Do New Immigrants to Canada Pay Taxes? – A lot of people have been moving to Canada and in recent years, Canada has been the top destination for a lot of immigrants from around the world and it is no surprise at all as Canada offers immigrants a great deal of opportunities and other wonderful benefits as you could even become a permanent residence of the country.
Immigrating to Canada is quite interesting but it is also challenging especially in the first few years of moving and this is normal as adapting to a new environment is not always easy especially if it has a different way of life from your home country and also different language but you should also know that Canada is one of the most diverse countries in the world so you might also adapt and settle in easily.
If you are not used to filing taxes, then this is one of the new things you might face in Canada and you shouldn’t worry about that as we are going to tell you more about taxes in Canada in this article.
But to answer the question of “if new immigrants to Canada pay taxes?” Well, yes they do. You should know that the province you live in and your income level will determine your tax level. Taxes are very important in every society and it is the civic duty of every Canadian citizen and permanent resident.
These taxes are used to provide some essential amenities and facilities for the people living in Canada and so even as an immigrant, when you pay your tax, you will get to enjoy the benefits that comes with it.
The healthcare service is one of the benefits you get from paying your tax in Canada as the taxes are used to fund this system. So as a newcomer in Canada, you will be subjected to the Canadian income tax.
You should know that there is a certain provision in the Act that allows for the creation of an “immigration trust” and this trust holds the newcomers’ foreign investment assets. With this, any foreign income or capital gains earned from assets held in the trust will be exempted from taxation.
The Canadian tax system is quite different from some other countries and so as a new immigrant, you might be confused about how to go about it. Let’s show you some tax policies for new immigrants in Canada as you know, every country has a tax system.
- The Canadian tax system is regulated by the Canada Revenue Agency (CRA).
- There are deadlines for filing your annual tax return and if you file your return after the due date, there are some penalties and interest on any amount owing for the tax year.
- Your personal income tax return is called a TI General and whether you are an employee or self-employed, you get to file your income on this same tax return.
- The deadline for filing your personal income tax return is April 30th and for the self-employed individuals, it is June 15th.
- If these dates mentioned above fall on Saturday or Sunday, then the due date will be the following Monday.
What Are Tax Returns?
We think it’s important that you know the meaning of tax returns and so we will be defining it for you. This is a comprehensive account of the previous calendar year’s income (from 1st January to 31st December) and also deductions along with the federal, provincial and territorial taxes paid and owed.
The tax returns are important as they help to determine if you will get a refund from the government of some or all the tax that was deducted from your income during that year.
Types Of Income Taxes
The federal and provincial governments in Canada impose personal income taxes on individuals and so you will have to pay two types of income taxes which are the federal income tax and provincial income tax and the amount you pay depends on the province you are living in.
When Are You Considered A Resident For Tax Purpose?
When you have a strong residential tie to Canada like owning properties in Canada, family ties, working in Canada or being a member of a Canadian organization, then the Canada Revenue Agency (CRA) will consider you a resident for tax purposes.
As a new immigrant, you become a resident when you arrive Canada and so this date will help you determine whether how and when to file your tax return. Do well to contact the CRA for residency status.
What Are The Benefits Of Filing Taxes?
Filing taxes will mean gathering information and documents about your income and expenses and one major benefit of filing your taxes is to receive a tax refund and this will only happen if you file your tax return.
A tax refund is when the government sends you back all or part of the taxes you have already paid and this maybe because you didn’t earn enough income during the year or you paid too much tax.
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Paying too much tax can occur when your employer takes too much tax from your salaries or wages than they should have and this might be as a result of wrong tax bracket or slab.
What Are The Requirements For Filing Tax
- You must have to pay tax
- You and your spouse or common-law partner elected to spilt pension income
- You received Canada Worker’s Benefits advance payments
- The CRA sent you a request to file a return
- You have to repay any of your Old Age Security (OAS) or Employment Insurance benefits
- You have not repaid all amounts withdrawn from your Registered Retirement Saving Plan (RRSP) under the Home Buyers’ Plan or the Lifelong Learning Plan.
- You are a non-resident receiving certain types of Canadian source income.
In some cases, the requirements we mentioned above might not apply, you could still file a return if:
- You want to claim the Canada Workers Benefit
- You or your spouse or common-law partner wants to begin or continue receiving Canada Child Benefits (CCB) payments.
- You want to claim a refund
- You want to transfer an unused part of your tuition to a future year.
You should know that:
Self-employment income is an income that is earned by individuals who work for themselves and so all income that are earned from this are taxable and should be reported to the Canada Revenue Agency (CRA).
But if you earn money from selling items that you own but you don’t do this as a regular business or source of income, then you don’t need to pay tax for that.
From all we have said so far, you must have seen that new immigrants to Canada pay tax as it is a way the Canadian government provides some amenities and essential services to the people living in Canada.
The Canadian tax system is the normal PAYE which is (Pay As You Earn) and you shouldn’t worry about tax rates as the country offers a fair tax rate.