This subject will probably not even cross your mind when you are getting ready to go to Canada, but if and when you do start working in Canada you will pay 15%-29% income tax on your wages, just as you probably do in your home country.
The good news is that you can apply for a tax refund at the end of the tax year!
Here’s what you need to know about your Canadian tax refund.
The Canadian tax year runs from January 1st until December 31st, just like the calendar year.
You need to wait until mid-February the following year to apply for a tax refund. The deadline for filing your tax return is April 30th.
Example: You worked from June 2016 until May 2019
- In February 2020 you will file your tax return for the 2019 tax year.
- You could expect to receive your refund 16 weeks later, i.e. May or June.
- June 2019 take holidays at Whistler Mountain Bike Park after you finish work.
- Fly home at the end of June – broke but with lots of great memories.
- In February 2020 file your 2019 tax return.
What you’ll be refunded
Probably one of the more interesting questions – where does the refund actually come from? Fasten your seatbelt!
Tax refunds in Canada come from the overpayment of taxes.
This mainly breaks down to 3 different taxes; the overpayment of income tax, overpayment of CPP (Canadian Pension Plan) and the overpayment of EI (Employer Insurance).
According to Taxback.com, their average refund for international workers is $998, so it’s not too shabby.
A lot of people like to think that it’s possible to retrieve an additional refund once you leave Canada, but unfortunately, this is not the case.
Non-residents are taxed just like residents, and they are refunded likewise.
Although we would like to think that it makes sense to be able to be refunded the tax paid into your Canadian Pension Plan (at least!), the Canadian Revenue Agency just doesn’t agree with us.
If you’re feeling a little confused right now, check out some more useful blogs or register with Taxback.com to get some professional help.
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Starting a Job in Canada from a Tax perspective Declaring Foreign Income in Canada What does a T4 Mean? Understanding your Tax Documents Important Dates in the Tax Year Determining your Residency Status Tax Tips & Myths 6 Tax Tips Spending your Tax Refund! When is too late to file your Canadian Tax Return?