For any newcomers to Canada, welcome to our country! As a new Canadian, you are now part of a rich history of hockey, maple syrup, Rocky Mountains, fresh water lakes and, of course, income taxes. But don’t fear, Danielle’s SOS Financial is here to help.
First, let’s establish what ‘new Canadian’ really means. It means you immigrated to Canada this year. It applies only for the first tax year that you are a new resident of Canada for income tax purposes. After your first tax year in Canada, you are no longer considered a newcomer for income tax purposes.
A resident of Canada for part or all of a tax year (January 1st to December 31st) must file a tax return. Even if you haven’t made any money in the year, you have to file a tax return to continue receiving the government benefits and credits available to you.
And what makes you an official resident?
You become a resident of Canada for income tax purposes when you establish important residential ties in Canada. You usually establish these ties on the date you arrive in Canada.
People who have applied for or received permanent resident status from Immigration, Refugees and Citizenship Canada
People who have received “approval-in-principle” from Immigration, Refugees and Citizenship Canada to stay in Canada
Protected persons (including refugees) within the meaning of the Immigration and Refugee Protection Act
Tell me more about benefits and credits.
Tax credits and benefits are offered both provincially and federally. To get these benefits, you should apply right away, but to receive them, you must be a permanent resident (even if you just have a temporary address, or a protected person). You should apply for these benefits as soon as you get your social insurance number (SIN). You can apply for a SIN number in person at any Service Canada Centre or by mail.
So, what deductions can you claim?
There are many, and a tax expert can help determine if you’re able to claim moving expenses, split your pension with a spouse or partner, if you can claim dependents who you still support at home and more.
A few other things to consider:
If you were a resident of Canada in an earlier year, and you are now a non-resident, you will be considered a resident of Canada for income tax purposes when you move back to Canada.
When entering Canada with value items like shares, paintings and jewelry, their value will be marked at the Canadian Fair Market Value.
If you have a loss from selling, giving away or losing your property, you can only deduct this loss from any gains you had from selling the same type of property. You cannot use this type of loss to reduce any capital gains you had from selling other types of properties.
In Quebec you have to file two sets of tax returns: provincial and federal; however in the rest of Canada, you only have to file federal taxes.
For the part of the tax year that you were not a resident of Canada you have to report income from any jobs held in Canada or from a business carried on in Canada, the sale of any Canadian property and taxable parts of scholarships, bursaries, fellowships, and research grants you received from Canadian sources.
For the part of the tax year that you were a resident of Canada, you have to report your world income earned after becoming a resident of Canada for income tax purposes on your Canadian tax return.
If you have protected person status and you received money from a charity such as a church group, you generally do not have to report the amounts on your tax return. However, if a charity hired you as an employee, the employment income you received is taxable.