When you are finally granted your permanent residency in Canada, the Canada Revenue Agency expects you to file your income tax return promptly.
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Are You a Permanent Resident?
If you immigrated to Canada as a permanent resident, the CRA is likely to consider you to be a part-year resident for income tax. If you are deemed by CRA to be a permanent resident partway through the year, you only have to pay tax on your worldwide income from the date when you entered Canada. That means you have to report all of the income that you earn in Canada as well as other worldwide income earned after your arrival. Non-refundable tax credits, such as the basic personal amount and the spousal amount, are prorated based on how long you have been a permanent resident in Canada.
According to the CRA, you are considered to be a permanent resident for tax purposes when you establish significant residential ties in Canada. These ties most often happen on the date when you arrive in Canada. Examples of significant residential ties include:
- Establishing a home in Canada;
- A spouse or common-law partner in Canada;
- Dependents in Canada.
If you were considered a resident of Canada in a previous year and you are now a non-resident, you are considered to be a Canadian resident for tax purposes when you move back to Canada and establish residential ties. CRA determines residency on a case by case basis so it is always a good idea to contact CRA prior to preparing your tax return.
Do You Have to File a Tax Return?
Whether you are a resident for the full year or part of the year, you are required to file a tax return if you have a balance owing or if you would like a refund. Even if you do not have any earned income, it may be to your advantage to file a tax return to claim certain payments or credits. For example, you may be entitled to the goods and services tax/harmonized sales tax credit, the Canada Child Tax Benefit and Universal Child Care Benefit as well as tax credits from the province where you reside.
New permanent residents do not need to complete a special tax return. You can complete the same general income tax and benefit package as Canadian-born citizens. You must file your tax return by the April 30 deadline. Claim any applicable federal deductions such as childcare costs, medical expenses, and caregiver amounts. Review all provincially specific credits as well to ensure you are claiming everything available to you. CRA offers numerous resources including information pamphlets specifically aimed at newcomers.
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