Citizenship and Immigration Canada
www.cic.gc.ca
Common menu bar links
Welcome to Canada: What you should know
Taxation
Canadian residents can benefit from programs that have been paid for through their taxes and payroll contributions. These programs include social assistance for people in need; employment insurance for workers who have lost their jobs; worker’s compensation for workers injured on the job; and old-age pensions for citizens 65 years of age or older.
Income tax
Canadians pay a variety of taxes. Income taxes are used by governments to provide services, such as roads, schools and health care. All residents of Canada are subject to income tax. Each year, you must submit an Income Tax and Benefit Return to tell the government how much money you earned and how much tax you paid. Taxes are deducted automatically from most income you receive. If you paid too much, you will get a refund. If you paid too little, you will have to pay more.
Filing an income tax return is extremely important. You will need to file one each year to qualify for various government benefits, such as the Canada Child Tax Benefit and the Goods and Services Tax/Harmonized Sales Tax (GST/HST) Credit. You can get the forms for the federal income tax from any post office or Canada Revenue Agency tax services office. The Canada Revenue Agency has several publications for newcomers that should be helpful (call 1‑800‑959‑2221 or visit www.cra.gc.ca/forms). 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 30 of each year. Remember, if you lived in Quebec during the year, you will also have to file a separate provincial tax return.
Tax-free savings
Everyone has their own dreams, and in Canada, we have several ways to help you save money to achieve those goals. One way to do that is to save your money in a Tax-Free Savings Account. You can save up to $5,000 a year in one of these accounts, which you open at a bank or other financial institution. The income or interest you earn on the investments in that Tax-Free Savings Account is tax-free, unlike the income you earn on money you invest in the stock market or in savings bonds. You can also withdraw the money at any time without being taxed on it. For more information on these accounts, go to www.tfsa.gc.ca or talk to your bank.
Another way that Canadians save for their retirement is by investing their money in a Registered Retirement Savings Plan (RRSP). RRSPs are registered with the federal government and are designed to help people add to the money they will receive from pensions and federal old-age benefits.
The money you invest in your RRSP is a way to defer taxes. Most people keep their money in an RRSP until they retire. At 71, RRSPs are changed to retirement income plans that begin to pay you money. To find out more about RRSPs, and the circumstances under which you can take out money without penalty, go to the Canada Revenue Agency website at www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/menu-eng.html.
Other taxes
Whenever you buy something, a Goods and Services Tax (GST) will be added to the price. This includes everything from socks to a new house. You may also pay a provincial sales tax (PST), which varies from province to province. If you own your own home, you will also pay property and school taxes. For more information on these taxes, contact either your local school board or your municipal government.
For more information
Contact
- the Canada Revenue Agency;
- the provincial ministry of revenue; or
- your local school board, all of which are listed in the telephone book.
