRSP, you can see what would happen if each spouse claimed his/her charitable donations separately or if you combined the claim under one spouse's return, and so on.
  • You can use a tax preparation service
  • You can use a professional accountant. If your financial life is other than simple, particularly if you are self-employed, the extra cost of a professional accountant usually is worthwhile.

Income Tax Rates

Please see the BE Wiki article called Income Tax Rates.


Tax Credits

Please see the BE Wiki articles called Tax Credits.


Child and Family Benefits

Please see the BE Wiki article called Family and Child Benefits.


Payroll Taxes

Please see the BE Wiki article called Payroll Deductions.


Registered Retirement Savings Plans (RRSPs)

Please see the BE Wiki article called Registered Retirement Savings Plans.


Business Income

Please see the BE Wiki article called Taxes on Business Income.


Capital Gains

Please see the BE Wiki article called Capital Gains Tax.


Foreign Assets

Please see the BE Wiki article called Foreign Asset Reporting.


Currency

Please see the BE Wiki article called Currency Exchange Gains and Losses.


Sales Taxes

Please see the BE Wiki article called Sales Taxes.


Real Estate Taxes

Please see the BE Wiki article called Real Estate Taxes.


Taxes during Immigration

Please see the BE Wiki article called Taxes during immigration-Canada.

Taxes on Leaving Canada

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

Contact Canada Revenue Agency

If you have further questions, and if you are in Canada, you can phone one of CRA's toll free numbers. CRA staff are helpful in answering questions.


Levels of Government

  • Canada has different levels of government, and these different levels of government levy different taxes.
  • To understand Canada's different levels of government, please see the BE Wiki article entitled Canadian Government.


Disclaimer

  • The information in this Wiki article is not intended to be comprehensive, and concentrates on matters of interest to new residents. It is provided for information only, and is not to be considered as tax advice.


  • Tax rates quoted refer to 2010, and are subject to change. The original author of this article is based in British Columbia, and does not claim specific knowledge of other provinces. In most cases the differences are minor. In some, particularly in Quebec, they are more significant. You will have to research this yourself.


  • Neither Britishexpats.com, the moderators, nor the authors of this article accept any responsibility or liability for the consequences of using this information. If you have a specific tax problem then please consult a tax professional.
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