If you moved to Canada and became a permanent resident in 2022, you will have to file your first income tax return with the Canada Revenue Agency (CRA). Even if you only lived in Canada for part of 2022 you will have to file a return if you:
- want to get benefit and credit payments
- want to claim a refund
- have to pay taxes in Canada.
Even if you didn’t earn income in Canada in 2022, it’s wise to file your first tax return in Canada so that you can apply for important benefits. If you do not file your income tax return, the government can’t pay the GST/HST or child tax benefit you may be eligible for. So it’s worthwhile to file your income tax return even if you lived in the country for a short period.
While filing taxes in Canada for the first time may seem overwhelming, there are many resources to help you (see the section below: Government of Canada Income Tax Resources). As well, many settlement agencies can help you to complete your taxes for the first time. This is just one of many important services that settlement agencies provide.
As we approach what is known as “tax season” in Canada and the income tax filing deadline, this is helpful information to get you started.
Understanding Canada’s Tax System
Learning to navigate the Canadian tax system will make your life here much easier. If you’re already employed, you see that a good portion of your earnings goes to taxes, maybe more than what you were used to in your native country.
The taxes that you pay come back to you in the form of helpful public services and many gratuities that make Canada one of the most sought-after destinations for immigrants. Not only that, but you can recover part of your taxes and access tax credits when you file an income tax return each year.
What are Tax Credits?
Tax credits are sums that are deducted from the total taxes you owe. Depending on your situation, you may be eligible for one or more types of tax credits. When you claim deductions, you may receive a larger refund or reduce the amount of taxes that you owe. Here are some examples of tax credits and deductions that you could be eligible for:
- Climate action incentive payment: available to residents of Alberta, Saskatchewan, Manitoba, and Ontario to offset the cost of federal pollution pricing. Effective July 2023 the payment will also extend to residents of Newfoundland & Labrador, Nova Scotia, and Prince Edward Island.
When you claim certain tax credits, you will have to support your claim with receipts.
What Benefits Can I Receive?
When you file your income tax return, you can also apply to receive benefits. These benefits are payments you will receive to pay for specific expenses and help make living in Canada more affordable. Some examples of benefits include:
- Goods and Service Tax (GST) and Harmonized Sales Tax (HST) credit: helps individuals and families with low or modest incomes to offset sales tax.
- Canada child tax benefit: a tax-free payment that helps families with the cost of raising children under 18.
- Provincial & territorial benefits & credits.
Here are some benefits you may be eligible for:
| Benefit | Married or Common-law with Children | Single with Children | Married or Common-law with No Children | Single and 19 or Older with No Children |
|---|---|---|---|---|
| Canada Child Benefit | Yes | Yes | No | No |
| GST/HST Benefit | Yes | Yes | Yes | Yes |
| Provincial & Territorial Benefits & Credits | Yes | Yes | Yes | Yes |
Watch this video to learn more about benefits and credits:
When is the Deadline to File an Income Tax Return for 2022?
The deadline to file your 2022 income tax return in Canada is on or before May 1, 2023. If you owe taxes, you will have to pay the full amount on or before May 1, 2023. The tax deadline is typically April 30. However, when this date falls on a Saturday or Sunday, as it does this year, the deadline is extended to the next business day.
If you are self-employed, the deadline to file your income tax return is June 15, 2023. But if you owe taxes, you still have to pay by May 1, 2023
When you owe money and do not pay by May 1, 2023, you will have to pay daily interest on the amount that you owe. And penalties and interest can become expensive. So if you owe money, it’s best if you can pay back the amount in full to avoid paying interest and late fees.
How to File Your Income Tax Return
You can file your income tax return for 2022 online in two different ways:
| EFILE | NETFILE |
|---|---|
| – EFILE is a secure CRA service that lets authorized service providers complete and file your return electronically. | – This electronic tax-filing service lets you do your personal income tax and benefit return online using certified tax preparation software and submit it directly to the CRA. |
You can also complete your income tax and benefit return by using a paper package. Click here to order the 2022 Income Tax package. Be sure to order the package for the province that you reside in because the tax system can vary by province.
Use Free Certified Online Tax Software to Simplify the Process:
Here are some of the free tax software products:
| Wealthsimple Tax | TurboTax | CloudTax |
|---|---|---|
| – Free autofill tax software allows you to easily complete a simple tax return – Provides a helpful guide to claiming deductions – Receive $15 back if using Wealthsimple Tax for the first time. | – Offers free & paid tax returns – Free tax return service applies to simple tax returns but does not include income, credits, and deductions such as: – Employment expenses (meals, lodging, etc) – Donations -Medical expenses – Investment income and expenses – Rental property income and expenses – Self-employed income and expenses. | – Free and paid services – Offers free ‘how-to’ videos and a step-by-step guided application. |
For more listings, check out this list of free tax software products here.
Find Free Tax Clinics:
You may be eligible to use the Community Volunteer Income Tax Program if you have a modest income and a simple tax situation.
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Avoid Fraud and Income Tax Scams
Unfortunately, scammers try to get Canadians to pay debts that they do not owe. And tax season is a prime time for scammers. Newcomers can be vulnerable to these scams, especially when it comes to receiving a call or letter from a government agency demanding money for payment. However, you can protect yourself if you know when and how the CRA may contact you.
Click here to find out how to protect yourself from fraud. This helpful information will help you to respond if you get an email, phone call, letter, or text from the CRA that seems suspicious.
Government of Canada Income Tax Resources
Newcomers to Canada 2022: Refer to this PDF brochure if you left another country to settle in Canada in 2022. It will help you to understand the Canadian tax system and what you require to complete your first income tax and benefit return as a resident of Canada.
Newcomers to Canada (immigrants and returning residents): This site will help you to complete your first income tax and benefit return as a resident of Canada. The information is only for the first tax year that you became a new resident of Canada.
Get Ready to Do Your Taxes: Get a quick overview of the documents you need to file your income tax return.
Don’t Get Scammed!: Learn when and how the CRA may contact you to avoid being a victim of fraud.
Common Tax Terms: glossary of terms to learn about your taxes.
Taxes in Canada: Online Learning Course
Learn about your taxes: This course can help you learn about personal income taxes in Canada. It includes seven online learning modules:
- One: Starting to work (why you need a social insurance number, what’s on your pay stub and T4 slip)
- Two: Preparing to do your taxes (what to know before you do your taxes, different ways to do them)
- Three: Completing a basic tax return (an introduction to a basic income tax and benefit return)
- Four: After completing a tax return (understanding a notice of assessment, paying off a balance, working with the CRA)
- Five: Using My Account (how to use CRAs online portal)
- Six: Purpose of taxes
- Seven: Accessing your benefits and credits.
Important Tax Changes for 2023
To offset some of the rising living costs, some income tax and benefit amounts will change. Again, these are important changes that put additional money in your pocket. Some of the important tax changes for 2023 include:
- The dollar limit for the Registered Retirement Savings Plan (RRSP) will increase from $29,210 to $30,780 (with a limit of 18% of your 2022 earned income).
- The dollar limit for the Tax-free Savings Account will increase from $6,000 to $6,500 (it’s important to use a TFSA as an investment and not as a savings account).
- An increase to the Basic Personal Amount (BPA) that you can earn without paying any federal tax will increase to $15,000.
- Tax bracket changes: all five federal income tax brackets have been adjusted by 6.3% to help Canadians maintain buying power as the cost of goods increases:
| Tax Bracket | Federal Tax Rate |
|---|---|
| $0 – $53,359 | 15% |
| More than $53,359 – $106,717 | 20.5% |
| More than $106,717 – $165,430 | 26% |
| More than $165,430 – $235,675 | 29% |
| Anything above $235,675 | 33% |
Another important change is the introduction of the First Home Savings Account (FHSA). This is a great way to help Canadians save for a new home. The FHSA allows your contributions to grow tax-free and helps you prepare to buy your first home. Your FHSA contributions are tax deductible. And the contributions are non-taxable as long as you withdraw the money to put toward your first home.
This new registered plan allows first-time homebuyers to save up to $8,000 per year with a lifetime limit of $40,000.
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In summary, if you arrived in 2022 and lived in Canada for a short period you should file your first income tax return. And with the 2022 tax deadline approaching, there is still time to file an income tax return. This will allow you to claim deductions and apply for future tax benefits that will put money in your pocket!
Learn more about banking in Canada, and be on your way to financial security and success! From financial first steps to your earnings in Canada, you can learn more when you visit our banking in Canada resource page.
