Canadian Tax System

In Canada, everyone needs to file an individual income tax return by April 30th each year. For example, the income tax return for the 2021 tax year must be filed by April 30, 2022.

People who own businesses and their spouses or common-law partners do not have to file income tax until June 15 of each year.

In Canada, like many other countries, there is a taxation system to collect money from individuals and businesses. Here the taxation system is managed by the Canada Revenue Agency (CRA).

The collected tax money pays for government services and programs. Our tax dollars pay for things like paving of roads, health care, public schools, economic stimulus programs, employment programs, cultural activities, etc.

Types of Taxes

Income Tax

The main form of tax in Canada is the Income Tax. You pay income tax when you:

  • Have a job — your employer deducts income tax from your paycheque and submits it on your behalf to CRA.
  • Own a business — any money earned in your business and expenses paid on your business need to be reported to CRA every year, and you have to pay taxes on profits earned.
  • Earn money — for example, if you earn interest on the money you have invested.

Sales Tax

When you buy something (products or services) in Canada, you pay sales taxes. Sales tax systems and amounts are not the same in all Canadian provinces.

Sales tax amounts are usually not included in the price tag of a product or service, so the final cost you pay at checkout will be higher than the one displayed on a price tag.

Some provinces use federal and provincial sales taxes separately. The federal tax of 5% (Goods and Services Tax – GST) is the same in all provinces, while the provincial sales tax (PST) varies from province to province.

Other provinces, including NL, use the Harmonized Sales Tax (HST). HST is a combined tax amount that includes both federal (GST) and provincial sales taxes, and it is administered by the federal government.

In NL, the HST is 15%.

Filing the Income Tax Return

As a newcomer to Canada, you are considered a ‘resident of Canada for income tax purposes‘ when you establish residential ties in Canada. This usually is on the date you arrive in Canada.

Even if you do not have any income, or are receiving financial assistance, you have to file an income tax return with CRA every year. This may help you get some benefits from federal or provincial government programs.

There are two ways to file your income tax return:

  • Electronically, by using the NETFILE service on the Internet along with a certified tax preparation software or web application.
  • Fill in an income tax form by hand, then mail or deliver it to your local tax centre. You can get the forms at your local post office, online or at the local CRA office.

How To Get Help With Filing Income Tax Return

There are several ways to get help with completing your income tax return:

  • Use the CRA online course Learn About Taxes.
  • Pay a professional to help you, like a bookkeeper, accountant, or a tax preparation service.
  • Make an appointment with a Community Volunteer Income Tax Program (CVITP). This program organizes tax preparation ‘clinics’ for people with low income who cannot fill out the return by themselves and cannot afford to pay to have it done for them. Call the CRA or check out their website to find a Voluntary Tax Preparation Clinic in NL.
  • Each year, the ANC’s Community Connections team partners with the CRA and CVIPT to deliver free tax assistance to clients in our respective regions. These volunteers can assist you through the income tax process.

Related Resources

General Tax Information

Filing Income Tax/Help with Your Return