Taxation in Canada – What Immigrants Need To Know

When Nadiya (have changed for privacy) recently immigrated from Ukraine to Calgary, Alberta, Canada she didn’t think the very government that gave her a new start in life would also be the same government that put up so many roadblocks to force her into poverty. But this is a hard lesson for many immigrants to Canada – you basically need a government license to feed your family in this country. Even though Canada has one of the most stable and liberal democracies in the world, one government department in particular thinks making money is a privilege and not a human right – that department is the Canada Revenue Agency.

Nadiya was sending her resume to hundreds of businesses looking for a job that paid more than minimum wage. One company said they didn’t have the resources to hire her full-time or even part-time but that they could use her as a contractor. Little did Nadia know, the the CRA and Human Resources Development Canada had set up thousands of pages of red tape to make her liable for before she could make her first dollar.

Canada immigrants tax

For people like Nadiya, moving to a new country can be an exciting yet stressful experience, especially when it comes to understanding the taxation system that is in place. Canada is no exception, and it is important for immigrants to understand the rules and regulations of taxation in Canada before making the move. This article will provide a brief overview of the taxation policies in Canada, including what types of taxes are applicable to immigrants, how and when to pay them, and what types of exemptions and deductions are available. Furthermore, it will provide resources for those looking for more information on taxation in Canada. By taking the time to understand the taxation system in Canada, immigrants can ensure that they are up to date on their financial obligations, as well as take advantage of any deductions that may be available to them.

Overview of Taxation in Canada

Canada’s taxation system can be confusing for those who have not previously been through it. However, it is important to remember that taxes are the price that individuals and businesses pay for living in the country. Taxation in Canada is primarily achieved through a progressive income tax system, which means that the higher your income level, the more taxes you will pay. The system consists of provincial/territorial taxes, federal taxes, and payroll deductions. The chart below shows how these taxes are calculated and how they are distributed. The taxation system in Canada is administered by the Canada Revenue Agency (CRA). The CRA oversees all aspects of the taxation system and ensures that all individuals who are required to pay taxes do so. It might be advisable to hire a tax preparation company to help do your annual taxes. Here is a list of some of those companies:

One suggestion from Canada’s leading tax consultant, Cawston & Associates is, before hiring someone to do your taxes, make sure they are still in business (the exact individual doing your taxes) after “tax season” is over. Some companies hire temporary workers to do taxes in March and April but, by June, those people are no longer working in tax preparation. The CRA can contact you about errors in your tax filing any time after you file taxes up to seven years later! We reviewed some criterial to become a tax consultant, read that before proceeding.

Types of Taxes Applicable to Immigrants

When newcomers arrive in Canada, they are responsible for paying taxes on their income from the day that they arrive. There is no grace period or time when they can defer paying taxes. For example, if you move to Canada on June 1st, you need to pay taxes on income earned in June, even though you don’t get your first paycheck from your employer until July. This is often the cause of the first frustration that many immigrants experience with the Canadian tax system. There are five types of taxes that are applicable to all individuals residing in Canada:

  • Income tax
  • Goods and Services Tax (GST)
  • Employment Insurance (EI) premium
  • Canada Pension Tax
  • Provincial/territorial taxes (or HST)
  • plus dividend tax  and many others (for some)

How and When to Pay Taxes in Canada

Tax payments in Canada are due on a monthly or quarterly basis, depending on the type of income being earned. For example, those who earn self-employed income are required to pay taxes on a monthly basis. It is important to note that if you earn a significant amount of money while residing in Canada, you may be subject to taxes in both your home country and Canada. This is referred to as double taxation, and it can be avoided if there is a tax treaty between your home country and Canada. If you are unsure about how to file taxes in both Canada and your home country, it is advisable to consult with a tax professional. Although there are many myths surrounding taxation in Canada, it is important to remember that all income taxes are to be deducted from your pay cheque before you even see it. Your employer usually manages these taxes for you.

Tax Deductions and Exemptions for Immigrants

Depending on your personal circumstances, there are a number of deductions and exemptions that may be applicable to you. Below are some of the most common deductions and exemptions for immigrants in Canada.

  • Basic personal amount: This is a non-refundable tax credit that can be claimed by all individuals. The amount of this deduction varies from year to year and is shown on the CRA website.
  • Tax-free savings account (TFSA): This is a government-sanctioned savings account that allows individuals to earn interest on their savings without being taxed on the earnings.
  • RRSP Savings offers a credit
  • Children’s Fitness and Arts Tax Credit: This is a non-refundable tax credit that provides up to $150 per child under the age of 16. (Only in Yukon, Quebec, and Manitoba as of 2023)
  • Disability tax credit: This is a non-refundable tax credit that is provided to those who are living with a physical or mental impairment that is long-term and severe.
  • Medical expenses: These are expenses that can be claimed against your income and are important to keep track of, as the CRA has strict rules around what qualifies.
  • Provincial/territorial tax credits: These credits are only applicable to residents of a specific province/territory and vary depending on the individual situation.
  • Credits for volunteer work: only in some firefighter roles
  • Other credits: There are a variety of other credits that may be applicable to immigrants, including the Climate Action Incentive, the Child and Family Benefit, and the Canada caregiver credit.

Resources for Further Taxation Information

  • Canada Revenue Agency (CRA) – The CRA is the government department responsible for administering the taxation system in Canada. The CRA website has a lot of helpful information, including facts and statistics about taxation in Canada, as well as helpful videos and articles.
  • BMO Bank of Montreal – As one of Canada’s largest banks, BMO offers a variety of financial products and services to individuals and businesses. Their website has an excellent section dedicated to taxation, including helpful articles and videos, as well as calculators, which can be useful for those who want to figure out how much they will be expected to pay in taxes.
  • CPA Canada – CPA Canada is a professional association dedicated to serving the public. They have a section on their website dedicated to taxation, which provides a lot of helpful information, including how to file taxes, common mistakes to avoid, and tax tips.


Taxation in Canada can be a confusing process for both longtime residents and newcomers alike. It is important for individuals to be aware of the types of taxes that are applicable to them and when and how these taxes should be paid. Additionally, it is helpful for individuals to understand any deductions or exemptions that may be applicable to them. This can help to ensure that taxes are being paid correctly and that individuals are receiving any credits that may be available to them.