Understanding how our income tax system works can be challenging if you are a newcomer to Canada. In fact, many countries operate differently from Canada or have no income tax reporting at all – so doing this for the first time can be intimidating, especially when you don’t know which credits and deductions to claim.
However, there are numerous advantages to filing taxes. Newcomers qualify for tax credits and deductions similar to those born Canadian citizens. Furthermore, with the aid of Faith Accounting & Tax Inc., we will ease the process of tax return filings in Canada.
Firstly, it should be noted that in Canada, the tax year is synonymous with Calendar year i.e., January through December. Then you will have until April next year to file your income taxes.
Thus, for 2023 income, you would want to keep every receipt throughout the year. Then, in February 2024, you’ll start collecting documents and forms from your employer, bank, or others.
You will then have between Feb. and (Tue) Apr 30th, 2024 (which is called “the tax deadline”) to submit your income tax return form. Therefore, it’s better to file early so that by April 15th, you are not rushing around trying to complete one by midnight. Also, you will get your refund earlier. More on this page about basics here.
Required Documentation:
Collect pay slips, invoices, and other receipts related to your income and expenses, as well as any credit information.
Important things to know for newcomers.
Firstly, your most important step is to get your Social Insurance Number (SIN) from Service Canada or get an individual Tax Number from the Canada Revenue Agency (CRA). This is required to get a job and to collect any benefits or credits you’re entitled to.
Credits and Benefits.
There are many tax credits and benefits available to Canadians. Here’s what you need to know about credits and benefits.
Credits: Tax credits are incentives offered by provincial and federal governments that reduce the amount of tax you owe.
Some examples include:
- GST/HST credit
- Childcare credits
Canada Carbon Rebate (formerly known as the Climate Action incentive payment)
Non-refundable, meaning they go towards helping you pay any taxes you may owe. Some examples include:
- The basic personal amount
- Charitable donations
- Medical expenses
- The home buyer’s amount
Of course, you can consult Faith Accounting & Tax Inc. to help you navigate and understand tax credits.
Setting roots in Canada
Newcomers who purchase their first home in Canada could possibly qualify for the First-Time Home Buyer’s Tax Credit. This $10,000 credit will give them $1,500 back to help defray the costs of moving to another country. However, it may not apply to applicants who own homes within the last five years—either in Canada or elsewhere—so it would be important to consult an expert who can determine whether one is eligible or not.
Benefits for Newcomers:
- First-Time Home Buyer’s Tax Credit: Up to $10k cut-to-moving expenses.
- Canada Child Benefit (CCB): Payment on a monthly basis towards child upbringing.
Dental Benefit
- For Canadians without dental insurance coverage, the government provides dental benefits.
- To be a resident and have filed a tax return for the previous year is necessary.
Taxes on Foreign Income:
Taxpayers must include all global income in their tax returns.
Many countries have signed tax treaties with Canada, thereby exempting or reducing taxes on foreign income that belongs to Canadian residents.
Claiming GST/HST Credit:
This credit is received quarterly, and it assists in offsetting carbon taxes.
Key Tax Dates:
- January: It’s easy to set up your CRA My Account so you can easily access your tax information.
- Mid-February: NETFILE and ReFILE services become available to file your tax return.
- March: Deadline for contributing to RRSPs (Registered Retirement Savings Plans) and ideal time to complete the annual round-up of all financial statements for faster refunds from the government.
- April 30th: Tax deadline (file early to avoid penalties).
- June 17th: Self-employed individuals such as Uber/Lyft drivers must submit their returns by this date.
Just remember though, if you owe any taxes they need to be paid on April 30th, do not wait till June if you think you will owe them.
Want more help with filing Canadian income taxes? Consult Faith Accounting & Tax Inc. Find an office near you to book an appointment today.
