Residents of Canada pay a variety of taxes to all three levels of government: federal, provincial or territorial, and municipal. These taxes are used to fund government programs and services, including health care and education.
Income tax
Residents of Canada must pay income tax on income received throughout the year. If you receive a salary, taxes are deducted automatically throughout the year. If you are self-employed, you may be required to pay your taxes in a single payment or in several payments. Each year, you must submit an Income Tax and Benefit Return to inform the government of how much money you earned and how much tax you paid. If you paid too much tax, you will get a refund. If you paid too little, you will have to pay more.
By filing an Income Tax and Benefit Return, you may qualify for various government benefits, such as the Canada Child Tax Benefit (CCTB), the Universal Child Care Benefit (UCCB) and the Goods and Services Tax/ Harmonized Sales Tax (GST/HST) credit. You may also qualify for benefits from provincial or territorial government programs. For more information, see www.cra-arc.gc.ca/bnfts/rltd_prgrms/menu-eng.html. For more information on the CCTB and UCCB, go to www.cra.gc.ca/bnfts or call the Canada Revenue Agency (CRA) at 1-800-387-1193. For more information on the GST/HST credit, go to www.cra.gc.ca/gsthstcredit or call 1-800-959-1953.
You can obtain income tax forms from any post office or CRA tax services office (for addresses, go to www.cra.gc.ca/tso or see the Blue Pages). Federal and provincial income tax forms come in the same package, except in the province of Quebec. Your address on December 31 of each year determines in which province you have to file your tax forms. So, if you lived in Quebec at the end of the year, you will have to file a separate provincial tax return. For more information, visit Revenu Québec’s website at www.revenuquebec.ca/en or call 1-800-267-6299.
If you consider leaving Canada for an extended period of time, make sure to notify the CRA as you may need to file an income tax return for that year.
The CRA has many publications that may be helpful to newcomers (consult www.cra.gc.ca/ forms or call 1-800-959-2221). They also have volunteers who can help you fill out your tax forms, under the Community Volunteer Income Tax Program. This is a free service. The deadline for completing your tax return is April 3 of each year.
Tax-free savings
In Canada, there are many ways to help you save money to reach your goals. You can save money in a Tax-Free Savings Account (TFSA) or save for your retirement by investing in a Registered Retirement Savings Plan (RRSP). For more information on TFSAs, visit www.tfsa.gc.ca or ask a representative at your bank or financial institution. For more information on RRSPs, visit www.cra.gc.ca (click on “Individuals” and “RRSPs and Related Plans”) or ask a representative at your bank. You can also save money for your children’s education with a Registered Education Savings Plan (RESP). For more information on RESPs, see the section on Education.
Other taxes
Whenever you buy something, a GST will be added to the price. You may also be required to pay a Provincial Sales Tax (PST), which varies from province to province. In some provinces, the GST and the PST have been combined to form the HST. Remember, in Canada, prices generally do not include these taxes – they are added when you pay. For more information, consult www.cra.gc.ca/individuals. If you own your own home, you will also pay property and school taxes. For more information on these taxes, contact your municipal government.
Further information on taxation
For more information on federal taxes, contact the CRA (visit www.cra.gc.ca or call 1-800-959-8281). For information on provincial taxes, contact your provincial or territorial ministry of revenue (you can find the contact information in Table 3.2 in the section on Sources of information).
Source: Welcome to Canada: What you should know
www.cic.gc.ca, Immigration, Refugees and Citizenship Canada. Reproduced with the permission of the Minister of Public Works and Government Services Canada, 2013.