Welcome to Canada, newcomers! We’re thrilled to have you in our country, where you’ll be part of a vibrant culture that includes hockey, maple syrup, breathtaking Rocky Mountains, pristine lakes, and, of course, income taxes, filing taxes as new Canadian. But don’t worry!
Filing Taxes as New Canadian: Understanding Tax Obligations and Benefits for New Canadians
As a newcomer to Canada, it’s important to familiarize yourself with the tax obligations and benefits that apply to you. Let’s delve into the details:
What does being a “new Canadian” mean for tax purposes? Being a “new Canadian” refers to immigrating to Canada within the current tax year. This designation applies only for your first tax year as a new resident of Canada. After that, you are no longer considered a newcomer for income tax purposes.
Do newcomers have to file a tax return?
Yes, if you are a resident of Canada for part or all of a tax year (January 1st to December 31st), you must file a tax return. Even if you haven’t earned any income during the year, filing a tax return is necessary to continue receiving government benefits and credits available to you.
How do you become an official resident of Canada for tax purposes?
You become a resident of Canada for income tax purposes when you establish important residential ties in the country. This typically happens on the date you arrive in Canada. Examples of residential ties include:
Having applied for or received permanent resident status from Immigration, Refugees and Citizenship Canada.
Receiving “approval-in-principle” from Immigration, Refugees and Citizenship Canada to stay in Canada.
Being a protected person, including refugees, as defined by the Immigration and Refugee Protection Act.
What are the benefits and credits available to newcomers?
Both provincial and federal tax credits and benefits are offered. To be eligible for these benefits, you must be a permanent resident, even if you have a temporary address or protected person status. It is recommended to apply for these benefits as soon as you obtain your social insurance number (SIN), which can be obtained in person at any Service Canada Centre or by mail.
Are there any deductions that newcomers can claim?
Yes, there are various deductions available. A tax expert can assist in determining if you qualify for deductions such as moving expenses, pension splitting with a spouse or partner, claiming dependents you support at home, and more.
Additional Considerations:
If you were a resident of Canada in a previous year and are now a non-resident, you will be considered a resident for income tax purposes upon your return to Canada.
When bringing valuable items like shares, paintings, or jewelry into Canada, their value will be assessed at the Canadian Fair Market Value.
Losses from selling, giving away, or losing property can only be deducted from gains made from selling the same type of property, not from other types of property.
In Quebec, you need to file both provincial and federal tax returns, while in the rest of Canada, only federal taxes need to be filed.
For the period you were not a resident of Canada, you must report income from Canadian jobs or businesses, the sale of Canadian property, and taxable portions of scholarships, bursaries, fellowships, and research grants received from Canadian sources.
For the period you were a resident of Canada, you must report worldwide income earned after becoming a resident for income tax purposes on your Canadian tax return.
Generally, if you have protected person status and receive money from a charity, such as a church group, you do not have to report those amounts on your tax return. However, if the charity employed you, the employment income received is taxable.
