Filing your income tax in Canada as an expat

While the Canadian tax system can seem complicated, this guide explains what you need to know and how to file your return. Here are the topics we’ll cover in this guide:

Income tax in Canada: Overview and latest developments

Canada has a progressive income tax system, meaning that higher levels of income are taxed at higher rates. It consists of both federal and provincial/territorial income taxes. The Canada Revenue Agency (CRA) is the federal tax authority, and the tax year runs from 1 January – 31 December. Tax returns are generally due in the following year.

Income taxes in Canada help fund a wide range of services and programs, including healthcare, education, public transport, national defense, and social security. At the federal level, individual income tax is the largest source of revenue, accounting for about 50% of total federal revenue in 2023-24.

Most types of income are taxable in Canada, including:

• Employment and self-employment income
• Pension income
• Registered savings plans and withdrawals
• Investment income, such as dividends, or other earnings from investments
• Certain benefits, such as employment insurance
• Rental income
• Trust income
• Capital gains

Latest news about income taxes in Canada in 2026

The federal government delivered the 2025-26 budget in November 2025. Key income tax changes for the year include:

• Lowering the bottom federal income tax rate from 15% to 14%
• Adjusting the federal tax brackets for inflation (e.g., income threshold for the bottom income tax rate increased from CAD 57,375 to CAD 58,523)
• Increasing the contribution limits on savings plans (e.g., to CAD 7,000 for TFSAs and CAD 33,810 for RRSPs)

2026 Tax rates: How much tax will I pay in Canada?

Canada has five federal income tax brackets.

The tax rates for each bracket for 2026 are:

Income tax bracket	Tax rate
Up to CAD 58,523	14%
CAD 58,524 – 117,045	20.5%
CAD 117,046 – 181,440	26%
CAD 181,441 – 258,482	29%
Income above CAD 258,482	33%

To help estimate your federal income tax liability for the current year, the CRA offers an official payroll deductions online calculator on its website.

In addition to federal income tax, each province and territory applies its own rates. These vary in 2026 from around 5% to 25%, depending on where you live and how much you earn. Examples include:

• Alberta ranges from 8% on income below CAD 61,200 to 15% on income over CAD 370,220
• British Columbia ranges from 5.06% on income below CAD 50,563 to 20.5% on income over CAD 265,545
• Ontario ranges from 5.05% on income below CAD 53,891 to 13.16% on income over CAD 220,000

Who pays income tax in Canada?

The following groups pay income tax in Canada:

• Tax residents in Canada pay tax on their worldwide income
• Non-residents pay tax only on income earned within Canada

Canadian citizens living overseas are generally taxed based on their residency status rather than citizenship. However, they may still owe tax on Canadian-source income, such as pensions or investment savings.

💡 For tax purposes, the CRA recognizes three main categories of residents:

• Factual residents: People who have significant residential ties in Canada (such as a home, spouse, or dependents), even if they spend time living abroad
• Deemed residents: Individuals who stay in Canada for 183 days or more during the tax year and are not considered a resident of another country with which Canada has a tax treaty
• Non-residents: People who live outside of Canada and do not have significant residential ties with Canada

You can check your residency status through the CRA website.

Who needs to file a tax return in Canada?

📌 You need to file a tax return in Canada if you:

• Earn income from self-employment
• Owe tax on any income that hasn’t been withheld at source
• Want to claim a tax refund
• Disposed of capital property (e.g., real estate or investments)
• Want to receive certain benefits, such as the Canada Child Benefit or the Guaranteed Income Supplement
• Receive a request to file from the CRA

You may also need to file if you meet certain other requirements. See the CRA website for details. If your only income was employment income and enough tax was deducted, you may not be legally required to file if you don’t meet any of the other filing requirements.

If you are a Canadian citizen living abroad, you might need to file a tax return if you earn Canada-source income, for example from a Canadian pension or investments.

Canadian income tax for foreigners

If you’re a foreigner living in Canada, you’ll pay tax according to your residency status. This means you’ll pay tax on your worldwide income if your main residency is in Canada.

If you’re a non-resident earning money from a Canadian source (e.g., a remote worker), you’ll pay tax on this income only.

Canada has tax treaties with over 90 countries worldwide – including the US, the UK, Australia, and France – as well as a federal foreign tax credit. This helps to prevent double taxation.

💡 If you’re an expat in Canada, you may need to:

• Transfer money to pay taxes in your home country while living in Canada
• Pay Canadian tax on foreign income

Wise can help you avoid excessive currency conversion fees when making international transfers.

You can send low-cost international transfers, using the mid-market exchange rate with no hidden markups and open a Wise Account to receive payments in 20+ currencies.

Who is exempt from Canadian income tax?

Most people are not fully exempt from Canadian income tax, but you may owe no federal income tax in certain situations.

You generally do not owe Canadian federal income tax if your income is below the Basic Personal Amount (BPA), although you may still need to file.

💡 Those who don’t qualify as tax residents in Canada are exempt from income tax if their only source of income is from overseas.

You may also owe no income tax if your only income comes from sources that are not taxable, such as:

• Gifts and inheritances (Canada doesn’t have inheritance or gift taxes, although capital gains may apply on gifted properties)
• Most life insurance payouts
• Lottery winnings

➡️ Under Section 87 of the Indian Act, certain income earned by a Status Indian may be exempt if it is sufficiently connected to a reserve.

How do you file your tax return in Canada? 🇨🇦

The Canadian tax year runs from 1 January to 31 December each year. Tax returns are usually due by 30 April (or 15 June if you are self-employed) the following year.

Here is a brief explainer guide for filing your Canadian income tax return.

How to register for tax in Canada?

You will need a tax identification number to file and pay taxes in Canada. For most Canadian residents, this is your Social Insurance Number (SIN). Non-residents need to obtain an Individual Tax Number (ITN) instead.

Both of these are unique 9-digit numbers. You can apply for an SSN online, by mail, or in person at your nearest Service Canada Office.

To apply for an ITIN, you will need to complete an application form (T1261) and send it to the CRA along with supporting documents.

Which forms do I need to fill out?

You can file your federal return electronically or by mail. The main options are:

• Tax software using NETFILE
• Through a tax professional using EFILE
• Paper forms using the T1 income tax package
• SimpleFile or free tax clinics, available for people with low income and straightforward tax situations

You will need to have to following information to hand:

• Your tax number (SIN or ITN)
• Tax slips from your employer, such as T4 slips
• Income records for any self-employment or freelance work
• Details of income sources, such as rental income, investments, or pensions
• Records for deductions, credits, or refunds, such as charitable donations, medical expenses, or benefits statements

If you file your tax return electronically, the software will guide you through the sections you need to complete and select the required forms automatically. If you file by mail, the T1 package contains most of the forms you need to complete. Depending on your income and deductions, you may need to include additional forms such as:

• Schedule 1 – Federal Tax
• Schedule 3 – Capital Gains
• T2125 – Business or professional activities (self-employed)
• T776 – Statement of real estate rentals (rental income)

The CRA website has detailed information on what forms you need to complete, as well as links to the forms.

Deductibles and tax relief

There are many deductions, expenses, and credits that can reduce your Canadian tax bill. You can find a full list on the CRA website.

• Deductions and expenses reduce your taxable income – the amount of income you pay tax on
• Tax credits directly reduce the amount of tax you have to pay. Some are refundable (you get money back even if you owe no tax) while others are non-refundable (they only reduce the tax you owe to zero)

💡 Common deductions and expenses include:

• Registered Retirement Savings Plan (RRSP) deduction for private pension contributions
• Child care expenses
• Business expenses for self-employed or freelance work
• Mandatory union or trade organization fees
• Spousal support payments (Alimony)
• Moving expenses (if you move at least 40km closer to a new job, business, or school)

➡️ Common tax credits include:

• Basic Personal Amount (BPA) – non-refundable tax credit available to most tax residents. In 2026, the standard federal BPA is CAD 16,129.
• Canada Workers Benefit (CWB) – refundable tax credit to help working individuals and families on a low income.
• Canada Employment Amount – non-refundable credit for employment-related expenses
• Medical Expenses Tax Credit – non-refundable credit for eligible medical expenses above a certain threshold
• Charitable Donations Credit – non-refundable credit for donations to registered charities
• Age Amount – non-refundable credit for residents aged 65+ with incomes below a certain threshold

How do I pay my Canadian income tax?

You can pay your Canadian tax bill in several ways, including:

• Directly from your bank account
• By debit card, credit card, or money transfer
• Through your online account with the CRA
• At a Canada Post retail location

The CRA website provides full details on each payment option, including any fees and processing times.

📅 Taxes are generally due on 30 April each year, the same date your tax return is due.

This deadline usually applies even if you file a self-employed tax return, which generally isn’t due until 15 June.

If you are self-employed or do not have taxes withheld from your income, you may need to pay in quarterly instalments throughout the year.

If you have tax obligations in more than one country, a Wise multi-currency account can help you manage your money.

Wise allows you to hold and exchange funds in 40 currencies, and send low-cost payments to 140 countries.

Transfers use the mid-market exchange rate with no hidden fees, helping you to save money and making things easier when it comes to international tax.

Income tax refunds

If you pay more income tax than you owe, you may be entitled to a refund. You usually claim your refund when you file your tax return.

If you file electronically, your refund is calculated automatically. You simply choose how you want to receive it. The most common options are direct deposit to your bank account or a check sent by mail.

Refunds are typically processed within two weeks, although it can take up to 12 weeks for returns sent by mail. Amended paper returns can take up to 16 weeks to process.

You must file a tax return to receive a refund, even if you would not otherwise be required to file. If you do not file on time, you generally have 10 years from the original filing deadline to claim a refund before it expires.

You can use the progress tracker in your CRA account to check the status of your refund. If you disagree with the CRA’s calculation of your tax or refund, you can formally object through your CRA account or by submitting T400A. If it cannot be resolved, you can request an appeal through the Tax Court of Canada.

The IRS issued over CAD 45 billion in tax refunds in 2025.

What happens if I don’t pay my income tax on time?

⚠️ You may face a fine or penalty if you don’t:

• Pay your tax bill by the deadline
• File your tax return on time
• Provide accurate and complete information on your return

The standard late payment penalty is 7% interest on the unpaid bill. The CRA reviews these interest rates every three months.

If you fail to file your tax return on time, the standard fine is 5% of the unpaid tax plus an additional 1% for each additional month the return is late. Repeated late filing can lead to the doubling of these amounts (10% of unpaid tax plus an additional 2% for each extra month).

⚠️ Penalties for false reporting or omissions is the higher of the following two amounts:

• CAD 100, or
• 50% of the understated tax (or overstated credits)

The CRA charges interest on tax penalties at a daily rate.

Repeated failure to comply with Canadian tax laws can result in tax fraud charges, leading to large fines and even imprisonment in serious cases. If you face difficulties with paying your tax bill on time, you should contact the CRA as soon as possible, as you may be able to arrange an affordable payment plan or another relief option.

Income tax advice in Canada 🇨🇦

This is a general guide intended for informational purposes only and does not constitute professional advice. You should consult a qualified tax expert if you have any queries about your own situation.

If you are self-employed in Canada, it’s worth considering using a professional accountant and taking independent financial advice on business tax liabilities.

The CRA has free assistance tools as well as outreach tax help services. You can also check with provincial or territorial tax authorities for income tax help. If you are looking for advisors with expat and international tax expertise, services in Canada include:

• Experts For Expats
• HSBC Expat
• Taxes For Expats

💡 You can find information on choosing a financial advisor on the Government of Canada official website.

Useful resources

• Canada Revenue Agency (CRA) – federal tax authority in Canada (accessed 20 Feb 2026)
• List of provincial and territorial government sites in Canada (accessed 20 Feb 2026)
• Financial Advisors Association of Canada (Advocis) – find a tax expert in Canada