As a newcomer to Canada, filing your taxes may not be high on your list of priorities! However, even if you aren’t earning money yet, filing taxes means you can cash in on certain benefits. Whether you’re here as an economic migrant or an international student, read on for an overview of Canada’s tax system and the benefits you are entitled to when you file your taxes on time.
The tax authority and you
Taxes in Canada are collected and administered by the Canada Revenue Agency (CRA), a federal body that is also responsible for benefit and credit payments. Canada’s tax system is based on self-assessment. The tax year is the same as the calendar year, from January 1 to December 31. Your tax return is typically due by April 30 of the next year.
Many services, programs, and benefits are funded through taxes, including the management of Canada’s airports, educational institutions, emergency services, healthcare facilities, libraries, and roads. Several social programs also receive funding through taxation.
As you get to know Canada’s tax system, you need to know that you are responsible for:
- Submitting your tax return every year by the deadline.
- Determining your residency status for income tax purposes
- Giving accurate and complete information
- Reporting your income from all sources
- Paying the amount you owe
- Notifying the CRA of any changes to your personal information
Also read: Your questions answered: Living and working in Canada as an immigrant
Who needs to pay taxes?
You need to pay taxes if you have residential ties to Canada. These include:
- Owning or renting a home in Canada where you might live with your spouse, common-law partner, or dependents
- Paying utility bills
- If you have a job
- You hold a Canadian bank account
- You have a car and/or a Canadian driver’s licence
- You have health insurance
- You have social ties to Canada
Before you pay taxes and claim benefits from the CRA, you need a Social Insurance Number (SIN), without which you cannot work, open a bank account, or access government benefits and services. Your SIN is confidential and unique to you and can be procured from Service Canada.
Know the benefits you may be eligible for
Benefits you can receive at the federal level include the Canada Child Benefit (CCB) — a tax-free monthly payment to help with the cost of raising children under 18, and the Canada Groceries and Essentials Benefit (formerly the GST/HST credit) — a tax-free quarterly payment for individuals and families with low and modest incomes to help offset the GST or HST they pay.
These aside, with Canada being a welfare state, additional benefits are available for persons with disabilities. If either you or a person in your family has a disability, you could be eligible for the Disability Tax Credit (DTC), a non-refundable tax credit that helps reduce the income tax you may have to pay. It also helps offset costs related to the Impairment. There is also a Child Disability Benefit for families who care for a child under 18.
View other benefit programs, eligibility, application instructions, and payment dates.
How can you calculate your benefits?
If you would like to know how much money might be coming to you this year, then you can use the CRA’s benefits finder to calculate your benefits. You can also sign up to receive benefit and credit payment reminders.
To ensure you continue to benefit from rebates and welfare benefits, make sure your personal information—such as your address, residency status, marital status, number of children in your care, and your direct deposit information—is kept up to date. You can do so through your account with the CRA, by mail, or by phone.
Can you get benefits if you are an international student?
Yes, you can! As a student, filing your taxes means you are eligible for both the HST and disability tax credits. You can also claim tax credits on interest paid on student loans and tuition fees, as well as moving expenses, in some cases. Learn more here.
Share this article with other newcomers who could gain from understanding Canada’s tax system and available benefits.