CANADIAN TAXES (For Immigrants)
If you are new to Canada and don’t know anything about Canadian taxes. Do you know anything about Canadian taxes? In this lesson, I’m going to teach you everything you need to know about Canadian taxes (For Immigrants).
Today I am going to help you get set up in your new life in Canada. So the first kind of tax that everyone in Canada has to pay is called GST. GST stands for goods and services tax this is a tax on everything you buy. So what say you go to the store and you want to buy a can of coke.
it’s going to say one dollar okay so you’re happy you have a loony a one-dollar coin is called a loony and you go to pay for your can of coke and you give the coke to the store clerk to that the checkout. clerk okay and she scans it. It comes up is 105 a dollar and $0.5.
What is GST & PST?
What. But you only have a loony. You can’t buy the coke. That’s so sad why did this happen. It’s because in Canada the GST is 5 percent so everything you buy in the store will have 5 percent added to the price you see on the shelf other parts of the world are much smarter than Canada.
For example, in Europe, if you see a price on the shelf. That’s the price you pay when you go to check out. But in Canada, I don’t know why we can’t figure it out so everything that you buy is going to have this 5 percent added on to it so when you go shopping you need to think about Hey these prices are real.
Now, this might not seem very much it’s only $0.5. In Canada, we also have PST. PST stands for provincial sales tax. So you have to pay your federal sales tax. Which is your GST that’s Canada and now you have to pay your provincial one as well so what is that?
Well you know Burda we’re lucky it’s 0 we don’t have PST here in Alberta. But the other provinces in Canada do have PST okay for example if you live in DC it says 7 percent if you live in Ontario it’s 8 percent. usually it’s around 7 or 8 percent some provinces are 10 percent.
So that’s quite a bit that means if you go by this can of coke from the store. You’re actually going to pay a dollar and $0.13. 5. Percent for the GST and let’s say you live in Ontario 8 percent for the P. S. T. now you’re paying $0.13 extra.
For your one dollar coke now you might still think all 13 since that’s not that much well yeah that’s not that much but let’s say you’re buying $1000 TV. And you have to pay $130 in taxes to buy this TV I think that’s a lot of money.
So the first kind of tax is the tax on things you buy. GST and PST everyone in Canada even tourists who come to Canada they have to pay those taxes right because you go to a store you go to pay for it it’s automatically going to be calculated into the price when you try to pay for it.
What is Revenue Canada?
The second kind of tax in Canada is called income tax. That is a tax on the money you earn from your work. Now the organization in Canada that collects the tax is called the revenue Canada. So if you ever get a call from revenue Canada. That’s maybe a bad thing and it could be a good thing too.
But if they want to do an audit on you in on it means they are going to ask you some questions. Have you been cheating on your taxes, okay so most people don’t want anything to do with revenue Canada people don’t like paying taxes right now everybody in Canada has to file their taxes before April.
April 30 is the deadline. so let’s say well right now it’s 2019 right so. Will have until April 30 to pay for the 2018 tax year. so when 2018 ends. They have a few months to gather their things to calculate. You know how much money they made from their jobs.
Then you get some slips in the mail some documents in the mail from your work. Actually one called a T. 4 slip that shows how much money you made from that job so people take the T. 4 slip and they use that and then they file their taxes and most people file their taxes online or they pay some company to do it for them.
But you can actually just do it yourself. You can also do it in paper form or you can do it online there are some different ways you can file your taxes, okay but you have to do it on or before April 30 that’s the deadline okay so Canadian income tax is a graduated system.
Okay that means is people who make more money get taxed more people who make less money get taxed less. So the rich people pay more. Poor people sometimes don’t pay anything. That’s how it works so they’re called tax brackets.
So these tax brackets bracket is like a group of some of something. So this bracket let’s say is the lowest it starts from 0 to $45000. If you make somewhere in this range then you are in the 15 percent bracket it means you have to pay 15 percent on your income.
Okay but if you make more money. let’s say you make like $100000 then you would be in the 26 percent tax bracket and if you make you know a lot of money then you’re in a higher tax review. These are just some examples there are more brackets here in between these are just a few examples.
So you can see what a bracket is okay so that is your federal income tax. This is federal. Federal means national government like Canada. This is your Canada income tax. But. This is not where the tax ends you still have a provincial income tax.
So it’s the same thing the federal income tax goes to the government of Canada provincial income tax goes to the province. So in Alberta, we have a flat rate of 10 percent so everyone in Alberta pays 10 percent of their income to the Alberta government other provinces in Canada also use a graduated system.
The bottom might be like 5 percent it might go up to like 15 percent or something like that okay so you actually have to pay 2 kinds of income taxes right. So let’s say you live in Alberta and you make $45000 a year. 10 percent of that goes to Alberta. 15 percent goes to Canada okay that’s a lot you’re losing a lot of money in taxes.
So basically those are the 4 kinds of taxes you need to know about the GST which is the government tax hello good G. stands for goods and services but you could remember it just by government sales tax you could think a provincial sales tax.
Government sales tax but really GST stands for goods and services tax okay then your federal income tax and your provincial income tax. That’s a lot of taxes. Let’s say for example you live in Manitoba and you spend $20000 a year.
On things like food maybe you buy a new TV or a car something like that. okay you spend $20000 that means you’re going to pay about 2600 in taxes on everything you buy. Then you’re going to pay taxes on everything you earn.
So let’s say you make $40000 then you have to pay federal income tax and provincial income tax is going to be about $10600. Wow, that’s like $13000 that you have to pay every year in tax but the good news is that there are actually some tax deductions and tax credits that sort of lower the amount of taxes.