As you spend your first year in Canada, you might not need to worry about paying your taxes at the very outset, but before those 12 months are up, you will need to plan filing your taxes as a newcomer.
This article contains an overview of Canada?s tax system, the benefits of taxation, and what happens in case you don?t file them on time.
Who?s responsible for paying my taxes as a newcomer?
Simply put, you are! The Canada Revenue Agency (CRA) collects tax payments and distributes benefits. A tax year in Canada runs from Jan. 1 to Dec. 30, and is due by April 30 of the next year.
Canada funds many services and programs with the CRA, as well as critical infrastructure, such as airports, emergency services, health care, and roads and highways. As a Canadian resident, you are responsible for:
- Filing your taxes - on time
- Determining your residency - this is essential for tax purposes
- Providing complete, accurate information
- Disclosing all sources of income, and paying what you owe
- Informing the CRA of any changes to your situation, including your marital status and place of residence
Does everyone need to file taxes?
Yes, if you have residential ties to Canada. These include owning/renting a home in Canada where you might live with your spouse, common-law partner, or dependents, and the bills you accordingly pay.
You also need to file taxes if you have a job, a Canadian bank account, a car and/or Canadian driver?s license, health insurance, and/or social ties to Canada.
Before filing taxes and claiming benefits, you also need a Social Insurance Number (SIN), which you can get from a Service Canada office. A SIN is crucial to work a job, open a bank account, and access government benefits and services. Remember that your SIN is confidential and should not be shared freely.
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What benefits am I eligible for if I file my taxes?
There are three main benefits that filing your taxes as a newcomer gets you: the Canada Child Benefit (CCB), the GST credit, and the HST credit.
- The Canada Child Benefit is a tax-free monthly payment. It helps with the cost of raising children, and gives you up to $7,787 each year for every child you have aged six and under, and a maximum of $6,750 for each child between the ages of six and 17.
- The GST and HST credits are tax free payments for individuals and families who earn low incomes. The payment is used to help offset the costs of goods and services. If you?re single, you could earn up to $519 a year, while families can get up to $1,038 each year.
If you or someone in your family has a disability, the Disability Tax Credit (DTC) could help reduce the income tax you owe. Similarly, a Child Disability Benefit provides up to $3,322 per child per year if your family cares for a child with a disability under the age of 18.
All payment amounts mentioned in this article are accurate as of March 2025. They could be subject to change.
How do I calculate my benefits?
Simple: use the CRA?s benefits finder. It tells you how much money that is likely to come to you this year. You can also sign up to receive benefit and credit payment reminders.
Please make sure your information with the CRA is always up to date, otherwise, you might miss out on receiving the benefits you are owed. Details such as your address, residency, marital status, the number of children you care for, and your banking details (for direct deposits), are up to date. You can modify your details by accessing your online CRA account, by mail, or by phone.
What happens if I don?t file my taxes?
Not filing your taxes over multiple years could have legal, financial, and personal implications, according to Credit Canada.????
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Legal implications include penalties, interest charges, garnished wages, frozen bank accounts, and even asset seizures.
Financial implications could extend to late filing penalties that start at five percent of what you owe, plus an extra one percent for each month you owe, for up to 12 months.
Personal implications involve holding back government benefits.
If you have not filed your taxes on time, Canada encourages you to voluntarily disclose your situation. The government will help you work out a solution. Alternatively, newcomers to Canada can get assistance from a tax consultant or a settlement agency, which offers many free services.
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