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Tax refunds will always be welcomed by those who have had to work and study during the last year, especially if you are living in an expensive place like Vancouver. However, getting the money back into your pocket is complex; many people throw in the towel. But do not be alarmed. In this article, Latincouver will give you all the necessary information to simplify your process.
What are taxations, and why do they exist?
First, you should be clear about the meaning of a tax. Citizens must pay taxes by law so that public entities have the resources to satisfy basic needs such as health, education, security, infrastructure, etc.
In almost all countries, citizens pay taxes on an estimated basis. Once the fiscal year ends, it is checked if your payments were more than the corresponding ones. If so, you have the right to demand a refund of money that will vary according to different factors.
Taxes in Canada
The percentage of taxes per purchase will vary depending on the country you live. Canada, unlike many countries, has provincial (PST) and federal (GST) taxes, which makes its tax rate one of the highest in the world.
In British Columbia, most purchases include 7% PST, and 5% GST, adding up to a total of 12%. However, there are certain exceptions, including the purchase of alcohol, where the PST is 10%. As for lodging, the PST is 8% plus hotel tax. There are also cases where PST is not charged, such as food in restaurants, books, children’s clothing, bicycles, and prescription drugs.
Tax return:
Knowing the difference between a tax return and a tax refund is essential. The declaration is the generation of a document with the details of your annual income given to the government. The return is when the government sends you the corresponding money. To obtain the refund, you must first make a declaration.
What documents do you need to make the return?
The documents you need will vary depending on the taxes you are applying. Canada has many types of taxes (called tax slips), so we recommend you research which ones you need. Below is a list of the information you must submit:
-Social Insurance Number (SIN): This is a nine-digit personal code mandatory to work in Canada. You can get it at Service Canada or even at the airport once you arrive in the country.
-T4: This form summarizes all the money an employer pays employees during the tax refund year.
-Bank information: this is so you can receive the refund directly to your account.
-Any other tax slips you have: (T2202, T5018, T5, etc.) Suppose you want to know all the tax slips available and what they are about. In that case, you can check the details on the Government of Canada website.
If this is the first time you will do the tax return in Canada, you will have to show a bit more information:
– First work or study permit.
– Net income before entering Canada from 2020 and 2021.
What is the step-by-step to follow?
- The first thing to do is to decide if you will do the return on your own or with the help of a tax expert.
- Provide updated personal data.
- Declare income.
- Request refunds, credits, and expenses.
- Send your income tax return.
- Wait for the receipt of the NOA (Notice of Assessment), an assessment of your income tax return that the CRA (Canada Revenue Agency) sends yearly.
- If you have a pending payment, do it before April 30.
- Expect your refund to arrive by cheque or direct deposit between 2 and 8 weeks after filing your return.
How to get the tax slips?
If this is your first tax return, you will likely have to go independently to get these documents. The employers and schools must provide the forms, or administrators must generate them. Let’s see how it works with the most common taxes:
- T4: Delivered by your employer.
- T4A: Delivered by your payer.
- T2202: Delivered by your school.
- T5: Delivered by financial institutions.
Key dates:
– January 28: Deadline for schools and businesses to send you your forms.
– April 30: Last day to file your tax return on time and pay to CRA without penalties.
Return times:
It’s important to know that the time it takes for your refund will depend on how you filed your return. Canada Revenue Agency aims to send you your refund within two weeks if you file online and eight weeks if you file on paper. Although these deadlines only count for returns the CRA receives on or before the due date (April 30).
If you live outside Canada and file a non-resident income tax return, the return can take up to 16 weeks.
Other important details are that the CRA may take longer to process your return if it requires further examination. By using direct deposit, the refund may arrive faster.
Other important questions:
Are there conditions to apply for the tax refund?
To be eligible, you must have stayed in Canada for at least six months during the tax year. Another condition is that your salary can be at most 10% of what you earned in Canada if you worked in another country during that year.
How much money can be returned on average with the Working Holiday Visa?
About CAD 998, a significant amount should always be noticed, right?
Who can I ask for help with my tax return?
If you are not good at this type of paperwork and need more time, your best option is to opt for an online service that will do the whole process. One of the most common options is TaxBack, which also gives you a previous estimate of how much money you will get back. You can also choose the service of a tax provider or accountant. In general, the services cost between CAD 60 and CAD 120.
How do I file my tax return on my own?
You have different options. You can go to a tax office and complete the instructions, and you can also send the documents by email or do the step-by-step online at this link.
It is quite a complicated process, and there are specific requirements to be taken into account. For the same reason, many people opt for someone’s help.
Are there differences depending on my marital status?
Yes, your status will determine factors on your tax return. The process is more straightforward if you are single and have never been married, and the opposite is true if you are single but have children. Let’s see what each of the marital statuses means.
1) Single: If you are not married and have no dependents.
2) Head of household: If you are not married but have at least one dependent for whom you pay housing expenses.
3) Married filing jointly: If you are married and want to file jointly with your spouse. It is generally more advantageous to file jointly from a tax standpoint.
4) Married filing separately: If you are married and want to file separately with your spouse. This option is often used when there are self-liability arrangements or sometimes to obtain larger refunds.
5) Widower with pension rights: This status is available for two years after the death of your spouse if you have a dependent. After the first year, you can declare your marital status as married.
From what date is my marital tax status determined?
Generally, your marital status on the last day of the tax year (December 31) is your marital status for the entire tax year.
How much of my income will be reduced?
The average income tax reduction is between 15% and 29%.
When does the tax year start?
The Canadian tax year starts on January 1 and ends on December 31.
Can I file a tax return if I study something for a few months and do not work?
Yes, a form called T2202 considers all students who have paid tuition and fees for qualifying courses, including spending more than 12 hours per month on program courses. You are not eligible for this form if someone, like your parents, lists you as a dependent on their tax return.
How do I calculate my T2202 refund?
You must multiply the tuition paid by the lowest federal tax bracket rate. In 2022 it was 15%.
Does this tax refund include 2023 dates?
No. The 2022 tax refund only includes 2022 tax year dates, i.e., between January 1 and December 31, 2022.
Can the CRA withhold part or all of my refund?
Yes, this can happen in specific cases:
– Owe balances.
– Have a garnishment order.
– Have outstanding federal, provincial, or territorial government debts (student loans, employment insurance, among others).
– Have a refund of less than CAD 2.
– Have outstanding GST refunds.
How is my tax refund monitored?
To get an update on your tax refund, you must wait eight weeks if you live in Canada. If you are no longer a resident, you must wait 16 weeks. After that time, you can call the CRA or contact them through the following link:
Can I transfer my tax refund to another account?
Yes, there are two ways to do it. The first is selecting this option when you file your tax return with the CRA, and the second is attaching a note to your printed return. Doing this ensures that the CRA will refund the account you want.
Do not let to make your taxes declaration on top of the deadline.
LISTEN TO OUR PODCASTS ABOUT TAXES AND MORE!
If you have yet to learn, Latincouver has two podcasts (for Spanish and Portuguese speakers) to talk with newcomers and people in Vancouver.
In March, both podcasts are bringing information related to taxes in British Columbia. Subscribe to our podcasts, Latinos en Canada and Brasileiros em Vancouver, and stay on top of essential information for Latino immigrants and events happening in Vancouver.
