It’s smart to file an income tax return in Canada if you arrived in 2023. If you became a permanent resident and lived in Canada, even for a short period, filing your first income tax return with the Canada Revenue Agency (CRA) can provide financial benefits. If you didn’t earn income in Canada in 2023, filing a return allows you to apply for important benefits. Also, the government can’t pay the Goods and Services Tax (GST), Harmonized Sales Tax (HST), or Canada Child Benefit (CCB) you may be eligible for without you filing a tax return. In other words, you will have to file an income tax return if you:

• Want to get benefits and credit payments

• Want to claim a refund

• Have to pay taxes in Canada. 

While filing taxes in Canada for the first time may seem overwhelming, there are resources to help you (see the section below: Government of Canada Income Tax Resources). Many settlement agencies can help you complete your taxes for the first time. This is just one of many important services that settlement agencies provide.

As we approach the “tax season” in Canada and the deadline to file your income tax return, this information will help you get started.

Understanding Canada’s Tax System  

Navigating the Canadian tax system will make your life here much easier. If you’re already employed, you know that a good portion of your earnings goes to taxes, maybe more than what you were used to in your native country. 

The taxes you pay come back to you through helpful public services and many gratuities making Canada one of the most sought-after destinations for immigrants. In addition, you can recover part of your taxes and access tax credits when you file an income tax return each year.

What are Tax Credits?

Tax credits are sums that are deducted from the total taxes you owe. You may be eligible for one or more tax credits. When you claim deductions, you may receive a larger refund or reduce the taxes that you owe. Here are some examples of tax credits and deductions that you could be eligible for:

• Child care expenses deduction

• Canada caregiver credit

• Education and textbook tax credits

• Disability tax credit

• Canada Carbon Rebate is available to residents of Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and Saskatchewan to offset the cost of federal pollution pricing. Currently, this credit is unavailable in British Columbia, Northwest Territories, Nunavut, Quebec, or Yukon.

• All deductions, credits, and expenses

When you claim certain tax credits, you must support your claim with receipts.

What Benefits Can I Receive?

When you file your income tax return, you can apply for benefits. These benefits are payments for specific expenses that can help make living in Canada more affordable. Some examples of benefits include:

• Goods and Service Tax (GST) and Harmonized Sales Tax (HST) credit: helps individuals and families with low or modest incomes to offset sales tax.

• Canada child tax benefit: a tax-free payment that helps families with the cost of raising children under 18.

• Provincial & territorial benefits & credits.

Here are some benefits you may be eligible for:

When is the Deadline to File an Income Tax Return for 2023?

The deadline to file your 2023 income tax return in Canada is on or before Tuesday, April 30, 2024. If you owe taxes, you have to pay the full amount on or before April 30, 2024. If you are self-employed, the deadline to file your income tax return is June 17, 2024. But if you owe taxes, you still have to pay by April 30, 2024.

If you owe money and do not pay by April 30, 2024, you will have to pay daily interest on the amount that you owe. And penalties and interest can become expensive. It’s best to pay the full amount to avoid paying interest and late fees.

How to File Your Income Tax Return

You can file your income tax return for 2023 online in two ways: 

You can also complete your income tax and benefit return by paper. Click here to get a 2023 T1 (personal) income tax package. Be sure to order the package for the province that you reside in because the tax system can vary by province.

Use Free Certified Online Tax Software to Simplify the Process:

Here are some free tax software products that you can use. These are great if you have a simple tax return to file:  

For more listings, check out this list of free tax software products here. 

Find Free Tax Clinics:

You may be eligible to use the Community Volunteer Income Tax Program if you have a modest income and a simple tax situation.

Avoid Fraud and Income Tax Scams

Unfortunately, scammers try to get Canadians to pay debts they do not owe. And tax season is a prime time for scammers. Newcomers can be vulnerable to these scams, especially when it comes to receiving a call or letter from a government agency demanding money for payment. However, you can protect yourself if you know when and how the CRA may contact you.

Click here to learn about scam protection and the CRA to protect yourself from fraud. This information will help you to respond if you get an email, phone call, letter, or text from the CRA that seems suspicious. 

Government of Canada Income Tax Resources

Learn How to File Your Income Tax Return

Learn about your taxes: This course can help you learn about personal income taxes in Canada. It includes seven online learning modules:

• One: Starting to work (why you need a social insurance number, what’s on your pay stub and T4 slip)

• Two: Preparing to do your taxes (what to know before you do your taxes, different ways to do them)

• Three: Completing a basic tax return (an introduction to a basic income tax and benefit return)

• Four: After completing a tax return (understanding a notice of assessment, paying off a balance, working with the CRA)

• Five: Using My Account (how to use CRAs online portal)

• Six: Purpose of taxes

• Seven: Accessing your benefits and credits.

Important Tax Changes for 2024

Income tax and benefit amounts will change to offset some of the rising living costs. Again, these are important changes that put additional money in your pocket. Some of the important tax changes for 2024 include:

• The dollar limit for the Registered Retirement Savings Plan (RRSP) will increase from $30,780 to 31,560 (with a limit of 18% of your 2023 earned income).

• The dollar limit for the Tax-free Savings Account (TFSA) will increase from $6,500 to $7,000 (it’s important to use a TFSA as an investment and not as a savings account).

• An increase to the Basic Personal Amount (BPA) you can earn without paying any federal tax will increase to $15,000.

• Tax bracket changes: all five federal income tax brackets have been adjusted by 4.7% to help Canadians maintain buying power as the cost of goods increases:

In summary, if you arrived in 2023 and lived in Canada even for a short period, it’s smart to file your first income tax return. And with the deadline approaching on April 30, 2024, there is still time to file your 2023 income tax return. This will allow you to claim deductions and apply for future tax benefits that will put money in your pocket!

Learn more about banking in Canada, and be on your way to financial security and success! From financial first steps to your earnings in Canada, you can learn more when you visit our banking in Canada resource page.

Salary negotiation is a touchy subject. Most job seekers are still unclear about the best practices for negotiating their salary. As a newcomer to Canada, the subject can be even more intimidating. You’re new to the country and you may be unfamiliar with common job search practices. Many people fear that if they ask for more money they will miss out on the job. Others may immediately accept a job without knowing you have the option to negotiate your salary and other aspects of your job. 

Negotiating your salary in Canada is common. It’s part of the hiring process. So, you shouldn’t shy away from the topic. As with other aspects of the job search process, there is a time and place for everything. There will be some jobs where there is no room for negotiation. As well, there are certain times when it is better to discuss money with your potential employer.

Here are some specific actions, tips, and advice for when and how to negotiate your salary in Canada. 

Can You Negotiate Your Salary in Canada?

This applies to entry-level positions as well. Most people incorrectly assume entry-level salaries are non-negotiable. But this is not always true. Companies will make exceptions for candidates they feel are the right person for the job. However, you usually have less wiggle room for these types of positions because these jobs are easier to fill. 

Common Situations When You Will Negotiate Your Salary

There are a few common situations where you will find yourself in a position to negotiate your salary. They are:

• Multiple job offers: You are in the process of interviewing with a company when another employer shows interest in you. The first company makes you a competitive offer to secure your services. You have the option to negotiate to ensure you receive a strong employment offer.

• Low salary offer from the employer: You received a job offer from a company you want to work for. But the salary is lower than you expected. It is important to negotiate to ensure you receive a salary you are worth.

• A recruiter reaches out to you: You are happy in your current role. A recruiter or other employer reaches out to you to inquire about your willingness to make a career move. You don’t want to leave your current job, but you also want to maximize your earning potential. So, you ask for a raise, knowing you have other job options.

Why Should You Negotiate Your Salary?

Salary negotiation is a normal part of the job search process. While it can be an intimidating process, it’s completely normal. Here are some reasons you should negotiate your salary before accepting a job offer:

• Higher earning potential: It’s simple, the people who negotiate their salary make more than those who do not.

• Employers can offer more: Companies do not usually put their best offer up first. There is often wiggle room.

• Other compensation is involved: Even if a company is not willing to offer you a higher salary, they make be willing to offer you other types of compensation such as an annual bonus, higher commission, stock options, or even more vacation time.

• Know your value: When you negotiate you are showing an employer that you know your value.

• If you don’t ask, you won’t get what you want: Higher salaries are often an option, but if you don’t ask, an employer is not going to offer them.

How To Approach Salary Negotiation in Canada

If you are going to negotiate your salary, you need to approach it the right way by taking these actions:

Get Everything in Writing

This is important and often overlooked by employees. Get all agreed-upon salary terms and conditions in writing. This will ensure everything you have spoken about is documented.

Things to Avoid When Negotiating Your Salary in Canada

Here are some important pointers to keep in mind. Avoid doing the following as part of the negotiation process:

Ask Before You Receive an Offer

The timing of your negotiations is important.  Ideally, you should wait until you have received a formal offer in writing.  You should also feel free to ask for some time to consider the offer to formulate your salary request.

Focus Only on the Money 

It can be very easy to get yourself into a mindset where you are only thinking about salary. Salary is important but it is not the only thing. Consider the possibility of a signing bonus, commission, and other forms of compensation as part of your job offer package. Other things to negotiate on top of or in addition to base salary include:

• Remote work

• A one-time signing bonus

• Higher commission rate

• Ongoing professional development

• Tuition reimbursement

• Professional dues

• Additional vacation days.

Show Your Hand

Don’t reveal your bottom-line number or you will lose your leverage in the negotiation. Know your worth and do not be afraid to ask for it. Employers will respect this. Your offer will not disappear because you want to negotiate. In most cases, the worst thing that will happen is they will say no to your request for a higher salary. 

Salary negotiations can be intimidating, but they are necessary if you want to be paid what you are worth. It’s also a common practice in the hiring process in Canada. So if you don’t try to negotiate salary, you could be leaving money on the table. 

For information, tools, FREE webinars, and more visit our Finding a Job in Canada resource page. Get the help you need to achieve your career goals in Canada!

Pay deductions can often be confusing and can come as an unpleasant surprise if you weren’t expecting them. Canadian workers have quite a few pay deductions that you should be aware of. Some of these are mandatory, like taxes, while others are voluntary, like union dues. These deductions make the difference between net pay and gross pay. Many pay deductions are there to help you in the future. However, you won’t be able to take advantage of the extra money if you do not know where it is and how you can access it.

Getting Your First Job in Canada

After you accept a job in Canada, you will receive a job offer letter. This is an exciting time! Your offer letter, also known as an employment letter, will include:

• Annual pay

• Method of payment and how often you will be paid

• Work schedule

• Job description and duties

• Workplace rules and policies

• Other employment conditions such as benefits and commissions.

The amount of money that is shown in the letter will not be the same amount that you will receive. This is because the amount on the letter is your gross pay.

Understanding Net Pay and Gross Pay

Understanding the difference between net pay and gross pay is important to make sure you put your money to the best use. Fortunately, net pay and gross pay are quite easy to understand.

Each time your employer pays you, they must deduct a certain amount from your paycheck. The amount of money they deduct depends on a few factors such as:

• The province you live in (each province has its own income tax rate)

• What type of job you have

• How much you are payed

• What programs you are part of (pension plans, Unions, etc.)

However, when an employer tells you how much you are going to be paid they are talking about gross pay. Gross pay is your pay before deductions. It is not actually what you are going to receive. Your gross pay includes bonuses, commissions, and overtime pay.

From your gross pay, your employer must make some deductions. The main deductions you will see on every pay stub are:

• Taxes

• Canada Pension Plan (CPP) and

• Employment Insurance (EI).

These deductions are not completely lost, however. Taxes go towards providing many public and social services in Canada. CPP and EI will also benefit you in the future when you retire or in case you lose your job.

After all the deductions have been made, the remaining money is now your net pay. This is the amount of money you will be taking home. Avoid confusing your gross and net pay because you need to budget your net pay and not your gross pay.

Your pay stub, or the letter you will receive with every pay, will have both your gross pay and your net pay. Your gross pay is listed at the top of the pay stub, followed by any deductions. At the bottom, you will find your net pay. This is the amount of money you will receive for that payment term.

Now let’s look at different pay deductions, what they are for, and how they affect your pay stub.

Payroll Deductions Can Help You be More Financially Secure

As you can see, many payroll deductions help you save for the future. However, you can take things further by adding a few more deductions to your pay, each payment term. I know it’s tempting to want all your money from each paycheque but it’s wise to save for the future.

A good way to save for the future is to set up automated deposits into your savings account or a Registered Retirement Savings Plan (RRSP). These automatic deposits contribute a portion of your paycheck into whatever account you want them to.

Saving for Your Future in Canada

You can refer to the 50/30/20 budgeting rule if you’re unsure how to budget your money. The rule recommends you put at least 20% of your pay toward savings. This way, you will have most of your pay for fixed expenses and entertainment while building savings over time.

If you plan to pay for your child’s post-secondary education, you can also open a Registered Education Savings Plan (RESP). An RESP is a great way to save for post-secondary education because the government will also contribute money to your RESP for every dollar you contribute. You can set up another automated deposit for this.

The best financial advice is to stick to a budget and automated pay deductions are no exception. Divide your money properly and have enough to pay for basic expenses before you set up any automated deposits. However, it may be wiser to make manual deposits if your income isn’t very reliable or if you are on a low income.