Key takeaways
- A refund means more tax was taken from your pay than you owe for the year
- Tax deducted is on your T4 slip, box 22
- RRSP contributions and other deductions usually increase a refund
- If you owe, pay by April 30 to avoid interest
- Newcomers often get a refund in their first year because they worked only part of the year
How a tax refund works in Canada
Your employer takes income tax off each paycheque based on your TD1 forms and pay. This is only an estimate. When you file your return, the Canada Revenue Agency (CRA) works out your real tax for the year. If more was taken than you owe, you get a refund. If less was taken, you have a balance owing.
The calculator does the same steps in simple form: it adds your income, subtracts deductions, applies the 2026 brackets and the basic credits, then compares the result with the tax you already paid.
What the calculator includes
- 2026 federal and provincial tax brackets for all 13 provinces and territories
- The basic personal amount, Canada employment amount, and credits for CPP and EI contributions
- The deduction for enhanced CPP contributions
- Ontario surtax, Ontario Health Premium and the Ontario low-income reduction
- The 16.5% Quebec abatement on federal tax
It does not include tuition, medical expenses, donations, moving expenses, childcare, the disability amount, or provincial rent and property tax credits. These all reduce tax, so your real refund may be larger.
Why newcomers often get a refund
Payroll tax assumes you earn the same amount all year. If you arrived in Canada in June and started working in July, your employer took tax as if you earned that pay for 12 months. Your real income for the year is lower, so you often get money back.
Filing also starts your benefits. The GST/HST credit (see our benefit estimator) and the Canada child benefit are based on your return, even if your income was low. Read filing your first tax return in Canada before you start.
Why you might owe
- You had two jobs. Each employer gave you the basic personal amount, so too little tax was taken.
- You had income with no tax taken: self-employment, rental income, interest or foreign income.
- You moved provinces during the year. You pay tax to the province you lived in on December 31.
If you owe, pay by April 30. File by April 30 as well (June 15 if you or your spouse are self-employed, but payment is still due April 30).
Worked example
Daniel lives in Ontario. He earned $55,000 in 2026 and his T4 shows $8,500 of tax deducted. The calculator estimates about $7,180 of income tax, including the $600 Ontario Health Premium. He can expect a refund of about $1,320. If he also contributed $3,000 to his RRSP, his refund would rise by about $600, to about $1,920. The saving is about 20% of the contribution, because most of the deducted income was taxed at 14% federal plus 5.05% Ontario.
Next steps
Choose a filing method: see the best tax software for newcomers. If you are not sure you must file, check do I need to file a tax return. To see how much tax an RRSP saves, try the RRSP tax savings calculator.