Yes, everyone who works in Canada no matter if a Canadian citizen, Canadian permanent resident, temporary worker or student, has to contribute to the Canadian tax system.
You have to file taxes if any of the following applies to you.
- You have to pay tax 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
- The CRA sent you a request to file a return
- You were self employed and your total income for the tax year was over $3,500
The entire list >> here << on the official government homepage
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 need all T4 from your employers.
The T4 Statement of Remuneration is a summary of the tax year where all earnings and deductions are reported to the CRA. The T4 will be sent to you automatically by your employers by the end of February of the following year. A copy also goes to the CRA.
The employers are required by law to issue you a T4 by the end of February, even if you only worked there for a few days. In most cases, the T4 are sent by post. You can also ask the employer to send this to you by email. If you don’t receive the T4 by the end of March (including post time), send the employer a reminder.
If you have access to your “My Account” at the CRA (Canada Revenue Agency), you can print out the T4 from there. Be aware, you can only register for the My Account after you filed a tax return in Canada. So this option only becomes available after your first tax return 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 as of May 1.
When can I file a Canadian tax return?
For past years: The CRA accepts tax returns for past tax years at any time during the year.
If you are expecting a tax refund, you have up to 10 years to file your tax return and get your money back. The CRA is in no rush to pay you the money they owe you.
For the current year: You have to wait until February of the following year for the current tax year. E.g. the software for the tax year 2022 will not be activated until mid-February 2023. By this time you will also receive the T4 from every employer. You can only submit your tax return with the T4.
How much tax can I get refunded from Canada?
This question can not be answered on a general basis. Every tax situation is different. Depending on how long you have been in Canada, how much you have earned and how much tax you have paid, a partial or even all of the tax may be refunded.
The three most important deciding factors in the tax return are:
- time spent in Canada
- filing the tax return as a ‘resident’ or ‘non-resident’
- foreign income before or after Canada
This means that whether or not you get a tax refund depends on a few factors, such as length of stay and ties to Canada. Another big factor in the amount of tax refund is your income BEFORE or AFTER staying in Canada.
Important! 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.
How do I know if I am a "resident" or "non-resident"?
Determining tax residency is not an easy task. If you want to knock yourself out with the “Income Tax Folio” >> here you go <<. I will try to explain it as simple as possible.
The following facts have a positive effect on the classification as “resident”, the more you have, the better the chances are.
- Family (spouse and children) joins you in Canada,
- Own/rent a home with a rental agreement (no flat share or roommate),
- Length of stay (longer than 183 days in Canada in the tax year),
- Canadian health insurance from a province,
- 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 “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”:
- If you have none of the above ties to Canada at all.
- If the family members (spouse and / or children) stayed in your home country.
- If you still have a home in your home country. You are automatically non-resident in Canada because home ownership is the most important factor and negates all other factors.
- If you were in Canada for less than 183 days in the tax year and only stayed in hostels or camped in a car.
- If you were in Canada for more than 183 days in the tax year, but only worked briefly in several provinces and slept in hostels, staff accommodation or in the car. So a typical backpacker on a road trip.
- If you just do a paid internship in Canada for a few months.
- If you only come to work on a farm for a few months.
- If you only come for a few months to work as an Au pair with a family.
- If you have both entered and left the country in the tax year, e.g. entry in April 2021 and exited in August 2021.
Important! In order to file the tax return as a non-resident, you have to use other tax packages/forms and you cannot submit the tax return online or via a software.