Money: What You Need to Know About TAX

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by Michael L. Crawford, BA(Hons), CMA

Even if this is your first day in Canada, it is never to early to start planning for tax time. Here are some things that you need to know about taxes and Canada.

Everyone, with limited exceptions, in Canada must file a personal tax return by April 30th for income earned the previous calendar year.

In Canada, personal income tax is based on residency. If you live in Canada for more than 183 days out of the calendar year you must pay tax on your worldwide income regardless of citizenship. There are some exceptions to this rule depending on your specific circumstances and any treaties between Canada and your home country.

If you work for any amount of time anywhere in Canada your employer must give you a “T4” slip by February 28th of the following calendar year. A T4 slip will detail how much you earned, and how much tax and other monies (more on that later) were withheld on your behalf. It is important to have all your T4’s when it comes time to prepare your tax return.

If you do not work but receive money from the Canadian government you will also receive a slip showing how much was paid to you and how much tax (if any) was withheld on your behalf. Depending on the source of the money, Social Assistance or Employment Insurance, you will receive a slip called a T5007 or T4E. You must also have these slips with you when it is time to prepare your tax return.

If you rent your home or apartment, be sure to bring the rent receipt (provided by the landlord) or the cancelled cheques with your tax return. In most instances you will be eligible for a partial refund based on what you have paid.

Another important subject at tax time is medical expenses. If you must pay for medical expenses AND you are not reimbursed in any manner you may be able to claim a deduction against your taxes. The calculation of the deduction can be complex and it is best to get help with it. You can get help from the Canada Revenue Agency, the organization, responsible for taxes in Canada through their free tax preparation centres or by paying a professional.

Often low income individuals or families don’t owe any, or little, tax at all. So you may wonder if you should worry about filing taxes. In Canada the personal tax return isn’t used just for collecting taxes but is used to determine eligibility for a number of benefits. These benefits include Goods and Services Tax (GST) rebate, Property Tax Rebate (depending on province), Sales Tax Rebate (depending on province) and the Child Tax Benefit. Even if you have NO income, you may be eligible for some or all of these benefits or rebates.

A tax return, on time, is not just an important responsibility in Canada, it`s a potential source of money! In Canada it is OK to complain about your tax return; in fact it’s as Canadian as hockey and ice scrapers.


Action Plan

  1. Collect all important slips (example T4, T4E, T5007, RC 600, receipt for rent OR cancelled cheques)
  2. Use a professional tax preparer
    1. Liberty Tax (Click here)
    2. H & R Block (Click here)
    3. Softron (Click here)
    4. OR Google “tax preparation” for your city for a list of independent tax preparers
  3. Get help at:
    1. Canada Revenue Agency (CRA) Main Homepage (Click here)
    2. Newcomers to Canada (Click here)
    3. International Students (Click here)
  4. You can pick up a tax package at any Canada Post Office.
  5. For forms not included click here
  6. For free tax preparation click here
  7. Wait for your refund and/or other benefits that you may be eligible for

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