Business & Experiences

Taxes in Canada

Much of Canada’s benefits are covered by Canadian national taxes. Canada’s tax system funds roads, schools, health care, social security, public safety, and services for immigrants.


The first tax return is an important turning point for new immigrants living in Canada. If you are new to Canada or living in Canada, there is a lot of information to consider when filing your tax return. Filing a tax return can be confusing, especially for people in countries that have never filed a tax return. Here are some common questions about Canadian immigration and new taxes.

Frequently asked questions about Canadian taxes for immigrants

What are the tax rates in Canada?

Canadian personal income tax rate. In Canada, the personal income tax rate is the highest federal marginal tax rate applicable to taxable income above $ 138,586. Individuals are also subject to a local tax rate of at least 15%.

Do you think Canada’s tax rate is too high?

Canada’s progressive tax system is very similar to that of the United States, and the amount of taxes a person must pay depends on their circumstances. The average maximum marginal tax rate on Canadian wage income is 45.7%.

What If I have no income, what should I do about tax return?

Most people in Canada must file a tax return even if they have no income. You must be a member of the Canadian Pension Plan (CPP). If your net income from self-employment and income from pensionable employment exceed $ 3,500, you must contribute to the Canadian Pension Plan (CPP).

If I don’t pay the taxes?

If you are required to pay taxes but do not submit your return by the due date (postmark required by April 30), the CRA will impose a late payment penalty. The penalty is 5% of the funds due in the late return month plus 1% of the amount due in the late return month, with a maximum of one year.

How do I file a Canadian tax return?

In the e-mail:

You can fill out a paper tax return and mail it to your local tax office.


You can use NETFILE to register your online declaration.

Other options:

For more information on tax filing, visit the CRA website.

Should I have to pay tax as a student?

If you have summer jobs, part-time jobs, scholarships or grants, you must file a tax return.

Immigration Trust. A five-year tax holiday for newcomers to Canada

Under Canada’s Income Tax Act, new immigrants to Canada receive a five-year “tax exemption period” upon arrival in Canada. This is especially beneficial for wealthy individuals settling in Canada or owning assets abroad.

Upon arrival in Canada, immigrants are generally subject to Canadian income tax on their global income. However, there are legal provisions that allow the creation of what is known as an “immigrant trust.” This trust has foreign investment assets of new immigrants. If properly structured, foreign income and capital gains from assets held in the trust are exempt from tax.

Immigrants can establish an immigration trust and transfer foreign assets to Canada before arriving in Canada. For example, if you live in Canada, own real estate in your home country, and plan to earn rental income, you can establish an immigration trust abroad. The person can then establish an immigration trust abroad and transfer the property to that trust. For 60 months, or 5 years, from the date a person becomes a resident of Canada, Canadian authorities do not tax real estate rental income.

With this five-year tax break, immigrants can become Canadian citizens in just three years and then choose to become Canadian tax non-residents. As a result, foreign income and capital gains may not be tax deductible in Canada at any time.

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