If you’re earning an income in Canada, you’ll need to pay tax on that income providing it is over the Canadian tax-free threshold of $11,809 in 2018 ($11,635 in 2017).
The tax rates in Canada are progressive, so the more you earn, the more tax you pay.
As well as federal tax, you’ll also need to pay Alberta provincial tax in Calgary. You can see the tax rates for 2018 detailed below.
The basic personal amount in Alberta in 2018 is $18,915, so your taxable income is reduced by that amount.
What’s my SIN?
A SIN or Social Insurance Number is a 9 digit number you’ll need to give your employer when you start your job so you can be taxed correctly. You also need it if you want to file a tax return and claim back any overpaid tax.
Our trusted partner Taxback.com can help you apply for your SIN before you even arrive in Canada!
What Canadian tax forms do I need to complete?
When you start a job in Canada, you’ll need to fill in federal and provincial personal tax credit forms so your employer knows how much tax to withhold from your wages.
A TD1 is a federal, provincial and personal tax credit form used to determine how much tax you should pay on your income.
There are a number of times when you may need to complete a TD1 form:
- when you have a new employer
- if you want to change credit amounts from previous years
- if you want to claim the deduction for living in a prescribed zone
- if you want to increase the amount of tax deducted at source
Have a look at the (2018) forms here:
Federal TD1 Form 2018
What is the 90% rule?
Your eligibility for personal tax credits is calculated on the TD1 forms. Basically, if 90% of your income in the tax year was sourced in Canada, then you can avail of the personal credits.
If not, then you shouldn’t claim the credits on the federal and provincial TD1 forms (you may end up with an underpayment of tax otherwise).
If more than 10% of your income was earned outside Canada, then you should make sure you enter 0 in box 13.
As a non-resident, you won’t be taxed on your Irish income in Canada but the Canada Revenue Agency requires you to state the portion so they can consider whether you can avail of particular tax benefits.
What’s my T4?
After the end of the tax year (typically in February), your employer will issue your T4.
This is a statement of earnings for the previous year and shows how much tax you paid.
The best thing about a T4 is that you can use it to apply for a tax refund!
How much you can claim depends on a number of factors, including:
- Your residency status
- How long you worked for
- How many jobs you had
- Income you received from overseas
- How much tax you paid
- If a tax treaty is applicable
How do I file my Canadian tax return?
If you worked in Canada and paid tax, you are legally obliged to file a tax return.
The deadline for filing your tax return and paying any balance of tax due is around 30 April of the following tax year.
So for example, if you work in Canada in 2018, you should file your tax return by 30 April 2019.
While the deadline to file is 30 April, you can choose to file from around mid-February. It’s a good idea to file as early as possible to avoid the ‘deadline rush’.
Oh and filing a tax return is the only way you can claim tax back.
You can always file your tax return directly with the Canadian tax authorities or if that sounds like a whole lot of hassle, you can head over to Taxback.com whose team of tax experts will take care of everything! In fact, they even offer a document retrieval service in case you can’t get a hold of your past payslips or your T4!
Want to claim a tax refund?
But before you file your tax return, you need to determine your Canadian residency status.
A few factors determine this, including:
- residential ties you have in Canada
- purpose and permanence of your stays abroad
- your ties abroad
If you’re on a 1 or 2 year Working Holiday Visa, then you should probably file as a non-resident for tax purposes.
If this all seems a bit confusing or you’re unsure of anything, Taxback.com offer a 24/7 Live Chat service where a member of their team will be more than happy to answer your tax-related questions.
Am I due a tax refund?
This depends on a number of factors.
Overpayments of tax in Canada can be broken into 3 categories:
- Overpayment of income tax
- Overpayment of Canadian Pension Plan (CPP)
- Overpayment of Employer Insurance (EI)
You can use our partner Taxback.com’s online calculator here to check if you’re due any tax back.