New immigrants to Canada such as permanent residents, international students and work permit holders are generally required to file a tax return in the year of their arrival, even if they did not earn any income in Canada during that year. This is because the Canadian tax system is based on residency, and as a resident of Canada, you are subject to Canadian income tax on your worldwide income.
Filing a tax return is important for several reasons:
• You are complying with Canadian tax laws and avoiding any potential penalties or fines for non-compliance.
• Temporary residents (international students and work permit holders) when applying for their permanent residency MAY require submitting Notices of Assessment (NOAs) for previous years of living in Canada, thus it is important for your tax file to be up to date since your time of arrival into Canada.
• You can ensure that you are eligible for benefits such as the GST/HST refunds (RC151), Provincial refunds and the Canada Child Benefit (RC66 & RC66SCH) and receive the appropriate benefits.
• If you are an international student, you may be eligible to claim tuition tax credits (T2202) on your Canadian income tax return and may carry forward credits to future years when you may have taxable income.
• It provides documented proof of your income and establishes your credit history, which can be used to support your credit card & personal/business loans applications, motor vehicle financing/lease & home mortgage applications.
• If your dependents (children) are on a student visa with a valid Canadian SIN, you might be eligible to make contributions to a Registered Education Savings Plans (RESPs) and qualify for the Canada education savings grant (CESG) and Canada learning bond (CLB).
• It provides the government with a record of your income, which is used to calculate your contribution rooms your Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Accounts (TFSA) accounts and Tax-Free First Home Savings Account (FHSA).
• Contribution to RRSPs, will enable to you make future tax-free withdrawals under the first time Home Buyers' Plan (HBP) to purchase your first home.
• It provides the government with a record of your income, which is used to determine your eligibility for the Canada Workers’ Benefit.
• It helps you meet the residency requirements for Canada Pension Plan (CPP) and Old Age Security OAS (benefits).
• It provides the government with a record of your residency, which is used to determine your eligibility for the Climate Action Incentive.
• When applying for super visa for parents/grandparents, the person who invites must prove that their household meets the minimum necessary income which MAY require Notice of Assessment (NOA) or T4/T1
It is important that as a new immigrant, the first Canada Personal T1 Tax return along with supporting forms RC151 and RC66/RC66SCH are filed duly and accurately to prevent penalties with CRA and experience delays in getting the entitled benefits. Thus, we suggest new immigrants to seek professional support from a tax preparer who is experienced in filing new immigrant taxes and related forms in the first year of landing to Canada.
In addition, Taxation is an important part of the Canadian personal financial planning system, hence we believe new immigrants to must seeks regular professional advice and guidance from a tax accountant and financial planner with regard to decisions such as becoming a first time home buyer, applying for a mortgage, getting your new motor vehicle, starting a business and making financial investments in non-registered (personal/taxable) and registered (RRSP, RESP, TFSA, FHSA) accounts in Canada.
Not sure how to file taxes as a new immigrant? Don’t worry, help is here!
Contact us by calling 604-373-0788, emailing us at commercial@ctpros.ca or by simply filling in the contact form
Disclaimer: This article only provides general information which is not construed as professional advice. Readers seeking professional advice must consult an experienced and a qualified professional in the respective field.
CanaTax was founded in Vancouver, British Columbia by a team with over three decades of combined experience in accounting and tax planning.
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