How Do Foreigners Pay Taxes in Canada? 7 Tips to Know


Because of the many favorable laws, the good social security, as well as the many opportunities for education and work, Canada is a country where many aim to stay at. Therefore, Canada is a country with many foreigners who are divided into categories as residents allowed to stay by the Immigration office.

Submitting and paying taxes is an especially important thing to be clear before the state, prevent being subject to criminal liability, and also enjoy certain benefits. However, taxation is usually different for foreigners, so you should inform yourself and understand your status of residency.

In this article, we’ll talk about some of the tips you should know about paying your taxes in Canada as a foreigner. This should help in going through the process easier, especially if this is your first time. Keep reading and find out more.

1. Understand Your Status of Residency


Before filing your taxes, it is important to understand what is your status of residency, as Blackspark suggests. The status is given by the Canadian revenue agency and it is based on various criteria.

This includes whether you own or lease property in Canada, whether you have a wife/husband who is living in Canada, and dependents.

Also, there are additional criteria which include the time you’ve spent in Canada, and your plans for staying permanently or traveling. Having a bank account from any Canadian financial institution, or any other document is also considered a factor of residency.

Depending on all of these criteria, you’ll be grouped into some of the categories of residency. These categories include non-residents, people with dual residency, and factual and deemed residents. After understanding the category you belong to, you get to know the type of taxes you should file for.

2. Get Your Social Insurance Digits

Getting your social insurance digits is done upon your arrival in Canada, normally, if you had planned on staying. However, if you still don’t have them, be sure to apply for them in Canada’s service. This number consists of nine digits and it is a personal and unique number of yours.

The social insurance digits are essential for you to start working, get all the taxing credits and benefits as well as open up a bank account.

However, if Canada’s service cannot give you a social insurance code, you can go to the Canadian revenue agency and receive a temporary tax code. That way, you’ll be able to use all of the services from above.

3. Be Sure to Use Credits and Benefits


After getting your digits, be sure to use all of the benefits and credits possible. That way, you can save and avoid certain taxes, especially if you are having a relatively low income. Some of this help include benefits if you have a child, benefits depending on the province you live, as well as benefits of having a bank account and receiving your finances there.

Normally, as a foreigner, you may not know about certain benefits you can use. For that reason, it is best to consider services that can help. Also, after filing your first taxes, you may be able to receive even more benefits for the next time.

4. What Needs to Be Reported Regarding Returns

While doing your taxes, you’ll have to report various types of income you’ve received over the past year. This includes the income you received from work, finances you received like grants and scholarships, and income from businesses based in Canada. Also, if you are selling property, you’ll have to report the capital gains you obtained.

5. Ways of Filing Taxes


When it comes to filing your taxes, there are two ways of doing it.

You can use the old way where you file everything on paper. This is a long process and may require guidance if you are doing this for the first time. After writing everything on paper, you get to send it using the mail service, and it takes more than seven weeks to be processed.

Now, there is a modernized way of doing taxes which is done online. There are specific taxing programs that you can use to fill in forms including all of your income data. After that, the program automatically sends your form directly to the return agency where it takes less than three weeks to be processed.

If you have trouble doing the taxes and need help, you should consider looking for a tax preparation service to guide you throughout the process. Their expertise and knowledge of Canadian laws will help you not only to do this process quicker but also accurately which is highly important.

6. Be Careful of Scammers

While looking for tax preparation services, it is important to select an established and safe company. In this case, you’ll have to be careful of scammers. Usually, the scammers are the ones who contact you and demand information such as your social insurance digits and other important numbers. Such information you will never be asked for by a legal and established tax service company.

Also, if you are being asked to pay by using gift cards and various payment services, stay away from that. Aggressiveness over the phone, threats and other ways of extortion will never be used if you are in contact with CRA or any established tax preparation service.


7. Make Sure You Are on Time

The taxes collected until December have to be paid by the end of April which is considered the deadline. But what happens if you fail to fill out the form before the deadline? In reality, you can be late and still submit your returns. However, there may be a certain interest you may have to cover depending on how many days you are late.

For that reason, it is best to have a tax preparation service by yourself and be sure are accurate and you’ll submit your returns on time. Not only you save yourself from the stress of not knowing how to fill out the forms, but you’ll also get legal bits of advice and future benefits you might consider and use.