So you’ve landed a job in Canada-well done! The toughest part is over and now you have to fill in some lovely forms so the government can tax your income.
You’ll need to fill in some forms too! These forms are Federal and Provincial personal tax credit forms and your employer needs them to determine how much tax to withhold from your wages.
When you start a new job in Canada, your employer will ask you to fill out some tax forms. The forms in question are called Federal and Provincial personal tax credit forms. Employers use these forms to determine the amount of tax to be deducted from your employment income.
They look like this:
The provincial form ( which one you need will depend on where you work)
You need to complete these forms if:
- You have a new employer
- You want to change amounts from previous claimed tax years
- You want to claim the deduction for living in a prescribed zone
- Wish to increase the amount of tax deducted at source
The most common reasons for filling out these forms are changing employers or starting your first job.
Usually everything is pretty straightforward, but you need to be careful if any of the following applies:
A) You were working outside Canada before you came here in the same tax year, either in your home country or another country
If you earned income from another country in the same year you earn income in Canada, you might not be eligible to claim the personal tax credits which let you earn money tax free in your job in Canada.
Basically, if you earn 90% of that year’s income in Canada, then you can claim the tax credits.
However if your foreign income was a lot more than that amount, you will not be eligible to claim the personal tax credits on the TD1 federal or provincial.
In this case, you should enter 0 in box 13.
B) You are working at more than one job
If you have more than one job you must make sure you don’t claim personal tax credits twice. It’s a good idea to claim the tax credits for whichever job pays the most. If you discover that you’ve claimed the credits twice, you should fill out the forms again.
If you come to settle in Canada, remember you will be taxed as a newcomer for income purposes. After the first tax year however, you will then be considered a resident of Canada for income tax purposes.
Non-residents pay tax only on their income from Canada, but once you are a resident for tax purposes, you pay tax on your worldwide income.
The Canadian tax year is from Jan 1 to December 31, but you cannot apply for a tax refund until March 1 of the following year.
After the end of the tax year (usually in February), your employer will issue your T4. Your T4 is a statement of earnings for the previous year and shows how much tax you paid.
You can use this statement to help apply for a tax refund. How much you get back will depend on a number of factors, such as:
- Your residency status
- How long you worked
- How many jobs you had
- Income you received from overseas
- How much tax you paid
- If a tax treaty is applicable
Getting a refund
If you’re working in Canada temporarily, you’re legally obliged to file a tax return. You should submit it by April 30 but you can apply for your refund from March 2016. To file your tax return, we’ll need a T4 or final cumulative payslip.
To apply, you simply need to register online here and send us your documents when you finish work so we can claim your tax back as soon as possible.
The tax year is from Jan 1 to Dec 31 and you have up to 10 years to claim a refund.