Filing Canadian taxes: Everything you need to know
Feeling overwhelmed about filing your Canadian taxes? Don't worry, you’re not alone! This guide has everything you need to confidently file your tax return, understand how much you might owe, and discover potential savings through tax credits.
You’ll learn about different types of taxes, what you need to report, how to submit your taxes, and the key documents you'll need along the way. Plus, you'll find handy tips for special situations, like if you're self-employed, a newcomer to Canada, or curious about tax-free earnings.
Let's simplify tax season and get you prepared to file with confidence!
Frequently asked questions
When should I start filing taxes in Canada?
You should file a return as soon as you have income to report. Many people start filing in their teen years if they have a part-time job. Even if you owe no tax, filing helps you stay up to date on benefits and credits.
What is the 90% rule for the CRA?
This rule applies if you earned income both in Canada and outside the country in the previous year. If 90% or more of your total income was earned in Canada, you are still eligible for credits like the full basic personal amount.
How do I file my taxes in Canada?
You can file online using the CRA’s system, hire an accountant, or use software designed for tax returns. Be sure to gather all your slips and receipts before you begin, so you have the information you need to maximize your savings.
How much tax do I pay on $30,000 in Canada?
The total amount you will pay depends on factors including your income, the credits you’re eligible for, and the province you live in. At $30,000, your income falls into the 15% bracket federally, but you’ll also pay provincial tax.
What is the minimum income to file taxes in Canada?
There is no minimum income to file taxes in Canada, but if you earn any taxable income or want to claim credits, you should file a return. Filing is also important if you want to build your RRSP or TFSA contribution room, even if your income is low.
Tax returns in Canada: The basics
It’s springtime – also known as tax season in Canada. This is the time when you need to file a tax return to settle up with the government and ensure you’ve paid the right amount of taxes based on your income. On your tax return, you disclose how much money you made over the previous year, how much tax you’ve already paid, and declare credits you may be eligible for. Then, a pre-defined formula will uncover whether you owe more or deserve a refund. If you paid too much over the year, you get money back; if you still owe, you settle up. It’s that simple.
Every worker in Canada pays taxes, but the real question is, how much? The answer to that depends on your income; the more money you make, the more taxes you pay. Almost everyone who earns money in Canada must file a tax return. This includes people who have jobs, run their own businesses, or earn income in other ways. If you’re unsure whether you need to file a tax return in Canada, check out the Government of Canada’s guidelines.
When it comes to managing taxes in Canada, the Canada Revenue Agency (CRA) runs the show. This is a government agency responsible for assessing tax returns, performing audits on questionable submissions, collecting money owed, and giving refunds or benefits when needed. They also offer online services and information for taxpayers.
In Canada, we’re faced with multiple different taxes, and it’s important to understand what each one is –– after all, this is where much of our hard-earned income is going.
- Income tax is the tax you pay on any money you make, whether that comes from your job, your company, or your investments.
- Capital gains tax is the tax you pay on profits made selling things like property or stocks. Reminder for 2024 taxes, the government changed the capital gains tax rules, so be sure to review the updates.
- Property tax is charged by your city or town – it’s based on your home’s value, and the money goes toward local services like garbage pickup and road maintenance.
- Sales taxes, such as Provincial Sales Tax (PST), Canadian federal Goods and Services Tax (GST), or Harmonized Sales Tax (HST), are added to the cost of everyday items from groceries to clothing to cleaning supplies. The amount of sales tax you’ll pay depends on the province you’re in.
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- GST is a sales tax charged by the federal government – it’s always 5%.
- PST is provincial sales tax – it’s charged in many, but not all, provinces and territories.
- HST is a combination of PST and GST, and it’s applied to goods and services in Ontario, Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland and Labrador.
- Alberta, Northwest Territories, Nunavut and Yukon charge GST only, while British Columbia, Manitoba, Quebec, and Saskatchewan charge GST and PST separately.
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A tax return is a set of forms that tells the CRA about your total income and any deductions or credits. This is where you report the income earned from jobs, investments, or other sources. It’s also where you declare expenses that can reduce your taxable income like RRSP contributions and charitable tax receipts, and where you claim eligibility for tax credits that will increase your chances of a refund. For more details on what to report, visit the CRA’s guide on reporting income.
It may seem hard to believe at times, but some things in Canada are tax-free. Canada offers the opportunity to contribute a certain amount each year into a Tax-Free Savings Account. The contribution limits change, but for 2024 the limit was $7,000. You do not have to pay tax on the income earned from investments housed within your TFSA. You also do not have to pay tax on certain gifts, lottery winnings, most life insurance benefits, and some government benefits.
If there are items you’re uncertain about, it’s always a good idea to check the CRA’s rules to make sure you understand what is taxable and what is not.
How to file your taxes in Canada
When it comes time to file your taxes in Canada, you have a few choices to make. Do you want to file on your own using the CRA website, do you want to purchase software to help you simplify the process, or do you want to hire a professional? These are all viable options that come with their own pros and cons.
How much tax will you pay? (Canadian tax brackets)
Those filing tax returns in Canada will pay both Federal taxes (these go to the Government of Canada), and Provincial taxes (these go to the government of whichever province you reside in). How much you pay will depend on the amount of income you make after any deductions, credits, and exemptions have been taken into account.
Here are the Canadian federal income tax rates for 2025:
|
Tax rate |
Taxable income threshold |
|
15% |
on the portion of taxable income that is $57,375 or less, plus |
|
20.5% |
on the portion of taxable income over $57,375 up to $114,750, plus |
|
26% |
on the portion of taxable income over $114,750 up to $177,882, plus |
|
29% |
on the portion of taxable income over $177,882 up to $253,414, plus |
|
33% |
on the portion of taxable income over $253,414 |
Ways to file your taxes
When it's time to file your taxes, there are several options that can fit your style and budget. You can use the CRA’s online service, which is free and offers step-by-step guidance to help you through each form. If you prefer a more personal touch and expert advice, an accountant can handle everything for you, though this option might cost a bit more. Or, you might choose to purchase tax filing software that offers a balance of guidance and independence.
The documents you need to file taxes
Gathering the right documents in advance can make filing your taxes much easier. Here’s what you’ll typically need:
T4 slip
T5 slip
Business expense receipts
RRSP contribution receipts
Charitable donation receipts
Keeping these documents organized — whether in a folder or on your computer — will help you file your return without any last-minute stress.
Also read: What documents do you need to do your taxes?
Keeping tax records
Keeping good tax records is a smart habit. The CRA might ask for proof of any credits or deductions, so it's a good idea to keep your slips, receipts, and other documents for at least six years. This means not only saving paper copies, but also scanning them and storing digital backups.
Whether it’s a T4 slip, donation receipt, or a record of business expenses, having everything neatly organized can save you a lot of time and stress if you ever need to show proof.
What is the tax deadline?
Most Canadians need to file their tax return and pay any taxes owed by April 30 every year. If April 30 falls on a weekend or holiday, the tax deadline will shift to the next business day. If you're self-employed, you have until June 15 to file your return, but any tax you owe still needs to be paid by April 30. Mark this date on your calendar and give yourself plenty of time to gather your documents and file your return, so you can avoid any last-minute stress or extra fees.
What happens after you file?
After you file your return, you'll get a Notice of Assessment from the CRA. This document tells you your final tax bill — whether you owe more money or are due a refund. If you notice any mistakes, you can easily fix them by filing an adjustment request. Just keep in mind that if you owe money and miss the payment deadline, the CRA might charge you interest or penalties. It's a good idea to check the CRA’s after-you-file guide for more details and tips to help you stay on track.
Canadian tax credits
Tax credits help reduce the amount of tax you owe. Instead of paying the full tax calculated on your income, these credits subtract a set amount from your total tax. It’s a simple way to save money, and since the rules can change from year to year, it’s a good idea to stay updated on the latest information through the Government of Canada’s website.
Here are some tax credits you may be eligible for:
- First-time home buyer and housing-related credits: These credits can ease the cost of buying your first home or improvements like renovations, making housing more affordable.
- GST/HST credits: These help low-to-moderate-income individuals and families offset the cost of the goods and services tax or harmonized sales tax, which you pay on everyday purchases.
- Family and child credits: These credits reduce your tax bill by helping cover the extra expenses that come with raising children.
- Disability credits: Designed to lessen the tax burden on individuals with disabilities, these credits help free up money to cover additional living costs.
- Canada caregiver credit: This is available for people who support a spouse or child with a physical or mental impairment.
- Insurance premium credits: There are a variety of insurance tax deductibles potentially available to you depending on the type of insurance you have and your personal situation.
Taxes for self-employed Canadians
If you're self-employed, it’s very important to keep your records in order. Document all the money you earn and every expense you incur because you only pay tax on the profits made by your business, and business expenses lower that profit.
Expenses like software subscriptions, business insurance, and office supplies can be deducted from your taxable income, which means you pay less tax. Keeping track of all your expenses may seem like extra work, but the savings are well worth it in the end.
Check out the CRA guide for self-employed income for more details.
Also read: An ultimate guide to insurance tax write-offs for self-employed Canadians
Taxes and newcomers to Canada
Are you new to Canada? When you file your first tax return, you may have extra steps — like showing any money you earned from other countries. Canada has a rule often referred to as the 90% rule, which means that if 90% or more of your net world income for the year was earned from Canada, you are eligible to claim federal non-refundable tax credits. Sounds confusing? Don’t worry –– the CRA has a helpful newcomer guide that walks you through the process, making it easy to understand and complete your first return.
Learn more about possible rule changes by checking upcoming capital gains tax changes and see if you need extra life insurance due to a potential tax hike.
If you're buying your first home, there are tax credits available to help you save money. First-time home buyers and persons with disabilities purchasing a home can also claim up to $10,000 under the Home Buyers’ Amount.
Families wanting to adapt their home to make it comfortable for multiple generations to live together may qualify for the Multigenerational Home Renovation Tax Credit. If you’re planning to create a self-contained secondary unit for a senior or adult who qualifies for the disability tax credit to live with a relative, you could claim up to $50,000 in qualifying expenditures for each renovation. The credit is 15% of your costs up to a maximum of $7,500 per claim.
There are additional tax credits available for those wishing to improve and renovate their homes. The not-yet-launched Canada Greener Homes Affordability Program will help low-to-median-income homeowners and tenants make changes to their homes to reduce their monthly energy bills. The Oil to Heat Pump Affordability Program offers up to $15,000 to help qualified residents change the source of heat in their homes away from oil and towards an eligible heat pump system.
Taxes and your mortgage
Your mortgage is often one of your biggest expenses, so it pays to understand all the tax details to keep more money in your pocket.
Capital gains
Capital gains is a tax you pay on the increased value of an investment (stocks, mutual funds) or asset (home or investment properties) from the time it was purchased to the time it was sold. The CRA currently taxes 50% of capital gains, meaning you have to pay tax on half of the money earned through selling these items.
Not every asset sold in Canada is subject to capital gains tax. Principal residences are exempt from capital gains tax, as long as that property was solely your personal residence each year that you owned it. But if you have an income suite, an investment property, or a second property like a cottage, you’ll be taxed on the financial gains made through its sale.
Learn more about property tax and capital gains tax in Canada:
Compare current mortgage rates across the Big 5 Banks and top Canadian lenders. Take 2 minutes to answer a few questions and discover the lowest rates available to you.
Taxes and your insurance
Did you know you can claim insurance premiums back on your taxes? Some conditions and limitations may apply based on your personal situation. However, understanding which insurance expenses you’re eligible to deduct can help you maximize your returns. We created a handy insurance tax guide to help you discover what you can (and cannot) claim in Canada.
Learn more about taxes and insurance in Canada:
- Is life insurance tax deductible?
- How to use life insurance for tax and estate planning
- Is travel insurance tax deductible? What you need to know
- Is health insurance tax deductible in Canada?
- Is car insurance tax deductible in Canada?
- Is home insurance tax deductible in Canada?
- Can I claim home or tenant insurance on my taxes? A guide for landlords and renters
- Is small business insurance tax deductible in Canada?
- An ultimate guide to insurance tax write-offs for self-employed Canadians
Taxes and personal finance
When filing your tax return, don’t forget to report the income you’ve made outside of your job or business. When it comes to interest earned from your savings or investment accounts, your bank or financial institution will usually provide you with a T5 slip for reporting investment income. You can also minimize your taxes in various ways and potentially get a tax refund.
Read about all the things you should consider before filing your taxes.
Learn more about taxes and personal finances in Canada:
Types of tax-free accounts in Canada
Find the best GIC rates in Canada
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