Canadian Tax Facts 2020

Determining how much money you need is one of the initial steps in processing your entry to Canada. You most likely already have money allocated to help with your move to the country. With that being said, here’s a helpful guide to help you on the basics of personal finance in Canada like which financial institutions to go for, and what expenses to expect. 

Canadian Tax Facts 2020

Canadian Banking

You can choose your banking services based on your own specific needs. But, here we will discuss the biggest domestic banks in Canada. 

  • CIBC

Canadian Imperial Bank of Commerce or CIBC is good for its continued investment into modern-day banking, with top-ranking mobile applications available. 

  • HSBC Canada

A world-renowned bank with over 130+ banking branches located in Canada’s major city. If you already own an account in another country, accessing and transferring money will be made easier. 

  • Scotiabank

The Scotiabank StartRight® Program, gives newcomers a chance to open an account even before they enter Canada. International money transfers have no fees and are unlimited. Banking for newcomers is free for the first year.

  • Bank of Montreal (BMO)

BMO is the oldest bank in Canada with over 200 years of experience in banking for newcomers. They also offer 1-year free banking for newcomers with no minimum balance required.

  • National Bank of Canada

National Bank is the largest bank in Quebec. They offer a tailored package for newcomers with year access to Assistance service for newcomers. 

Credit Score

Your credit score is a number between 300 and 900 that indicates how good you are at managing your debts and finances or in other words, your creditworthiness. A good credit score will help you get loans easier and qualify for major credit-based purchases, like a mortgaged home or a leased car. It will also be used for smaller transactions like a monthly mobile plan. 

To determine your creditworthiness, your credit history will be reviewed on how well you were able to pay back past credits on time and whether or not you have declared bankruptcy in the past. Your credit report will be requested by certain entities like banks, employers and landlords, and your consent will be required to grant them access.

As a newcomer, you will need to establish your credit history in the country first before you can qualify for major credit-based purchases. To start out, get a credit card, make sure to pay your credit on time, and don’t max out your monthly limit, leaving around 35% of your credit limit. Once you qualify for other types of credit, start branching out to other types of credit that require a higher credit score to further improve your credit record.


A percentage of 35% to 50% of your income will go to housing and utilities, as with most Canadians. This includes renting your home or paying a mortgage.

Health insurance is free in Canada, but may not cover your first 3 months in the country. Public transportation is available, but most families in Canada have one or more cars for transportation. Basic expenses for food and clothing will depend on the size of your family coming to Canada.

With all the basics like housing, healthcare, transportation, food and clothing covered, before moving, do thorough research on the prices of commodities and services you might need when you move to Canada. Record it on a spreadsheet and make sure you have enough and more to cover what you need. 

Deductions and Taxes

Your paycheque will be deducted around 25% to 35%, which will be used to pay for:

Goods and Services Tax (GST) adds 5% to the price of most goods and services. Provincial Sales Tax (PST) is added to GST in most provinces, and ranges from an extra 7% to 10%. Harmonized Sales Tax (HST) is combined GST and PST used in Newfoundland and Labrador, New Brunswick, Nova Scotia, Prince Edward Island and Ontario.

Quebec administers its own GST/HST and Quebec Sales Tax.


Personal Finance & Taxes for Newcomers in Canada

Canada’s Taxation Process

Canada’s tax system is managed and regulated by the Canada Revenue Agency, also known as the CRA. Now that they have their own website, It’s now easy for residents whether temporary or permanent to monitor their personal income tax and manage any tax affairs at the click of a button. This is where you register any information that may come in handy when it comes to your yearly contributions. This includes:

  • Income from Self-Employment
  • Foreign Income
  • Property owned in Canada
  • Property used to carry on a business
  • Shares from a Canadian Private Corporation
  • Shares of any public corporations
  • Partnership interests.

Taxes filed by the CRA and sources are calculated from the time you were in the country. For those obtained while not yet in Canada, they will not hold you liable for such, however, you still need to declare them in your Canadian Tax Return. This is to determine whether you’re eligible for tax credits and benefits.

Also, whether you have made a huge amount of income or nothing at all, you must still declare all of your assets, properties and sources of income. For the filing of your personal income tax return or T1, the deadline is often set to the 30th of April.

For self-employed people the date for personal income tax return filing is on the fifteenth of June. If these dates happen to fall on a weekend, the processing is going to be moved to the following Monday. Failure to meet these deadlines can end up in late filing penalties.

Tax Filing

There are many ways to file your tax. Before you begin doing so, you must first ensure that you have all the important details and documents that support your claim on credits, deductions, and expenses.

If you’re employed or you just had an investment income, you need to gather “slips” from your financial organization or employer. Slips serve as documentation for the amount of income that you have received out of your RRIF for the tax year and also the tax deducted. It is necessary that you understand the various types of tax slips as these determine what you would like to take care of or share within the filing of your taxes.

  • T4 or Remuneration Tax tells how much you received within the tax year and the quantity deducted from your financial gain. This covers your salary and other employment income like bonuses, vacation pay, tips, honorariums, commissions, and taxable allowances.
  • T5, which is also referred to as the Statement of Investment Income are tax info slips prepared by organizations that pay interests, dividends or royalties. These include those from bank accounts, accounts with investment dealers or brokers, insurance policies, annuities and bonds.
  • T3 which is the statement of Trust income Allocations and Designations are issued by financial directors and trustees to report income earned from mutual and trust funds.

Upon securing these tax slips, you can file for an income tax return at the province you’re residing in or the province that you’re registered with. Filing a tax return is important for you to get compensation for any overpayments you have made throughout the year for your income tax, pension plans or Employment Insurance contributions. it’s also in this process that the CRA can confirm which benefits you are eligible for such as:

  • The Canada child Benefit
  • Goods and Services/Harmonized sales tax (GST/HST)Credit
  • Territorial or Provincial Benefits
  • Working income tax Benefits
  • Forwarding or Transferring of unused Tuition
  • Updating Registered Retirement Savings plan (RRSP)deduction limits

If this is your first time filing taxes, don’t worry. CRA has made it simple for newcomers and long-time residents to process their taxes. You may need to study a bit but once you get the hang of it, filing your taxes in the future would be a piece of cake.

Online Filing

The quickest and most convenient way to file your tax is through an online software system that is certified by the CRA. Learn more about certified tax software in Canada here: These programs are offered free of charge.

Through the Phone

Offered to people with low or fixed income, the File My Return service is free of charge. If you’re eligible for this option, the CRA can let you know by sending you an invitation letter through mail in mid February. In this program, you just need to provide some personal information and answer a series of short questions through an automated phone service.


Despite technological advancements, many individuals still choose to process their taxes through paper. Snail mail, however, takes a substantial amount of your time out of the filing process so before you choose to take this route, you may want to reconsider doing all your tax returns through alternative methods.

The common processing time for income tax returns sent online is two weeks while those done through mail take four to six weeks on average. It’s best to question what can be the most effective route to take.

If you want to pursue your tax returns through the mail, it would be best to secure all of your information that’s been sent to avoid readjustments. Filing by paper might take a month and a half but sometimes adjustments take up to ten weeks to process.

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