Canadian taxes - part 1

So while I'm on a blogging roll, how about I share my experiences of lodging tax returns in Canada.  Now that the initial debacle is over, its quite humorous really.

So the tax year here coincides with the calendar year, so January to December.  So that makes life a bit easy.  However, as I found out the hard way, employers have until the END OF FEBRUARY before they have to send out your income information, known as a T4.  For years, I have lodged my tax return usually in the first week of when the tax dept takes returns!  After my initial annoyance at having to wait for so long, I decided that would be ok, as I would have the money for March break, so its all good.

So finally, early March, I have my T4 in my hot little hand, and so starts the process of working out my taxes.  I hunted and hunted throughout the tax dept's website for how to lodge - I've been e-filing for years, simple and quick, a totally painless way to do taxes.  Not so in Canada!  While Canada does offer e-filing, you need to use an authorised taxation software program, which you buy at the store.  WHAT????  Sneaky tax dept!  But worse, because this would be my first time lodging in Canada, I was not allowed to e-file!  NNOOOO!!!!!

So, against my better judgement, I went to a tax agent who offered same day returns.  With March break quickly looming, I wanted my return now!  I had plans for that money!  So I went to the tax agent, along with half the town it would seem, and waited for several hours for my turn to be seen.  I finally got into the little office and started the process of having someone else do my return.  Then she started going on about having to file it through the international division, and it would take weeks to go through.  Huh?  no no, you offer same day returns!  But alas, no, I apparently didn't qualify for that. I would have to lodge a paper return, and not expect a return any time soon.  Well, there was no way I was going to pay someone else to do what I could do myself if I wasn't going to get the return any quicker, so back home I went.

Next up - actually working out my return using the paper forms.  Confusing doesn't even begin to explain the process.  It started out quite simply - plotting in the information from my T4 into the appropriate squares. Having only one job and one source of income, this was relatively easy.  Then I turned the page.....

Next was question after question about RRSP's, UCCB, CPP, and the like.  Huh?  What the hell are they?  Well, if I don't know, I'm guessing I don't get that.  Onto the next bit I go. More questions about deductions and loans, blah blah blah.  Finally I get to the magical box at the bottom stating this figure is my Taxable Income. Which is not to be confused with my actual income or my net income.  Ok....so far, so good.  Turn the page again....

Now this is where things get hairy.  First I have to work out my federal tax.  This involves a completely separate form full of a few more confusing questions.  Once I had that sorted out (this process may have been simplified had I imbibed in a few glasses of relaxing alcohol - hey, I wonder if *that* would then count as a tax deduction?), then it was time to work out my Provincial tax.  What?  How much friggin tax do I need to pay?  The Canadian tax dept is very sneaky.  They *appear* to have a low tax rate, but that's just the federal tax rate!  Then you also have to pay tax for the province you live in - and that tax rate is different in every province! And wouldn't you know it, I've picked the province with one of the highest tax rates!  Oh goodie!

So finally, I worked out ALL the tax amounts, do a bit of brain numbing arithmetic, and come to the glorious conclusion - I'm owed a tax refund!  WOOHOO!!!!

After a double check that everything is added and subtracted correctly, I place all the required forms into the brown envelope and send that sucker away.  I was a bit bummed that I wouldn't get my return in time for March break, but oh well.  It would be here in time for Summer break instead - which would be handy for our trip to PEI. 

So I sit back and relax for the next 6 weeks, waiting waiting.  Finally I call the tax dept and ask how much longer I have to wait.  It is now that the real frustrations begin.  I'm told that because it is my first year filing a tax return and I'm a foreigner, my tax return has to be processed manually by the international office. Crap, the tax agent was right about that!  But, I explained, I'm not living overseas or earning money overseas, so why does it still get processed through the international office?  Because that's how they've always done it.  Gee, swell.  So I get told if I have still heard nothing, call back in 2 weeks.

Fast forward a few months, and many many phone calls later......our summer trip to PEI had come and gone, and still no return.....

After a few phone calls, I finally managed to speak to a lovely lady in the international office.  Oh, how's this for ironic - whenever I called the tax dept, I would speak with someone with a heavy foreign accent.  But when I spoke to someone from the international office, they always had a Canadian accent.  hahahaha  Anyway, back to my saga.  The lovely lady gave me her direct line to call for updates, which was very handy.  And she took the time to explain the long drawn out process.  So what they do with anyone new to the country, they put a request out to every country to see if you're earning money there, and then have to wait to get a response back (not sure if it was every single country, or just countries i had lived in - doesn't matter, its a slow process anyway).  So finally, she tells me that everything is in order, and that my return can now be lodged.  WHAT????

So now I find out that this whole time was spent simply determining if I could legally lodge a tax return!!!  Seriously? I said to her, really, if I wasn't here legally, I wouldn't be stupid enough to lodge a tax return.  Apparently not all foreigners think like me, and it is surprising how many illegal people DO lodge a return!  But, I was told that it should be only a few more weeks now!  oh joy....

The long and short of it (who am I kidding, there was no SHORT in any of this story) it took just over 6 months to get my return!  But I was assured repeatedly that the next return would be MUCH faster!  Here's hoping....I have plans for that next return too....  :)

So the moral of the story....there isn't one.  Canadian taxes are confusing and you pay a lot of it.  End of story!  Actually, there was one good thing - children are worth a pretty decent tax break.  I should collect a few more of them!