Personal Income Tax in Canada: 5 Tips for Newcomers

Tax-preparation season is as much a Canadian tradition as maple syrup and the May 2-4 weekend. This year, Canada Revenue Agency’s (CRA) income tax filing deadline is April 30. Leading up to that date, you’ll see ads for tax services and software and a flurry of activity as people collect tax documents and receipts.

What is a tax return?

An income tax and benefits return (also known as a “tax return”) is an account of an individual’s income and deductions for the year that just ended, plus what they paid or owe in federal, provincial and/or territorial taxes.

As a newcomer, you may be unsure if you should file an income tax return. The answer is probably: yes. Here’s what you need to know.

TIP #1: Filing a tax return is recommended for most people.

Canadian tax status is based on residency, not citizenship, so chances are, if you spent some or all of 2021 living here as a permanent resident or deemed resident, you should file a tax return.

You especially need to file a return if:

  • You earned income in 2021, whether from Canadian or international sources;

  • You owe taxes;

  • You want to claim a tax refund or benefit;

  • You received tax benefits or earned money from selling capital property;

  • The Canada Revenue Agency (CRA) has asked you to file a return.

TIP #2: It’s worth it to file, even if your income was zero.

If you earned income, it’s important to pay taxes owed to the government as this helps fund our country’s services and benefits. Alternatively, your tax return may show you overpaid through workplace deductions, in which case you’ll qualify for a tax refund.

Do you file a tax return if you have no income?

Even if your income was zero in 2021, it makes sense to file a tax return, since you may qualify for benefits or credits, including:

…all of which can put more money back into your pocket!

By filing your return, you’ll automatically receive the benefits you’re eligible for, including relevant provincial/territorial programs. There’s no need to apply separately.

TIP #3: Get your paperwork in order.

Getting set up is faster than ever with electronic tax filing. Although paper returns are still available, filing your return digitally through NETFILE or EFILE saves time.

Before starting, gather all the information you’ll need, such as your Social Insurance Number (SIN) and any of the following that apply to you:

  • T4 income slip(s) provided by your employer;

  • Medical expense receipts for you, your spouse and/or children;

  • Receipts for childcare expenses;

  • Information on foreign income or foreign assets over $100,000.

TIP #4: Don’t forget your additional sources of income.

Remember that taxable income includes more than just your “day job.” Additional income that must be reported includes these sometimes-overlooked sources:

  • Self-employment income: yes, your side hustle counts;

  • Other employment income: tips, gratuities, research grants and other work-related income that doesn’t appear on your T4 slip;

  • Commissions;

  • COVID-19 benefits from federal and provincial programs

  • Foreign income.

TIP #5: You can get help with your income tax return

Unsure of how to file taxes online? If you get confused – help is at hand.

Consider using Staples tax software products like Intuit TurboTax and UFile, which streamline filing and can help maximize your refund and/or benefits.

Or, visit a free community tax return clinic through the Canada Revenue Agency’s Community Volunteer Income Tax Program. Trained volunteers can help you or fill out your return for you.

Need more tax info? Visit the Government of Canada’s 2021 income tax help page.

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