How To Apply For A Canadian Income Tax Return – Working Holiday or Students
November 25, 2015
Posted in How To Guide
So you came to beautiful Canada and are either currently working at your Working Holiday City Job, Working Holiday Resort Job, or have just finished your program. You may have been surprised to find out that you have to pay taxes here in Canada, even on your working holiday. If you’ve never filed taxes before, you may be confused on the process.
Here in Canada, you need to pay taxes on things such as goods, services, and even on the money that you make at your working holiday job. You may feel like that’s a lot of money to give to the Canadian government, but fret not – you may be able to get some of your money back by filing your Canadian taxes. Here, the government will determine if, over the year, you paid too much, or too little taxes. A little known fact is that the average Canadian tax return is around $998 CAD. That’s a lot of money that you can put to use elsewhere. Generally speaking, there are a few ways you can claim a tax refund from the Canadian government on your income. Keep reading to find out how to apply for your Canadian tax refund!
Option 1: File It Yourself with the Canada Revenue Agency
Although it may seem difficult or complicated to do it yourself, it’s actually quite simple if you take your time and follow these steps carefully. Many working holidaymakers are daunted by the prospect of filling out tax paperwork and dealing with the Canadian Revenue Agency (CRA).
The main advantage of filing yourself is that it’s free. The downside is that you will be responsible for ensuring that your return is fully compliant with the CRA. It will also be up to you to do your research and ensure you claim every tax entitlement you’re due.
In reality, filing yourself is not that hard to do, especially if you follow these steps carefully.
Step 1: Find Out Your Canadian Residency Status
If you are participating in one of our Working Holiday Programs through International Experience Canada (IEC), you are typically considered a “non-resident” to the Canadian government. It’s also important to note that there are some circumstances in which working holidaymakers should file a ‘resident’ tax return.
For example, if you have significant ties to Canada, you may be entitled to file as a resident – depending on your circumstances.
What’s more, if you are still in Canada, you should call the International Tax Services Office (1-800-267-5177) to check if your home country has a tax treaty with Canada. This may affect your income tax status. If your residency situation is more complicated, you might be required to complete forms NR73 and/or NR74 and mail them to the CRA for proper determination.
Step 2: Get Your Canadian T4 Form(s)
You need to get a ‘T4’ form from each of your employers (you are legally entitled to receive this form).
Your employer will usually send this form to you between January and March, either by mail or email. If you’ve worked for more than one employer during the same year, you should ensure that you get forms from each employer.
Be sure to provide each employer with your mailing address so that you can receive your T4 forms in time to file your Canadian income tax return by the April 30th tax deadline.
Step 3: Get the Income Tax Forms
The forms that you will need to file your tax return can be found at any Canada Post location. The forms come with a step-by-step guide that will tell you exactly what you need to do and how to fill them out. You can also find these forms online by going to the Canada Revenue Agency’s website here. The forms you need to complete vary according your residency status, income type and expenses you need to claim.
The tax package for Canadian non-residents with employment income will include the following:
- T1 Income Tax Return, and the 428 form for the province where you worked
- Schedule A
- Schedule B
If you qualify as a Canadian resident for taxation purposes, you only need to file a T1 Income Tax Return and Form 428.
Step 4: Mail Out Your Completed Tax Package
Your final step is to send all of the completed forms, along with the original copies of your T4 slips, to the appropriate tax office according your residency status here.
Option 2: Use A Service Like Taxback
Taxback is a trusted partner of Stepwest and they have many years of experience of helping non-residents to claim their Canadian tax refunds.
If you file your tax return with Taxback:
- You will not have to deal with any tricky tax forms. Their tax teams handle all the paperwork.
- You are guaranteed to receive your maximum legal tax refund.
- Receive an exclusive $10 CAD discount for all Stepwest participants.
What’s more, they will transfer your refund to your bank account anywhere in the world. So if you have to complete your taxes and are already back home, that’s no problem. Receiving your tax refund check by mail when you are outside Canada can be extremely difficult as CRA will not mail the money outside of Canada.
Another unique feature of the services offered at Taxback is that their customer service representatives and tax experts can speak more than 22 languages! You are sure to find someone who is able to help you with any of your questions.
There is an excellent ‘no refund – no fee’ policy which means that you will NOT be charged any fees if you do not receive any tax refunds. If you do receive a refund, however, the service fee will be deducted from your refund and the rest will be transferred to your account. In other words, there is no commitment and no risk to you!
You have the option of registering with Taxback for a FREE account where you can upload your documents and keep track of the progress of your tax refund application.
Their handy tax calculator will give you the chance to see your estimated tax refund for free.
CERB Taxes for Working Holiday and Students in Canada
If you are on a working holiday in Canada during 2020, you have no doubt been affected by the COVID-19 pandemic. With this in mind, there are a couple of things you should know about Canadian tax if you have received the Canadian Emergency Response Benefit (CERB) payments while being on your working holiday permit or your study permit.
What does CERB mean for your tax return when you are a Working Holiday or Student?
The aim of the CERB payment was to provide financial support to employed and self-employed workers in Canada who were directly affected by COVID-19. Eligible workers were entitled to receive $2,000 for a 4-week period. However, many workers are unaware that CERB payments are fully taxable and must be reported as income earned when filing your 2020 tax return in early 2021. Unlike a typical paycheque from an employer, taxes owed on CERB aren’t deducted from the CERB payment before you receive it.
The amount you will owe on your CERB payments will vary province by province. If you are a student and your only income in 2020 was the CERB payment, and you got the full $12,000, you will owe nothing in Alberta, Nova Scotia, Nunavut, Northwest Territories and Yukon. However, elsewhere you will owe provincial taxes between $17.06 (Manitoba) and $217.67 (Newfoundland and Labrador).
Of course, everyone’s tax situation is unique to the individual, so you will need to evaluate your own payment. To figure out what the tax hit will be on your CERB payments, you’ll need to find out:
- What you earned in 2020 before CERB
- How much you received and/or will receive from CERB
- Your estimate of what you will earn in 2020 after your CERB payments
Remember, if your Canadian tax situation is stressing you out, you can always contact Taxback. Their tax team will ensure you claiming all taxable income correctly.
Having the correct information on how to file for your Canadian tax return is very important.
By having the right resources to refer to, you can spend less time worrying about the details and more time enjoying your working holiday in Canada making awesome memories.
All of our Working Holiday Programs here at Stepwest not only come with a guaranteed job placement or your money back, but we also offer continuous, professional support during your stay in Canada. We would be more than happy to help you out with your questions!
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