Tax Education for Canada New Work Visa
Holders.
The first
thing to realize is that the Canadian tax system still expects you to fill out
forms declaring taxable earnings. In many countries correcting overpaying and
underpaying your tax is done automatically. This is not the case in Canada,
forms must be filled in.
Tax Year
In Canada,
the tax year runs from January through to December. Your pay slips could well
show tax being deducted. You will need to keep these for reference. You will
need to check as well that the correct amount of tax has been paid. The tax
season usually starts every February. This covers the previous year. For
example, the tax you owe in 2022, will be paid in February 2023. The deadline
will be the end of April. If you still owe taxes, and you have not declared
them, after this date, you could be liable for a penalty.
Refunds
There are a
few things to take into consideration. You will not get a 100% tax refund. Even
though, if you are on a Canadian working holiday, and you are not eligible for
Canadian Employment Insurance (EI) and a Canadian Pension Plan (CPP), these
will be deducted from your pay.
T4
The T4 is an
information slip. This will show a summary of the money you have earned, along
with the taxes you have paid in. There is a legal obligation, in Canada, for your
employer to supply you with this T4 summary. You must have this in order to
fill out your tax form. This should get to you by the end of February. This can
be sent to you, by your employer, either by email or post.
If you leave
Canada at an earlier point in the year, you will have to wait for the same date
to file your Canadian taxation.
There are
ways of getting refunds, even if you leave Canada early in the tax year. The T4
will be needed as well as filling out your tax forms. These refunds can be work-related, medical and transportation costs.
Completing
the Process
Forms can be
downloaded from various sources online. The official agency is the Canadian
Revenue Agency CRA. There is an official website, NETFILE, set up by the CRA,
where the whole process of filling out your tax returns, can be done online.
You can buy
and download software that can do a lot of this for you. This can cost between
CAD$15 to CAD$20. This can do the calculations for you, then you download the
forms. The cheaper software is usually restricted to one user, so you cannot
share this software around. You need to be very clear as well, about what your
residency status is.
Are you
applying as a resident or non-resident?
Forms can
also be posted. You can readily find forms from Canadian Post and Service
Canada offices. These can then be posted. Using legal Companies and
Accountants to Help You. This might be an option, but legal companies may not
have enough experience in this work and may not consider doing it. Given they
may not have much experience with working holiday tax returns. Costs start from
$50 CAD upwards.
There are
internal tax specialist companies in Canada, who will do all the work for you.
There are
international options as well. If you are from Australia and you have
undertaken a working holiday in Canada. This company will give you a free estimate and then charge a fee depending on the work there is. They will also help you with
getting back refunds.
Quebec a
Special Case
All the other
provinces and territories in Canada work under the same general federal tax
system. However, Quebec has its own system. The provincial government collects
its own taxation. This comes under the Ministere du Revenu du Quebec. Those
of you in Quebec Province who say working there or in Montreal will have to check
out their systems. They will more than likely parallel the general Federal
systems.
Some
Technical Points: Resident or Non-Resident.
If you are on
a short-term working visa for a year or two, it is highly likely that you will
be classified as a non-resident in Canada. This applies if you are a resident
somewhere else. You do not have “sufficient ties” to Canada. However, if you
have worked in Canada for more than 183 tax days, you might be considered a
resident. A resident in Canada is classified as someone who owns and rents a
property, has a spouse or partner, and has dependent children. You have a permanent
job, own a car, etc., and have Canadian health insurance. Plus, a Canadian
passport and or a Canadian driver’s license.
So, it is
highly likely, therefore, that if you are undertaking a working visa and job in
Canada, you are a non-resident.
Requirements
if you are non-resident
As a non-resident, you would be expected to fill out a form which is “Income Tax and Benefit
Return of Non-Residents and Deemed Residents of Canada.”
Added to this
you will need an ITN number, this is an Individual Tax Number, for anyone
without a social security number.
There are
various ways of getting this online. The best way is to apply via the official
Canadian Website for a “T1261 Canadian Revenue Agency Individual Tax Number
(ITN) for Non-Residents.”
Conclusion
You will need
the help of a good agency to help you with all of this. If you to keep an eye
on the date.
Keep all your
pay slips. You must make sure you get a T4 form from your employer when you
make your tax return. Sort out an ITN number. If you are in Quebec province, investigate
the systems there. Again, there are international as well as Canadian agencies
that can help you fill out the tax return. See if you are eligible for any tax
refunds. A good agency should be able to deal with this. This should not be too
difficult. Get good outside help and be systematic about all of this and there should
be no problems.
