Opening a TFSA Account

Last February, I opened my first step to retirement.  Since I'm not yet eligible to use any RRSP contribution for tax credit purposes, I opened a TFSA account for the meantime.  For those not familiar with the TFSA (Tax Free Savings Account), it is a type of an account that will not be taxed on it interest earning.  The contribution limit today is $5,500 plus last years unused limit of $5,000.  I'm planning to maximize my contribution limit and try to diversify my investments.  So far, I only have a savings account. =(.  Oh well, one step at a time.

Income Tax Filing

One of the main difference of Canada vs the Philippines is the Income Tax Filing.  I'm now preparing our first income tax filing and it's very complicated.

In the Philippines, if you are employed, your company will compute for your form 2316.  You will just have to sign it and they will take care of the filing.  Your tax refund or payable will be computed in you December salary and will be added or subtracted depending on the tax withheld.

Here, they employ the "honesty" system and every individual has to file their returns.  Employees would received their T4 from their employees and need to transfer the amounts in the correct line in the tax forms.  This is were it gets tricky.  You may not be able to subtract anything from your income, but there are a lot of tax credits like donations, public transit, tuition fee, books and trades tools available at your disposal.  Just be aware of it because every year Canada Revenue Agency will implement new laws and amounts.

If you belong to the low income families, you may also be eligible for some benefits like Working Income Tax Benefit, HST/GST credit or in our case, Ontario Trillium benefit.

Anyway, just a last minute advise, file early so that your refund will arrive early. =)