Updated Checked by the Tax-Services.ca editorial team How we check
No, a raise can’t leave you with less money in Canada, because only the dollars above a bracket threshold are taxed at the higher rate. In Ontario in 2026, a $1,000 raise at $116,000 still adds about $621 to your take-home pay. That’s the first of ten tax myths below. Each gets a short correction, an official source where one exists, and a number from this site’s calculators where one fits.
Which ten tax myths come up most often?
| The myth | The short answer |
|---|---|
| A raise can shrink your pay cheque | No, brackets tax only the extra dollars |
| A big refund is a bonus | It’s your own money coming back |
| Filing a return invites an audit | Reviews and audits are different things |
| An RRSP always beats a TFSA | It depends on your tax rate now and later |
| Gifts and inheritances are taxed | Not to the person receiving them, with exceptions |
| The CRA takes gift cards | Never |
| No receipt, no claim | Other proof can work, and you keep records six years |
| Under 183 days means non-resident | Ties to Canada matter first |
| Capital gains are fully taxed | Half the gain is included in income |
| Write-offs are free money | They only trim the tax on money you already spent |
What do people get wrong about the CRA?
Does filing a return cause an audit?
No. The CRA says a review is a routine check of the information on your return and isn’t an audit, and that it picks audits through a risk assessment. Not filing is the bigger risk, because the CRA runs a non-filer program for unfiled returns. The CRA page on Canada Revenue Agency: how tax returns are selected for review explains the process, and our guide to CRA letters helps if one has already arrived.
Will the CRA ever take gift cards?
Never. The CRA says it won’t demand immediate payment by e-transfer, cryptocurrency, prepaid cards or gift cards, and it won’t threaten arrest, so anyone who does is a scammer. The Canada Revenue Agency: recognize a scam page lists what the agency will and won’t do. The CRA scams page covers what to do if you’ve already paid.
Can you claim an expense without a receipt?
Sometimes. You should keep records, but a missing receipt doesn’t automatically kill a claim. The CRA says to keep documents for at least six years, and proof can include cancelled cheques and bank statements as well as official receipts. Ask the seller for a duplicate and keep a note of what you did to get it. See Canada Revenue Agency: how long to keep your records.
Does 183 days decide if you’re a Canadian resident?
No. The CRA starts with your residential ties, such as a home, a spouse or common-law partner, and dependants in Canada. Keep significant ties while you live abroad and you can be a factual resident of Canada even after months away. The 183-day rule works the other way: someone with no significant ties who stays in Canada 183 days or more in a year is deemed a resident for the whole year. Read Canada Revenue Agency: determining your residency status, and consider Form NR73 or NR74 if you want an official opinion.
Are gifts and inheritances taxed in Canada?
The person receiving a gift or inheritance doesn’t pay income tax on it, but the estate may owe tax. When someone dies, the CRA treats them as having sold most of their property just before death, so the final return can show capital gains. An RRSP is generally included in income unless it passes to a spouse. The Canada Revenue Agency: capital gains on a final return page spells it out. The gifts page covers living gifts and the attribution rules.
Which myths cost people real money?
A raise drops your take-home pay
Canada’s brackets are marginal, so a raise is taxed at your top rate only on the extra dollars. Take an Ontario employee on $116,000 who gets $1,000 more. The site’s engine puts the extra take-home pay at about $621, which means roughly 38 cents on the dollar goes to income tax. Benefits that shrink as income rises, like the Canada Child Benefit, can bite harder. Your pay itself never falls. The tax brackets page has the bracket table.
A big refund is a bonus
A refund means you overpaid during the year, so the CRA is handing back an interest-free loan. A $1,200 refund works out to about $100 a month that was withheld and you couldn’t use. If you’d rather have it in your pay cheque, adjust your withholding. The refund timing page explains when the money shows up.
An RRSP always beats a TFSA
The RRSP wins when your tax rate now is higher than it’ll be at withdrawal, and the TFSA often wins when it isn’t. An Ontario worker on $50,000 who deducts $5,000 saves about $1,103 in tax. One on $120,000 saves about $1,995. Someone who earns little today and expects a bigger income later may do better in the TFSA. The TFSA versus RRSP calculator runs both cases.
Capital gains are fully taxed
Only half of a capital gain goes into income, so it’s taxed more lightly than pay. The inclusion rate stays at 50% in 2026, after the proposed increase was cancelled. On a $10,000 gain, an Ontario resident earning $90,000 pays about $1,483. The same $10,000 as extra wages costs about $2,991. Your own rate depends on your income and province.
Write-offs are free money
A deduction only reduces the tax on money you’ve already spent. A self-employed Ontario worker with $90,000 of net income who spends $1,000 on a legitimate business cost saves about $297 in tax and is out about $703. Spending to save tax makes sense only for things you’d have bought anyway.
Where does this information come from?
Rules come from Canada Revenue Agency pages on reviews, records, scams, residency and final returns as of October 2026; the dollar examples are estimates from this site’s Ontario 2026 tax engine. Checked in October 2026. This is an independent information site: we provide no services, we do not represent the CRA or any organization, and we do not guarantee that anything here is accurate or current. We accept no liability for decisions based on it. Check the official source before you rely on it. See the full disclaimer.
Frequently asked questions
Do I pay tax on my tax refund?
No. A refund is tax you overpaid, not income, so it doesn't go on next year's return. It's simply the gap between what your employer withheld and what you actually owed for the year.
How long do I need to keep my receipts?
Keep records and supporting documents for at least six years, counted from the end of the last tax year they relate to. If you file late, the six years run from the filing date. An objection or appeal extends the period until the matter is settled.
Does the CRA send refunds by e-transfer or text?
No. The CRA says it doesn't send refunds or payments by e-transfer or text message, and it won't email or text you a link to claim a refund. Refunds arrive by direct deposit or cheque after your return is assessed, so treat any link as a scam.
What is the difference between a CRA review and an audit?
A review is a routine check of something on your return, often a mismatch with a slip, and usually asks for proof of a claim. An audit examines your books and records more closely and is chosen through a risk assessment. A review letter doesn't mean you're being audited.