As a newcomer to Canada, you are probably confused and have a million questions about filing taxes; what should I report as income? What if I make a mistake? How do I fill these forms? Where can I find help with filing taxes?
This post will answer all your questions and many more in a simple and easy-to-understand manner.
Here is what you need to know about filing taxes in Canada for the first time.
What you should know about filing taxes as a newcomer
In Canada, income tax is overseen by the Canada Revenue Agency (CRA).
The Canadian income tax year is from January 1 to December 31. If you arrived and settled in Canada between January and December, you are required to file your taxes.
If you settle in Canada from another country, you are a new resident of Canada for income tax purposes only for the first tax year. After you file your first tax in Canada, you are no longer regarded as a newcomer for income tax purposes.
You are seen as a resident of Canada for income tax purposes when you form significant residential ties in Canada.
Who should file a tax return?
Those who live in Canada permanently – Canadian residents, Newcomers to Canada (immigrants/permanent residents)
Those who live in Canada temporarily – International students, foreign workers
There are other situations where you may be required to file your taxes in Canada if you do not exactly fall under any of the above categories. Visit the Government of Canada website for more information on this.
Why should I file taxes?
You should file your taxes if you
- Want to receive or continue receiving the benefit and credit payments (GST/HST and Canada Child Benefit) that you are entitled to
- Intend to claim an income tax refund
- Might earn a higher income in the future and want to carry forward certain expenses (for example tuition and education credits) to reduce the tax you owe in future years.
You must also file your taxes if
- The CRA notifies you to file a tax
- Owe the government income tax from your earnings
What can I report as income?
For the part of the tax year that you were considered a resident of Canada, you have to report your world income (income from all sources both inside and outside Canada converted to CAD) as well as your underground economy (income you earned in cash without any records).
All or part of your world income may be exempt from Canadian tax if Canada has a tax treaty with the country or region where you earned the income.
For more information about what to report as income, check Reporting Income on the CRA website.
Can I file taxes even if I had no income?
Yes, you should file your taxes even if you had zero income for that tax year. Filing a tax return every year (even if you didn’t have any income), makes you eligible to receive tax credits and benefits (GST/HST & CCB) that you wouldn’t be able to get otherwise.
When can I start filing taxes?
You can start filing taxes in mid-February, and the deadline is the end of April. If you are self-employed, the deadline for filing taxes is mid-June.
For 2022, the earliest you can file your tax returns electronically is February 21.
The tax-filing deadline for most individuals is April 30, 2022 (May 2, 2022, since April 30 is a Saturday) while the deadline to file your tax is June 15, 2022, if you or your spouse or common law-partner is self-employed.
These dates typically change every year. Visit the CRA website for specific dates for each year.
What do I need to file a tax return?
To file your tax in Canada, you need
- A Social Insurance Number (SIN)
- An Individual Tax Number (ITN) if you are not eligible for a SIN
- T4 for your employment income and deductions issued by your employer
- T2202A for the tuition, education and textbook fees you paid for the tax year issued by your institution
- T4A for students who have received a scholarship or bursary in the tax year
- T5 for your investment income from savings accounts issued by your bank
- Records of any other income, such as an income statement from your self-employment.
- Receipts for tax deductions, including medical expenses, charitable donations, childcare or caregiver expenses, monthly transit passes, etc.
How do I file my taxes in Canada?
There are two ways of filing taxes in Canada.
- Electronically/Online
- By Paper/Post mail
Filing taxes electronically
There are various options available for you to file your taxes electronically.
EFILE: This is a secure CRA service that allows authorized service providers and discounters, complete and send your income tax return directly to the CRA from the software used to file the tax.
NETFILE: You can use the CRA’s secure service to complete and file your return electronically by yourself using certified tax preparation software or a web tax application.
Here is a list of certified software and applications, both free and paid versions.
Filing taxes via paper
If you choose to file your tax return by paper, find the forms you need on the Canada Revenue Agency website.
Where can I find help with filing taxes?
If you need help with filing taxes as a newcomer, there are a number of options available to assist you.
There are free tax clinics that help newcomers to Canada file their taxes. If you have a modest income and a simple tax situation, volunteers at a free tax clinic may be able to complete your tax return for you. Search for the tax clinic close to you.
A tax preparation professional can help you with filing taxes in Canada. You can do a Google search for professionals close to you or ask people for referrals to a trusted professional.
What expenses can I claim while filing taxes?
You may be able to reduce your total income by claiming deductions that you qualify for. When you claim deductions while filing taxes, they are subtracted from your total income.
Here are some common deductions you should claim when filing taxes in Canada.
- Registered retirement savings plan (RRSP) contributions: Excluding the ones you made the first year that you will be filing a return in Canada).
- Moving expenses: You cannot deduct moving expenses incurred to move to Canada.
- Support payments: Spousal or child support payments you paid, even if your former spouse or common-law partner does not live in Canada.
- Work-related expenses: T2200 Employment Expenses (signed by your employer), In-home office expenses, Tool expenses, Union dues not included on your T4 slip
- Child care expenses
- Adoption expenses
- Study expenses: Tuition, education, and textbook and interest paid on your student loans
- Charitable donations
- Medical expenses
- Examination fees for licensing or certification
- Digital News subscription expenses
- Political contributions
- Attendant care and care in a facility expenses
- Receipts for classroom/school supplies (for teachers and early childhood educators)
Depending on your province, you may be able to claim certain expenses such as rent, property tax, or children’s fitness and arts expenses.
Will I need to submit receipts for deductions claimed?
You will not need to submit receipts for deductions you claimed when you file your taxes. However, it is very important to keep all your receipts and documents in case the CRA requests to see them at a later time. The CRA can choose to randomly verify information in tax returns at any time.
What happens after I submit my tax return?
If you filed your taxes electronically using NETFILE your return, the CRA will issue a confirmation number when you submit it after it does an initial check and accepts your return. This number will be displayed on your screen. You should keep this confirmation number for your records.
If you encounter an error while trying to submit your tax returns using NETFILE, you can print and mail a paper version of your return to the CRA. Print the downloaded paper version of your return and mail it to the CRA office specified for your city or province of residence.
What if I discover a mistake I made after submitting my tax returns?
If you discover a mistake after you’ve already filed, you should request a change to your tax return.
What happens after I file my taxes?
You will receive a notice of assessment (NOA) after the CRA reviews your return. This document contains important information such as the amount you owe the government (if applicable), the refund you will get from the government, and when to expect the refund back.
You will also find your tax-advantaged account contribution limits for (RRSPs) and tax-free savings accounts (TFSAs) for the tax year in your NOA.
Need a referral to a tax preparation professional? Ask BC Settlement Buddy.
Are you confused about anything related to living, studying, and working in BC? Talk to BC Settlement Buddy.
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