Newcomers' Guide to Income Tax Filing in Canada

Newcomers' Guide to Income Tax Filing in Canada

Michael Zimmer Published:
March 23, 2023

Some of the things that makes Canada so attractive a place to live is its state-of-the-art free healthcare, free world-class education, govt-subsidized college or university education, best infrastructure, career prospects, etc. These benefits are free because they are paid for by the government of Canada using taxpayers money. Canadian citizens and permanent residents see paying their tax positively because of these exclusive benefits.  However, understanding the Canadian tax system can be challenging, especially if you are a newcomer.

Through this article, we intent to cover the basics of Canada’s income tax regime. You must understand that as with anything else, tax-related matters that are mentioned in this article are subject to change with time. You must not see this article as professional advice. You must consult a tax professional if you (or your establishment) seek professional advice in filing income tax.

The first thing newcomers need to know is that taxes in Canada are collected by the Canada Revenue Agency (CRA). The CRA is responsible for collecting taxes and administering various social and economic benefit programs. When you file a tax return with the Canada Revenue Agency (CRA), you are basically submitting a document that outlines your income, deductions, and credits for a specific tax year. It is an important process as it determines your qualifications for benefits, credits, and refunds, in addition to establishing your tax liability.


Importance Of Filing Your Tax Return: Benefits & Consequences

As a newcomer to Canada, filing your income tax return is important for several reasons. To establish your eligibility for government benefit programs (for example, the Canada Child Benefit), are based on your income reported on your tax return.

Filing a tax return is necessary to determine your eligibility for these benefits. Canada offers various tax credits and deductions that can reduce the amount of tax you owe. By filing a tax return, you can claim these credits and deductions and potentially reduce your tax liability. Filing a tax return is one way to establish your credit history in Canada, which is important if you plan to apply for credit in the future. If you fail to file a tax return, you may be subject to penalties and interest charges. These can add up quickly and result in a significant financial burden. Filing a tax return is mandatory if you earned income in Canada during the previous tax year. Non-compliance with Canadian tax laws can result in penalties and legal consequences.


Income Tax Returns Deadlines | Keep These Dates in Your Mind

The deadline for filing a tax return in Canada is April 30 (of the year following the tax year). For example, the deadline for filing a tax return for tax year 2022 is April 30, 2023. However, if you or your spouse or common-law partner are self-employed, the deadline to file your tax return is June 15. At the same time, any balance owing is still due by April 30, to avoid interest charges.

It’s essential to note that even if you don’t owe any taxes or aren’t able to pay the balance owed by the deadline, you should still file your tax return on time to avoid any late-filing penalties.


Ways to File Your Tax Return in Canada: Online, Paper, Software, and Professional Help

There are several ways for you to file your tax return in Canada. Here are some of the most common methods:

  • Online: The easiest and most convenient way to file your tax return is to do it online. Through the Canada Revenue Agency’s (CRA) website. To file online, you’ll need to use NETFILE, which is a secure, electronic tax-filing service that allows you to file your return directly to the CRA.
  • Paper: If you prefer to file a paper tax return, you can download the forms from the CRA’s website or pick up a copy at a post office or Service Canada office. You’ll need to fill out the forms and mail them to the CRA.
  • Tax preparation software: You can also use tax preparation software to file your tax return. Many software programs are available, including popular options like TurboTax, H&R Block, and Simple Tax.
  • Professional tax preparer: If you have a more complex tax situation, you may want to consider using the services of a professional tax preparer, such as an accountant or tax lawyer.

Information and Documents Needed for Filing Your Income Tax Return in Canada

When filing your tax return in Canada, you’ll need to provide various personal, work, and financial information. Personal information includes your full name, Social Insurance Number (SIN), date of birth, and current address.

For income information, you’ll need to provide information about all sources of income earned during the tax year, including employment income (T4 slip), self-employment income (T2125 form), investment income (T5 and T3 slips), and any other sources of income.

When filing your tax return, you will be required to furnish more details regarding your income that can be obtained from tax slips like T4, T3, and T5. These slips provide information about the income earned from remuneration, trusts, and investments. You’ll also need to provide details on any deductions or credits you wish to claim.


Keep All Your Receipts Safe & Secure!

To ensure you are prepared for any requests from the Canada Revenue Agency (CRA), it’s important that you keep all official receipts for medical expenses, charitable donations, and business expenses for at least six years after filing your income tax return. By doing so, you may be eligible for various deductions and credits, including family, childcare, and caregiver deductions, home buyer tax credits, disability tax credits, and more.

To determine which deductions and credits you qualify for, it’s best to consult with a Canadian tax professional.

Contact us today to know if you qualify to migrate to Canada. Check out Owlspriority Immigration’s Canada Settlement Resources to learn more about income tax filing in Canada for individuals as well as businesses.

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