Income taxes in Canada facts for kids
In Canada, if you earn money, you usually need to tell the government about it each year. This is done by sending in a special form called an income tax return. But don't worry, if you earn only a very small amount, you usually don't have to do this. Unlike some other countries, Canadians living outside Canada usually don't pay Canadian income tax unless they earn money from something in Canada.
The Canada Revenue Agency (CRA) is the government group that checks these tax forms. Sometimes, after they check, you might need to pay more money. Other times, the government might owe you money back, which is called a refund.
Most people who work for an employer pay income tax a little bit at a time throughout the year. Their employer takes money directly from their paycheque. This is called tax withholding. If too much money was taken from your paycheque during the year, you will get a refund when you file your tax return.
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Understanding Canadian Income Tax
Income tax in Canada can seem a bit complicated. It's based on a set of rules found in a very long document called the Income Tax Act. This act explains exactly how much tax people need to pay based on how much money they earn.
Why Do We Pay Income Tax?
You might wonder why we pay income tax at all! The money collected from income tax helps the government pay for many important things that benefit everyone in Canada. These include:
- Schools and education
- Hospitals and healthcare
- Roads and public transportation
- Parks and public services
- Support for families and seniors
So, when you pay income tax, you're helping to build and maintain the services and places that make Canada a great place to live.
When to File Your Tax Form
There's a special deadline each year for sending in your income tax return. For most people, this deadline is April 30th of the year after you earned the money. For example, for money you earned in 2023, you would file your tax form by April 30th, 2024.
What Happens if You Miss the Deadline?
It's important to send in your tax form on time, especially if you owe money to the government. If you miss the deadline and you owe money, you might have to pay extra charges. These extra charges are called interest and a penalty. They are added to the amount you already owe. So, it's always best to file your tax form before the deadline!
