Canada Taxback for IEC participants
Do I have to file taxes under an IEC work permit, like the Working Holiday?
In general, everyone who works in Canada whether you are a Canadian citizen, permanent resident, temporary foreign worker, or international student, is required to contribute to the Canadian tax system.
You have to file your tax return if any of the following applies to you.
- The CRA sent you a request to file a return
- You owe taxes for the year
- You want to claim a refund
- You want to claim the Canada workers benefit (CWB) or you received CWB advance payments in the year
- You want to claim the GST⁄HST credit
- You were self employed and your total income for the tax year was over $3,500
You can find the complete list >> here << on the official Canada Revenue Agency website.
Did you just arrive in Canada? A very good source of information for newcomers is the website of the Canada Revenue Agency.
What is the Canadian tax year?
The Canadian tax year is the same as the calendar year and runs from January 1st – December 31st.
What is a T4?
To file a Canadian tax return, you will need all T4 slips from your employers.
The T4 Statement of Remuneration Paid is an official summary of your income and deductions for the tax year. It is submitted to the Canada Revenue Agency (CRA) and shows exactly how much you earned and how much tax was withheld. Typically, your employer will send this to you automatically by the end of February in the year following your employment. A copy is also sent directly to the CRA.
By law, employers must issue a T4, even if you worked for them for a short time. Most employers mail these slips to your last known address, but you can also request to receive them via email for faster access.
If you haven’t received your T4 by mid-March, including time for postal delivery, it’s a good idea to contact your employer with a reminder.
Additionally, if you have registered for a CRA online account, you can download your T4 slips directly from there. Keep in mind, though, that you can only create a CRA account after filing your first Canadian tax return. So, this option will only become available after your initial year of filing in Canada.
What is the deadline for filing a Canadian tax return?
The official deadline for the tax return is
- April 30th for employees (personal tax returns)
- June 15 for self employed (business tax returns)
There are no penalties if you file your taxes after the deadline if you expect a tax refund. That means if you expect a tax refund, you have up to 10 years to get your money back from the CRA. So it’s never too late to file your tax return. The CRA accepts past year tax returns throughout the year.
But if you file late and owe taxes, the CRA will start charging you compound daily interest starting May 1.
The late-filing penalty is 5% of your taxes owing, plus 1% for each full month that you file late, to a maximum of 12 months.
When can I file a Canadian tax return?
Filing for Past Years
The Canada Revenue Agency (CRA) accepts tax returns for previous tax years at any time throughout the year.
If you’re expecting a tax refund, you have up to 10 years from the end of the tax year to file your return and still receive your money. However, it’s worth noting that the CRA won’t chase you down to give you your refund, you’ll need to take the initiative to file and claim it.
Filing for the Current Tax Year
When it comes to the current tax year, you’ll need to wait until February of the following year before filing. For example, if you’re filing for the 2025 tax year, the filing software and systems become available in mid-February 2026.
By this time, you should also receive your T4 slips from each employer, which are essential for completing your tax return. You cannot submit your return without these documents.
How can I file my taxes?
You can file your taxes online or by paper, or with the help of a taxback service:
- NETFILE (electronic filing)
- Through a tax preparer
- Community volunteer tax clinic if you have a simple tax situation
- Paper tax return
Can I file online even if I file for the first time?
Yes, electronic filing is possible as a newcomer. The CRA has a list of certified tax software products.
How much tax can I get refunded from Canada?
This question doesn’t have a one-size-fits-all answer. Every tax situation is unique, and whether you’ll receive a refund depends on several personal factors. These include how long you stayed in Canada, how much income you earned, and how much tax was deducted from your pay.
Here are the three most important elements that affect your Canadian tax return:
- Time Spent in Canada: The length of your stay can influence your tax residency status and eligibility for credits.
- Residency Status: Whether you file as a resident or non-resident for tax purposes significantly affects your refund and filing obligations.
- Foreign Income (before or after Canada): Your income from outside Canada in the same calendar year can impact your Canadian tax credits.
Important to note! The foreign income before / after the stay in Canada is not taxed in Canada, it is only used to calculate the amount of non-refundable tax credits in the tax return. Depending on your individual circumstances, you may be able to claim all, some, or none of these tax credits.
Based on 10 years of past experience in the tax back service, if you are classified as a non-resident for tax purposes and cannot claim any tax credits, you will most likely owe taxes to the Canada Revenue Agency (CRA).
This is because employers often do not withhold enough tax from your paycheques during the year. As a result, when you file your tax return, the CRA may determine that you underpaid and will require you to pay the difference. Sadly, many IEC participants find themselves in this situation and end up owing taxes.
In these cases, filing a tax return becomes mandatory, to settle your tax obligations correctly.
The > Canadataxback website provides detailed answers to many questions that have come up over the years from other IEC participants. Feel free to check it out if you would like to know the reason for the taxes owing.
How do I know if I am a "resident" or "non-resident"?
First and foremost, it’s very important to clarify that being a “resident for tax purposes” in Canada is not the same as simply being a “resident” in the everyday sense of living in the country.
In fact, tax residency is a completely separate concept and has nothing to do with your immigration status. You could be in Canada on a temporary visa, such as a Working Holiday, and still be considered a resident for tax purposes, depending on your circumstances.
The Canada Revenue Agency (CRA) determines tax residency based on several factors, including:
- The length of your stay
- Your residential ties (e.g. housing, employment, personal relationships)
- Your intention to stay in Canada temporarily or longer term
Understanding your correct tax residency status is crucial because it directly affects how much tax you owe and which deductions or credits you can claim.
Determining tax residency is not an easy task. The “Income Tax Folio” from the CRA is the one that can be used to make the best decision. I will try to explain it as simple as possible.
The following ties can help you qualify as a "resident for tax purposes". The more ties you have, the stronger your chances of being classified as a resident.
- Family (spouse and children) joins you in Canada,
- Own/rent a home with a rental agreement in Canada,
- flat share or roommate, or staff accommodation doesn’t count
- Length of stay (longer than 183 days in Canada in the tax year),
- Canadian health insurance from a province,
- Car,
- Canadian driver’s license,
- Canadian bank account,
- Canadian SIM card or mobile phone contract
The two strongest ties to Canada, and therefore also the most important ones (“significant residential ties”), are family members (spouse and children) and owning/renting a home in Canada. All other items in the list are called “secondary residential ties” and you need to have many of them to qualify as “resident”.
Another stronger tie, in my opinion, is a health care card from a province. Canadian health insurance is hard to get because you must meet certain residency requirements. Therefore it will have a very positive effect on the residency determination.
Here are a few examples of “non-resident”
You may be classified as a non-resident for tax purposes in Canada if any of the following situations apply:
- You have no ties to Canada at all such as a home, spouse, or children.
- Family remains in your home country: If your spouse and/or children are still living in your home country.
- Owning a home abroad: If you maintain ownership of a home in your home country, this is one of the strongest indicators of non-residency, and can override the other factors.
- Short stay in Canada: If you were in Canada for less than 183 days during the tax year and stayed in hostels or camped in your car.
- Backpacking across Canada: Even if you spent more than 183 days in Canada, and you worked briefly in multiple provinces while primarily staying in hostels, staff accommodations, or your car.
- Paid internship: If you were only in Canada for a few months as part of a paid internship.
- Temporary farm work: Similarly, if your time in Canada was limited to working on a farm for a few months, you would typically be considered a non-resident.
- You work as an Au Pair: If you came to Canada for just a few months to work as an Au Pair with a family, your stay may not qualify you as a resident for tax purposes.
You entered and left Canada in the same tax year: For example, if you enter in April 2024 and leave in August 2024.
I already left Canada; can I file my Canadian tax return online?
In order to file the Canadian tax return after you left Canada or as a non-resident, you cannot submit the tax return via an online software. Instead, the return must be completed on paper and mailed in.
Canadataxback can help with your Canadian taxback.