Tax in Canada: What Australians Need to Know in Their First Year

Tax season in Canada can feel overwhelming when you’re used to the Australian system. In Australia, most employees have tax handled via PAYG withholding and the end-of-year process is relatively straightforward. In Canada, everyone files a return - it’s not optional - and the system has a few quirks that catch newcomers off guard.

This guide covers what you need to know in your first year as a Canadian tax resident.

When do you become a Canadian tax resident?

This is the first question to answer. Canada uses a residency-based tax system, and you become a tax resident when you establish significant residential ties to Canada - typically when you land with a work permit and set up a home, open a bank account, and start working.

How Canadian tax is structured

Canada has both federal and provincial income tax, and both are calculated on your same taxable income. You pay both, and they stack.

Federal tax rates (2025):

• Up to $57,375: 15%
• $57,375 to $114,750: 20.5%
• $114,750 to $158,519: 26%
• $158,519 to $220,000: 29%
• Over $220,000: 33%

On top of this, you pay provincial tax. Rates vary significantly:

• Alberta has the lowest combined rates - no provincial tax on the first $148,269 of income, and lower rates above that
• Ontario adds approximately 5.05% to 13.16% depending on income
• BC adds approximately 5.06% to 20.5%
• Quebec has the highest combined rates, adding 14% to 25.75%

For a practical example: if you earn CAD $80,000 in Ontario, your combined federal and provincial effective tax rate is roughly 22-24%, giving you a take-home of around $61,000-$62,000.

The tax year and filing deadline

The Canadian tax year runs from 1 January to 31 December - the same calendar year, which is simpler than Australia’s 1 July to 30 June financial year.

The deadline to file your return is 30 April of the following year. If you or your spouse are self-employed, your deadline extends to 15 June, but any tax owing is still due 30 April.

In your first year as a partial-year resident, you file a return covering only the period from your arrival date to 31 December.

What you need to file

To file your first Canadian return, you’ll need:

• T4 slips from any employers (the Canadian equivalent of Australia’s payment summary). Your employer provides these by the end of February
• Social Insurance Number (SIN) - essential for any tax filing
• Your arrival date in Canada, which affects your residency status for that year
• Details of any foreign income received while you were a Canadian resident
• RRSP contribution room if applicable (more on this below)

If you’re filing for the first time, you cannot file online via My Account with the CRA until your account is set up with a previous year’s return. In your first year, you’ll likely need to file a paper return or use tax software like TurboTax, H&R Block, or Wealthsimple Tax.

Key deductions and credits

Basic Personal Amount (BPA). Everyone gets a non-refundable tax credit on the first ~$15,705 of income (2025 figure). This effectively means the first $15,705 you earn in Canada is tax-free.

RRSP (Registered Retirement Savings Plan). This is Canada’s version of a superannuation-style tax-deferred savings account. Contributions to an RRSP reduce your taxable income dollar-for-dollar, up to 18% of your previous year’s earned income (maximum $31,560 in 2025). In your first year, your contribution room is based on the prior year - which for a new arrival is typically zero, since you had no Canadian earned income. You start accumulating RRSP room from your first year of Canadian employment.

Moving expenses. If you moved more than 40km closer to a new workplace or educational institution, you may be able to deduct eligible moving expenses including airfare, shipping costs, and temporary accommodation.

Union dues and professional fees. If you pay dues to a professional association or union, these are deductible.

Childcare expenses. If you have children and pay for childcare, these are partially deductible.

GST/HST credit. Most newcomers to Canada qualify for the GST/HST credit - a quarterly payment from the government to help offset the cost of sales tax for lower and middle income earners. You apply for this on your first tax return.

Canada Child Benefit (CCB). If you have children under 18, you qualify for the Canada Child Benefit - a monthly tax-free payment that can be substantial depending on your income and number of children.

Things Australians find different

You file even if you owe nothing. In Australia, if your tax was withheld correctly you might not need to do much. In Canada, everyone files a return regardless. Failing to file can result in penalties.

Provincial tax is separate. Your T4 slip shows federal and provincial tax withheld. You file one return (the T1) that calculates both, but the provincial component is specific to the province you were resident in on 31 December.

There is no equivalent to the Medicare Levy. Your provincial health insurance is separate from your tax - you apply for it directly with the province.

Superannuation doesn’t translate directly. Your Australian super stays in Australia. You cannot transfer it to an RRSP on a tax-advantaged basis. The tax treaties between Australia and Canada allow you to access your Australian super without paying Canadian tax on it in most cases, but get specific advice on this before you withdraw anything.

Should you use a tax accountant?

In your first year, yes - particularly if you have foreign income, investments, or an Australian property. The first return is the most complex because of the partial-year residency and the need to establish your tax history with the CRA. A Canadian accountant familiar with Australian newcomers will pay for themselves.

From year two, most straightforward employees can file themselves using Wealthsimple Tax (free) or TurboTax.

The bottom line

Canadian tax is not dramatically harder than Australian tax - it’s just different. The key things to get right in your first year are establishing your Canadian tax residency date correctly, filing on time, and claiming the GST/HST credit and CCB if you’re eligible. Sort out a good accountant for year one, understand the RRSP system early, and you’ll be in good shape.

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