One of the many privileges of living in Canada includes your first year of paying taxes to the government. Mercifully, the Canada Revenue Agency (CRA) treats new Canadians differently. In order to get newcomers accustomed to how the Canadian tax system works, the first-year process focuses on establishing your presence within the system.
Residential Ties Determine Tax Status
Regardless of whether or not you’ve been granted residency within Canada, you may be considered a newcomer in terms of Canadian tax law. If you’re a protected person under the Immigration and Refugee Protection Act, or if you’ve received “approval-in-principal” to stay, you still need to file a tax return.
The Canadian government considers residential ties to be the determinant of whether or not you pay taxes. If you’re not a citizen but you own a home in Canada, or have dependants living in Canada, or have a Canadian spouse or common-law partner, then the CRA considers these to be significant factors in establishing residential ties to Canada. Less important, but still considered, secondary residential ties include the following:
- Canadian driver’s license
- Canadian health insurance under a provincial or territorial body
- personal property in Canada, like a vehicle or jewelry
- Canadian credit cards and bank accounts
- memberships with religious and recreational organizations withing Canada
- Canadian passport
All of this is factored in when determining an individual’s residence status. After you submit all the requisite information, the CRA may consider you a factual resident of Canada, or a non-resident, or an immigrant, or an immigrant, or an alternative status. These determinations impact the way the Canadian tax system will interact with you during your first year and beyond.
Does Everyone With Residential Ties Need to File A Tax Return?
If you’ve been determined to have residential ties to Canada, then you’ll need to file a tax return for part or all of a tax year, even if you didn’t earn any income during that year. For newcomers with minimal income and straightforward tax returns, a community volunteer income tax program exists to help ensure that all your taxes are done right.
Filing tax returns is entirely beneficial, giving you access to benefits and credits from Canadian government programs. When you’re new to Canada, you should attempt to secure a Social Insurance Number as soon as you’re eligible. Even if you don’t have a SIN card, you’ll be required to file a tax return with the SIN number left blank.
Benefits and Credits For Newcomers
Part of filing your taxes involves applying to programs that provide benefits to all Canadians, including newcomers. All newcomers are eligible for provincial programs that provide tax credits and benefits, as well as the GST/HST tax credit. The Canada child benefit program is restricted to those who are married, in common-law relationships, or a single parent with one or more children under the age of 18.
Filing Your First Tax Return
If you’ve already received a SIN number, then filing your taxes will take less time because you’ll have access to internet filing systems. NETFILE enables you to use tax software or an app to submit all the necessary details for your return. EFILE tax returns may be facilitated by someone with the ability to electronically wire your tax return to the government. Without a SIN number, you’ll need to mail it to the International and Ottawa Tax Services Office, which will increase the processing time.
As a newcomer, you’ll need to provide information such as your date of entry, a complete set of identification, your income, spouse or common-law information, and the time that you spent in Canada as a resident, among other details.
Getting the Most Out of Your First Tax Return
As a Canadian newcomer, it’s extremely unlikely that you’re fully aware of all the different rules and regulations of Canada’s tax system. This may result in you and your family missing out on benefits and credits, or accidentally claiming the wrong type of benefits. Getting in touch with immigration tax and law specialists ensures that you complete your first return with the best possible results.
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President & CEO
Michael Niren
Mr. Niren is CEO of VisaPlace LLC and the President and Managing Partner of VisaPlace Legal Canada, an immigration law firm based in Toronto, and VisaPlace Legal US a law firm registered in The District of Columbia, USA. Mr. Niren is a graduate of Osgoode Hall Law School in Toronto, a member of the Law Society of Upper Canada, the Canadian Bar Association’s Citizenship and Immigration Section, American Lawyers Association, and an Associate Member of the American Bar Association.
