Everything you need to know about tax when filing as a new Canadian.
January 28, 2022
Welcome to Canada! If you’re new to the country, there are a few things you can expect like friendly faces, a passionate love of hockey, free healthcare and of course our infamous cold winters. But winter isn’t the only thing you'll have to get used to, our tax system might be new to you as well.
It can be challenging to know which credits to claim or even how or when to file, let alone when it’s your first time. But don’t worry, this is why H&R Block is here to help! We’ve come up with the top three dos and don’ts to help you understand your taxes.
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're a new resident of Canada for income tax purposes. After your first tax year in Canada, you're 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.
And what makes you an official resident? You become a resident of Canada for income tax purposes when you establish significant residential ties in Canada. Usually, you establish these ties on the date you arrive in Canada.
Important residential ties can also include:
- A home
- A spouse
- A driver’s license
- Health insurance
- Personal property such as cars or furniture
Now onto the 3 dos we recommend for all new Canadians!
DO: Make sure you have your Social Insurance Number (SIN) from Service Canada
Our first tip is to apply for your Social Insurance Number (SIN) as soon as you can. You can request a SIN from Service Canada. This number is used to identify you so you can file your tax return and apply for tax credits and benefits that can be offered both federally and provincially.
If you had applied for your SIN, but didn’t receive it before the filing deadline, don’t worry! You can leave that specific field blank to avoid late-filing penalties, just make sure to attach a note explaining why you couldn’t provide it.
DO: Make sure you know your deadlines and any penalties
There are a few deadlines you need to be aware of when it comes to filing your return. All dates are listed below:
- The deadline for personal tax returns is usually April 30, but since it falls on a Saturday in 2022, it is extended to May 2. If you’re self-employed, your deadline for filing your tax return is June 15.
- For more tax tips for self-employed individuals, check out our blog!
Now, you might be wondering what would happen if you don’t file on time? Between avoiding late-filing penalties and getting your refund sooner, there are plenty of reasons why you shouldn’t file your return late. Check out this blog to learn more about why you should try to file on time.
Sign up for our newsletter to get reminders about key tax dates delivered straight to your inbox or keep checking the H&R Block Tax Tips Blog for the latest news from the CRA and Revenu Québec.
DO: Look into which tax credits you can apply for
There are many tax deductions and credits you can claim, and all will depend on your unique situation. Although you do need to report any income earned, even if you haven’t earned any income during the year, you still might be eligible for some benefits.
There are some key credits as a first timer you should be on the lookout for, which can include:
- First-Time Home Buyer’s Tax Credit on your first home in Canada. This is a $5,000 tax credit that helps to offset costs of buying a new home. You may not be eligible for this amount if you owned a home in the previous five years, regardless of whether it was in Canada or not.
- If you have children under eighteen, you may qualify to receive the Canada Child Benefit (CCB). This is a tax-free monthly payment for families to help them offset the cost of raising children (and starting a new life in Canada). The payment varies based on the age of the child and the overall income of the family. The first year you arrive, you should apply for it using Form RC66 Canada Child Benefits Application and the related schedules. In subsequent years, you just need to file a tax return and the CRA will determine your eligibility based on the amount of income you report.
- Newcomers should apply for the GST/HST credit, which is a tax-free quarterly payment. The year you arrive, you should apply for it using Form RC151 GST/HST Credit Application for Individuals Who Become Residents of Canada. In subsequent years, you do not have to apply for it. You just have to file a tax return and the CRA will determine whether you are eligible for it.
- For mor e information on tax credits and benefits, check out our blog for a full breakdown!
Now onto the don’ts!
DON’T: Forget to report all your income even if it’s from other places
When you sell capital properties like shares, real estate, paintings, and jewellery, you're only taxed on the gain that has accrued since you became a resident of Canada. Therefore, you should keep a record of their value when you arrive.
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. Your capital gains or losses will be calculated based on this amount and on the date of sale, if applicable.
Filing your first Canadian tax return can seem intimidating, but the CRA has lots of resources for first-time filers, and offers a Newcomers to Canada guide to help you get started. And of course, you can always come into an H&R Block branch or speak to one of our Associates for help with your filing!
DON’T: Not file because you didn’t make any income or are unsure of your status
One of the biggest misconceptions about filing your taxes is either:
- Not filing because you made little to no income, or
- Not filing because you're unsure of if you're a Canadian citizen
You could be eligible for certain benefits like the quarterly GST/HST credit or the Canada Child Benefit. The CRA needs a current tax return to see whether you qualify for any of these or other benefits.
In Canada, our tax system doesn’t work based on your citizenship but instead on your residency. Residency is established through residential ties in Canada. If you’re unsure whether or not you’re considered a resident for income tax purposes, you can submit Form NR74, Determination of Residency Status (Entering Canada) to the CRA to find out.
Still have questions? Come to one of our friendly offices and visit a Tax Expert at an office near you! We’re always here to help out, if you would rather do it yourself with our online tax software, you can always add on Expert Review or Remote Tax Expert to lend a hand.