Taxation and Income 

1. Introduction to Taxes

Taxes are money that people pay to the government. We don’t pay taxes for fun — we pay them to help our communities. Taxes help pay for things that everyone uses, like hospitals, schools, roads, and buses. In Canada, almost everyone pays taxes in some way.

There are many types of taxes. One kind is called income tax. This is a tax on the money you earn from working. If you have a job, part of your paycheck goes to income tax.

Another kind of tax is GST (Goods and Services Tax). This is added to things you buy, like clothes, games, or food at a restaurant. Saskatchewan also has PST (Provincial Sales Tax), which is an extra tax added to most items you buy in the province. You don’t see this money go to the government directly, but it’s added to your bill when you shop.

So where does this tax money go?

Here in southern Saskatchewan, taxes help pay for:

• Hospitals like the Regina General Hospital

• Public schools in places like Moose Jaw, Swift Current, and Weyburn

• Snow plows and road repair trucks that keep highways safe in the winter

• Firefighters and police services

• Community programs and libraries

Without taxes, these things would not run properly.

Even if you don’t work yet, your family and neighbors are paying taxes every time they get paid or buy something. That money is shared by the government to make sure everyone gets access to things we all need — like clean water, safe roads, and health care.

In Canada, we have a saying: “We all pitch in.” That’s what taxes are — everyone helping out so we can live in safe, healthy, and well-run communities.

2. What is Income?

Income is the money you earn. You might earn it by working for someone else, or by running your own business. Some people earn income by working full-time, others part-time, and some earn money through small jobs or side hustles.

If you had the lesson on earning an income, you’ve already seen many ways people make money in southern Saskatchewan. Some work as teachers, nurses, or carpenters. Others sell beadwork, do lawn care, or run their own food businesses. All of these are ways to earn income.

People in your community might:

• Work in trades like welding or mechanics

• Run their own business from home

• Work in health care or education

• Do seasonal jobs like farming, snow removal, or guiding land-based activities

• Sell crafts, art, or baked goods

• Share culture and knowledge through workshops or consulting

Income can come in different forms. Two of the most common are:

• Wages – money you earn by the hour, day, or week. For example, you might earn $15 per hour working at a grocery store.

• Salary – a set amount of money you earn each year, no matter how many hours you work. For example, a teacher might earn $70,000 per year.

There is also freelance income, where you work for yourself and do short jobs for different people. And entrepreneurship, where you run your own business.

Another important part of income is knowing the difference between gross income and net income:

• Gross income is the total money you earn before any taxes or deductions are taken off.

• Net income is what you actually take home after taxes and other costs are removed. This is the money you can spend or save.

For example, if you earn $500 from a job, you might only get $420 after taxes are taken off. That $420 is your net income — it’s what ends up in your pocket.

Knowing how you earn income — and what happens to it — helps you make better choices with money.

3. How Taxes Affect Your Pay

When you start working and get your first paycheck, you might notice something surprising — you don’t get to keep all the money you earned.

That’s because some money is taken off your pay. These are called deductions, and they include taxes and other payments that go to the government. This is normal. Everyone who earns income in Canada has some money taken off their pay.

Let’s break it down.

Here’s What Comes Off Your Pay:

1. Income Tax
   This is the biggest deduction. It goes to the government to pay for things like hospitals, roads, and schools.

2. CPP (Canada Pension Plan)
   This helps give you money when you retire. You start paying into it once you earn over a certain amount in a year.

3. EI (Employment Insurance)
   This gives you money if you lose your job or need to take time off for family or health reasons.

These deductions are taken off your gross income — the total money you earn. What’s left is your net income, also called your “take-home pay.”

Example: A First Paycheck

Let’s say you work part-time at a grocery store in southern Saskatchewan. You earn $15/hour and work 20 hours in one week.

Gross Pay (before taxes):
$15 × 20 hours = $300

Deductions might look like this:

• Income Tax: $25

• CPP: $13

• EI: $6

Total Deductions: $44
Net Pay (after deductions):
$300 – $44 = $256

Even though you earned $300, you only take home $256. That’s the money you actually receive.

Why Does This Matter?

Understanding how taxes work helps you plan. It teaches you that your pay stub (the paper or digital summary of your paycheck) shows more than just how many hours you worked. It also shows:

• Gross income

• Deductions

• Net income

Knowing this helps you:

• Avoid surprises when your paycheck is smaller than expected

• Understand where your money is going

• Learn how to read and check your pay stub

Even if you’re only working a few hours a week or helping with seasonal work, it’s good to get in the habit of checking your deductions and understanding what’s being taken off.

In the next section, you’ll learn how some of those deductions — like taxes — can be lowered through credits and deductions when you file your tax return.

4. Tax Deductions and Credits

When you earn money, you pay taxes. But did you know there are ways to lower the amount of tax you owe? That’s where tax deductions and tax credits come in.

They don’t give you money right away — but they can help you pay less tax or get some money back later. This happens when you file a tax return (which we’ll talk about in the next section).

Let’s look at what these terms mean.

What is a Tax Deduction?

A tax deduction is an amount of money you can subtract from your total income before the government calculates your tax.

That means if you made $10,000 in a year, but had $1,000 in deductions, the government only taxes you on $9,000.

Some common tax deductions include:

• Tuition fees if you are taking classes

• Childcare expenses if you pay for someone to look after your child

• Moving costs if you moved for school or work

• Union or work-related fees

What is a Tax Credit?

A tax credit is an amount of money that reduces the amount of tax you have to pay — or increases the money you get back as a refund.

There are non-refundable tax credits, which lower the tax you owe, and refundable tax credits, which can give you money even if you don’t owe any tax.

Here are a few examples that might apply to people in southern Saskatchewan:

1. GST Credit (Goods and Services Tax Credit)

• This is money the government gives back to low-income Canadians, including youth and students.

• You don’t need to pay GST to get this — you just need to file your taxes.

2. Canada Workers Benefit (CWB)

• If you earn a small income from working, this credit gives you a refund.

• Even part-time workers might qualify.

3. Saskatchewan Low-Income Tax Credit (SLITC)

• A tax credit for Saskatchewan residents with low or modest income.

• It is paid every 3 months, and you qualify automatically if you file your taxes and meet the income level.

For First Nations Students: Taxes and Treaty Rights

Some First Nations people with status cards may not have to pay taxes on certain income or purchases — depending on where and how they earn or spend their money. This is linked to treaty rights and Section 87 of the Indian Act (yes, it is still called the "Indian Act" in Canada).

Here are a few key points:

• Income earned on a reserve may not be taxed if both the employer and the job are on a reserve.

• Purchases made on a reserve by a status card holder are not charged GST or PST if the item is delivered or bought on-reserve.

• These tax exemptions do not apply to everyone or every situation. The rules depend on where you live, where you work, and how your income is earned.

• Even if you don’t owe tax, it’s still important to file a tax return. This is how you get benefits like the GST credit or child benefits.

If you’re not sure whether your income is tax-exempt, you can:

• Talk to a tax professional or someone at a free tax clinic

• Ask your Band office or Indigenous employment support worker

• Visit the Canada Revenue Agency (CRA) website for details

Filing your taxes can still help you get refunds, credits, and benefits, even if you don’t pay income tax.

5. How to File a Tax Return

Filing a tax return means telling the government how much money you made during the year — and how much tax you paid. You do this by filling out a special form and sending it to the Canada Revenue Agency (CRA).

When you file a tax return, the CRA checks to see:

• If you paid too much tax (you get money back — called a refund)

• If you paid too little (you might owe more)

• If you qualify for money like the GST credit, Canada Workers Benefit, or other supports

Even if you earned a small amount or didn’t pay tax, you should still file. Many young people in Saskatchewan get hundreds of dollars back through credits.

Who Should File a Tax Return?

You should file a return if:

• You had a job (even part-time or seasonal)

• You earned self-employment income (like babysitting or selling art)

• You want to get benefits like the GST credit

• You are 18 or older (this is when you can start getting credits)

What You Need to File

Before you file your tax return, collect these things:

• SIN (Social Insurance Number): A 9-digit number you need for work and taxes

• T4 Slip: A form your employer gives you showing how much you earned and what was taken off

• Receipts: For things like tuition, rent, or donations

• Bank account info: To get your refund by direct deposit

• Status card (if you are First Nations): If you qualify for tax exemptions

Keep these documents in a safe place. You may need them again later.

Ways to File a Tax Return

You can file your taxes in a few different ways:

1. Online (for free)

• Use free tax software like SimpleTax, Wealthsimple Tax, or TurboTax Free

• Good if you feel confident using a computer

• CRA’s website (cra.gc.ca) has a list of approved tools

2. With help from a free tax clinic

• These clinics help people with low income, for free

• Many are run by community centers, schools, or libraries

• In southern Saskatchewan, you can often find clinics in places like Regina, Moose Jaw, or Yorkton

Visit: canada.ca/taxes-help to find a free clinic near you

3. By mail

• You can still fill out paper forms and send them by mail

• Slower, but some people prefer it

• You can order the forms online or by phone through the CRA

What Happens After You File?

After you file your tax return, the CRA will:

• Review your form

• Send you a Notice of Assessment (a letter showing what they checked and what you’re getting back)

• Send you your refund, if you are owed money

  • This could take a few days (for online filing) or a few weeks (for mail)

Common Refunds and Benefits

Here are some examples of what you might get back after filing:

• GST Credit: Money sent every 3 months — many students qualify

• Saskatchewan Low-Income Tax Credit: Paid automatically if you qualify

• Canada Workers Benefit: A refund for people earning low income

• Tuition Tax Credit: Helps you get some money back if you took classes

Even if you didn’t earn very much, you might still get these benefits. Filing is the only way to get them.

Where to Get Help

If you're unsure about how to file:

• Ask a trusted adult, teacher, or school counselor

• Go to a free tax clinic

• Contact the CRA at 1-800-959-8281

• Visit: cra.gc.ca

It might seem confusing at first, but many people are happy to help you learn.

6. Why Filing Taxes is Important

Some people think they don’t need to file taxes if they don’t make much money. But in Canada, even if you only earn a little, it’s still a good idea to file a tax return every year.

Why? Because filing helps you:

• Get money back

• Get benefits and credits

• Keep things simple and safe with the government

Here’s how it works.

1. You Might Get a Refund

When you work, your employer usually takes tax off your pay — even if you don’t earn very much. When you file your tax return, the government checks if you paid too much. If you did, you get some of that money back. This is called a tax refund.

Example:

• You earn $5,000 working part-time

• Your employer takes $200 in taxes

• You file your taxes

• CRA checks and sees you didn’t need to pay that much

• You get a refund of some or all of that $200

That money goes straight to your bank account — but only if you file!

2. You Can Get Government Benefits

The government gives money to help people with low income — but only if you file a tax return.

Some examples:

• GST Credit: Money every 3 months, even if you didn’t pay any GST

• Saskatchewan Low-Income Tax Credit: Paid 4 times a year

• Canada Workers Benefit: If you earned even a small amount of income

Even if you earned just a little — from babysitting, farm work, or a part-time job — these programs might give you hundreds of dollars back each year.

3. Filing Protects You

When you file your taxes:

• The CRA has the right info about your income

• You avoid late fees or missed paperwork in the future

• You build a good record with the government

Later in life, filing your taxes will help you:

• Apply for student loans or grants

• Get credit cards or loans

• Prove your income when applying for housing or programs

It’s like keeping your money life organized.

4. It Helps Even If You Don’t Owe Anything

Many students don’t make enough to pay tax — and that’s okay. But you should still file. Why?

• To carry forward tax credits (like tuition) for future years

• To keep your benefits active

• To learn the process early so it’s easy later

You’re building a habit that will help you every year.

Final Tip

Think of tax time as a check-in with the government. You tell them what you earned, and they check if they owe you anything — not the other way around.

Even if you think you don’t need to file, it’s worth doing. You might be surprised how much money is waiting for you.

7. Vocabulary

These are important words from this lesson. Each one includes a short, plain definition and a simple sentence to show how the word is used.

1. Income

What it means: Money you earn from working or running a business.
Example: Jordan earns income by working at a grocery store after school.

2. Tax

What it means: Money you pay to the government to help pay for things like roads and hospitals.
Example: When you buy clothes, you pay tax on top of the price.

3. Deduction

What it means: Money taken off your paycheck before you get it.
Example: Deductions like income tax and CPP came off her pay.

4. Net Income

What it means: The money you take home after deductions.
Example: Liam’s net income for the week was $320 after taxes were taken off.

5. Tax Return

What it means: A form you send to the government to show how much money you earned and taxes you paid.
Example: They filed their tax return and got a refund a few weeks later.

6. Refund

What it means: Money the government gives back to you if you paid too much tax.
Example: She got a $150 refund after doing her taxes.

7. T4

What it means: A form from your employer that shows how much money you made and what was taken off.
Example: Jayden used his T4 to fill out his tax return.

8. CPP (Canada Pension Plan)

What it means: A plan that helps you get money when you retire; you pay into it from your paycheck.
Example: CPP is one of the deductions on her pay stub.

9. EI (Employment Insurance)

What it means: A program that gives money if you lose your job or take time off for certain reasons.
Example: He paid into EI in case he ever needs it.

10. SIN (Social Insurance Number)

What it means: A 9-digit number you need to work or get benefits in Canada.
Example: You need a SIN to get a job or file taxes.

11. CRA (Canada Revenue Agency)

What it means: The part of the government that deals with taxes and benefits.
Example: The CRA sent her a letter after she filed her taxes.

12. Credit (Tax Credit)

What it means: An amount that helps you pay less tax or get money back.
Example: He got a tax credit and received extra money in his refund.