July 11, 2009

Things Needed to Know about Tax and Social Benefits.

You’ve just come to Canada for a while. You try to adapt to society, find a job and integrate with the labor force. Then, boom! You have a mail from Canada Revenue Agency asking you to claim your income tax. What is that? How to claim income tax? Where should I go to do this, how to start? Lucky you! Thanks to annual volunteers in Service Canada located in Alvin Hamilton Building, 1783 Hamilton Street, Regina, you can get help for free. The deadline to submit your tax return is April 30th of each year.

After spending some time to get acquaintance with Regina's life, you should check out what you can have from Government. There are some government benefits that you and your family members will be eligible for. This is really nice thing about this country. You can see it here.

Canada's tax system is similar to that of many countries. Employers and other payers usually deduct taxes from the income they pay you, and people with business or rental income normally pay their taxes by instalments. Many of the benefits people enjoy in Canada are made possible through taxes. Canada’s tax system pays for roads, public utilities, schools, health care, economic development, cultural activities, defence, and law enforcement.

Each year, the Canada Revenue Agency (CRA) promotes compliance and taxpayer education through many review programs. Under some programs, CRA review a number of deductions and credits on the individual income tax return and ensure that various income amounts have been correctly reported. CRA also review benefits and credits such as the Canada Child Tax Benefit (CCTB) which is a tax-free monthly payment made to eligible families to help them with the cost of raising children under age 18. The CCTB may include the National Child Benefit Supplement (NCBS) and Child Disability Benefit (CDB).

Beside CCTB, the goods and services tax/harmonized sales tax (GST/HST) credit is also reviewed: “GST is a tax that you pay on most goods and services sold or provided in Canada. In some provinces, GST has been blended with provincial sales tax and is called HST. The GST/HST credit helps individuals and families with low and modest incomes offset all or part of the GST or HST that they pay. We will base your credit on the number of children you have and on your family net income. This information is also used to calculate payments from related provincial programs. To receive the GST/HST credit, you have to apply for it.” – Canada Revenue Agency.

If you have young children, do not forget to apply for Universal Child Care Benefit (UCCB) which is designed to help Canadian families, as they try to balance work and family life, by supporting their child care choices through direct financial support. The UCCB is for children under the age of 6 years and is paid in instalments of $100 per month per child.

Usually, when you put your money in a certain saving account in any banks in Canada, the interest created will be taxed. However, this will not happen with your TFSA. Starting in 2009, Canadian residents who are 18 years of age or older will be able to earn tax-free investment income within a Tax-Free Savings Account (TFSA) during their lifetime. The income generated in such an account (for example, investment income and capital gains) is tax-free, even when it is withdrawn. The TFSA dollar limit is $5,000 in 2009, and will be indexed to inflation and rounded to the nearest $500 in later years.

When you have a job, then a career, you will need to save aside an amount of money so that you can use this sum when you retire your job. If you earn 70,000$ per year, you will be taxed 11% for the first $ 40,113, then 13% for the next $ 74,497, then 15.0% on any remainder. If you put $ 30,000 to your RRSP account, it will still be $30,000 due to tax-free feature. The money you put aside will increase with time through the way you will investment. Its interest will be tax-free unless you cash in, make withdrawals, or receive payments from the plan. I am talking about Registered Retirement Savings Plan (RRSP). An RRSP is a retirement plan that we register and that you or your spouse or common-law partner establish and contribute to. Deductible RRSP contributions can be used to reduce your tax. Come with RRSP are HBP and LLP.

The Home Buyers' Plan (HBP) is a program that allows you to withdraw up to $25,000 from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability .The Lifelong Learning Plan (LLP) allows you to withdraw amounts from RRSPs to finance training or education for you or your spouse or common-law partner. You cannot use the RRSP funds to finance your children's training or education, or the training or education of your spouse or common-law partner's children.

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