Tax Return Canada season is underway…
Preparing for your Canadian tax return can be a scary prospect, so we’ve prepared some tips to help you face the tax season! Everyone pays tax in Canada, but the nice part is that you may be due a tax refund.
Here is how to make the process of your tax return in Canada as painless as possible:
1. Tax return Canada deadline
Know the facts. Get your tax return for Canada in by the deadline of April 30th so you don’t get penalised by the Canadian Revenue Office.
If you don’t file your tax return in Canada on time, you could incur a penalty fee of 5pc on top of anything you may owe to the Canadian government.
2. Your residency status
Your tax obligations are typically determined by your residency status, so you need to know your status before you know what your tax responsibilities are.
There are a number of factors involved in determining your status, including your residential ties with Canada, length of stay, the purpose of your stay, and various other factors.
For example, if you’re on a working holiday in Canada, you’ll generally be classified as a ‘non-resident for tax purposes’.
3. Your SIN
If you’re working in Canada, you should have a Social Insurance Number (SIN). When completing your tax return Canada, enter your SIN on the first line of the “Information about you” area of the “Identification” section on page 1.
4. Keep your T4!
To file your tax return in Canada, you’ll need your T4 or final cumulative payslip from your employer.
This is usually sent out to employees by February 28 at the latest. If you have different employers throughout the year, then make sure you get a T4 from each of them.
What is a T4? It’s a summary of the previous tax year and it outlines how much you income earned, and how much tax you paid.
If you’ve lost your T4, it’s a good idea to firstly get in contact with your employer as they might have a copy for you, otherwise you can use a provider to get it for you.
5. What tax am I paying?
Generally speaking, you’ll pay three types of taxes. income tax, CPP (Canadian pension plan) and EI (employer insurance). You can find a breakdown of the amounts paid on your T4.
You will find your income tax in box 22 of your T4 slip, CPP contributions in box 16, and EI in box 18.
It’s not a given that you’ll receive all of your tax back. In Canada you will only get a refund if you have overpaid any of these taxes. You can check how much you’re due back at this tax refund calculator.
You may be eligible to claim expenses including:
- Medical e.g. Doctors visits, prescriptions, and surgery.
- Travel e.g. monthly transit passes.
- Business e.g. rent, supplies, travel, and professional fees.
If you have your own business, there are certain expenses you can deduct so keep your receipts! You can find out more about business expenses here.
7. When can I apply for a tax refund?
The Canadian tax year runs from January 1 to December 31, and you have up to 10 years to file.
If you worked in Canada in 2015, you can apply for your refund from March 2016. If you worked in Canada anytime from 2005-2014, you can apply for your tax refund now.
8. Tax return in Canada: how to apply
You can apply directly with the Canadian tax office, or you can use a tax agent such as Taxback.com. Think of the filing system for your tax return in Canada as the DIY or self-service option, and Taxback.com as the full service option.
The benefits of DIY:
- You’ll learn a thing or two about the Canadian tax system.
- It’s free – you won’t be paying a fee to an accountant or tax service provider.
The benefits of using a tax agent like Taxback.com:
- Free tax refund estimate with no obligation to file.
- Send your refund internationally.
- Local offices in Vancouver, Banff and Whistler.
- 24/7 live chat help.
- No complicated paperwork.
How to apply: DIY
- Contact the CRA to determine your residency status to ensure you are filing correctly.
- Gather all your documents (e.g. your T4 and T5 slips, receipts etc.).
- Find out all the credits that you’re eligible to claim for.
- File your tax return Canada. You can do this online if you’ve filed before, but if you’re a first time filer, you must file on paper. You can pick up your T1 at any Canada Post.
- Make your payment (if you’re owing), or receive your refund. Note that you can only receive your refund to your Canadian address or bank account.
How to apply: With an Agent like Taxback.com
- Apply online here or visit us in our local offices in Vancouver, Banff or Whistler.
- If filing online, email Canada@taxback.com with your T4, ID and any expense receipts you may have.
- Get your free estimate, and decide if you want to file. You’ll get a discount if you mention Moving2Canada.
- Receive your refund, in your Canadian or international bank account.