Income Tax and Tax Rates
When you move to Canada, you become a resident of Canada for tax purposes, even if you are not planning to stay forever. The government agency responsible for tax is the Canada Revenue Agency (CRA). According to CRA, as a resident of Canada, you are responsible for reporting your worldwide income for tax purposes. Because you now live in Canada, and partake of the benefits and services provided by the federal and provincial governments, you must also pay taxes in order to help provide for these benefits and services. Your income is taxed according to a certain percentage, and, if you work in Canada, your employer will withhold taxes for you. In this case, you will not need to worry about paying any tax (since it is paid for you). Here are the rates for 2011:
- 15% on the first $41,544 of taxable income, +
- 22% on the next $41,544 of taxable income (on the portion of taxable income between $41,544 and $83,088), +
- 26% on the next $45,712 of taxable income (on the portion of taxable income between $83,088 and $128,800), +
- 29% of taxable income over $128,800
Provincial Rates for British Columbia
- 5.06% on the first $36,146 of taxable income, +
- 7.7% on the next $36,147, +
- 10.5% on the next $10,708, +
- 12.29% on the next $17,786, +
- 14.7% on the amount over $100,787
Payment Calendar and Filing Your Taxes
Your taxes must be filed on or by April 30th of each year. You can mail in your tax package, file it electronically, file it over the phone, or have a tax professional submit your tax papers on your behalf. Further information on filing your taxes can be found here: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/menu-eng.html.
Tax Treaties (directly from CRA website)
Canada has tax conventions or agreements — commonly known as tax treaties — with many countries.
A tax treaty is designed to avoid double taxation for people who would otherwise pay tax on the same income in two countries.
Generally, a tax treaty determines how much each country can tax income such as:
If Canada has a tax treaty with your home country (see the list of treaty countries on Finance Canada’s Website: http://www.fin.gc.ca/treaties-conventions/treatystatus_-eng.asp), you can contact the International Tax Services Office for more information about the treaty:http://www.cra-arc.gc.ca/cntct/international-eng.html.
The Community Volunteer Income Tax Program (CVITP) exists to provide assistance to individuals unable to complete their tax forms on their own, or unable to pay to have it done. More information can be found here: http://www.cra-arc.gc.ca/tx/ndvdls/vlntr/menu-eng.html.
CRA also provides helpful information for newcomers to Canada on topics such as Residency Status, Tax Obligations, and Entitlement to Benefits and Credits: http://www.cra-arc.gc.ca/E/pub/tg/t4055/t4055-10e.pdf.
The CRA website (http://www.cra-arc.gc.ca/menu-eng.html) has a lot of helpful information about the Canadian tax system, why you must pay taxes, and how to pay your taxes. There are also downloadable guides available for further information:
- General Income Tax and Benefit Guide: http://www.cra-arc.gc.ca/E/pub/tg/5000-g/README.html
- Students and Income Tax: http://www.cra-arc.gc.ca/E/pub/tg/p105/README.html
- Gifts and Income Tax: http://www.cra-arc.gc.ca/E/pub/tg/p113/README.html
- General Application for GST/HST Rebates: http://www.cra-arc.gc.ca/E/pub/gp/rc4033/README.html
- Employee or Self-Employed?: http://www.cra-arc.gc.ca/E/pub/tg/rc4110/README.html