Firstly, welcome to Canada! As a newcomer who has travelled thousands of miles to set roots in Canada recently, there are a few things you need to know about your taxes.
Understanding which credits and deductions you can claim can be confusing for anyone, let alone for newcomers. However, the silver lining is the numerous benefits to filing taxes, and new Canadians are eligible for the same tax credits and deductions as those who are Canadian citizens.
Residency status and tax obligations:
Many of your tax obligations will depend on your residency status in Canada. The Canadian Revenue Agency (CRA) determines official residency, when you establish significant residential ties to Canada. Significant residential ties in simple terms could involve owning a home, having a spouse or kids in Canada. This may also include secondary ties, such as possession of a driver’s license, health insurance and personal property including cars or furniture.
Newcomers to Canada include protected persons, individuals who have applied for or received permanent residency status from Citizenship and Immigration Canada, or individuals who have received approval in principle to reside in Canada.
Obtaining a Social Insurance Number (SIN) from Service Canada should be your first step on arrival. You need this to file your tax return and to receive credits and benefits available to you.
Claiming benefits that are rightfully yours:
There are several tax deductions and credits you are eligible to claim, and all will depend on your unique circumstances. Although you will have to report all income earned, you may still be eligible for benefits even if you didn’t draw income during the year you arrived in Canada.
Getting familiar with the tax filing process may be daunting but here are some key credits you should look out for:
- Setting roots in Canada: New Canadians investing in their first home are eligible to claim the First-Time Home Buyer’s Tax Credit on their first home in Canada. The $5,000 tax credit can help to offset expenses of moving from a new country. You may not be able to claim this amount if you owned a home in the last five years, regardless of whether it was in Canada.
- Young ones: New residents with children under eighteen may qualify to receive the Canada Child Benefit (CCB). This is a tax-free monthly compensation for families to help them offset the cost of raising children (and starting a new life in Canada). The payment varies according to the age of the child and the total income of the family.
- Income earned outside Canada: In Canada, residents must declare all income they earned from anywhere in the world when filing their taxes. The income from another country may however be exempt from Canadian tax or subject to special tax treatment if Canada has a tax treaty with the country in which the earned income was earned. Canada currently shares tax treaties with nearly 100 different countries across the globe.
- Claim credit where credit is due: Newcomers are eligible to apply for GST/HST credit, which is a tax-free quarterly payment. Although this is offered to low income families, even those whose income is above the qualifying limit should apply, because if their income changes, they could be entitled to it. If they meet the requirements, the payment is calculated based on the income they earned the previous year.
Know your (Oh) Canada deadlines:
It’s always prudent to map out important dates on your calendar, as it can get overwhelming when everything is happening at one time. As a small gift in your Canadian journey, your new friends at H&R Block have you covered.
- Getting your GST/HST credit: The quarterly credit allows you to receive your payments during the first two weeks of April, July, October and January.
- Child benefit: This is a monthly benefit and you will typically see it arrive in midway through the months.
- Deadlines to file: April 30, is the final deadline for filing your taxes. If you owe anything, you must settle it by this date or you could face interest charges. The one exception is for self-employed Canadians. They must complete their tax-filing by June 15.
As you embark on your new Canadian life enjoying Tim’s coffee or trying out some maple syrup, remember: if you ever need help you can always talk to an H&R Block Tax Expert. For more information, find an office near you, or get an expert review with our tax software.