Tax Return Canada season is technically over… but you can still file!
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 Canada as painless as possible:
1. Tax return Canada deadline
If you don’t file your tax return in Canada on time, you could incur a penalty fee of 5 percent 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 if you’re a resident or non-resident for tax filing purposes. When you’re sure of your status you will be aware of your tax responsibilities.
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 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’ – if you need help determining your residency status, head over to Taxback.com’s 24/7 Live Chat service and a member of their team will clear things up for you.
3. Your SIN
If you’re working in Canada, you should have a Social Insurance Number (SIN). When completing your tax return for 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 employer.
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, Taxback.com offers a Document Retrieval Service to help you locate any missing documents.
5. What tax am I paying?
Generally speaking, you’ll pay three types of tax; 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.
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, surgery.
- Travel, e.g. monthly transit passes.
- Business, e.g. rent, supplies, travel, 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 the filing deadline for 2020 is June 1. For example for the 2019 tax year you have file and pay your balance due before June 1, 2020 in order to avoid additional penalty and interest.
However in case your result is a refund you have up to 10 years to file. If you worked in Canada in 2019, you can apply for your refund from February 2020. If you worked in Canada anytime from 2010-2019, 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 helpful tax agent. Think of the filing system for your tax return in Canada as the DIY or self-service option, or you could always leave it to the professionals!
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.
- 24/7 live chat help.
- No complicated paperwork.
- Free review of the Notice of assessment and free amendment in case less received from the tax office.
- Easy to follow step-by step process.
- Saves your money for postal and telephone expenses related to the filing of your return.
- Saves your time for more important things.
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 only if you are a resident or an immigrant in Canada if you are a non-resident or an emigrant from Canada, you must file on paper. If you are in Canada you can pick up your T1 at any Canada Post; if you are outside of Canada you should use the international postal options.
- Make your payment (if you’re owing), or receive your refund. Note that you can only receive your refund to your Canadian bank account or a cheque to your mailing address.
How to apply: With an Agent like Taxback.com
- Apply online here.
- If filing online, email [email protected] 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.
If you had to leave Canada due to the outbreak of COVID-19, you can still file from home! Taxback.com can help you receive any refunds you may be due from your stay in the country.