Along with understanding some of our unique terms like chesterfield and double-double, Canada’s tax system may be somewhat puzzling to recent immigrants. Depending on your own tax situation and family structure, you may be eligible for a number of tax breaks.
As a new Canadian, you may receive benefits or tax refunds. You are eligible for most of the same benefits as other Canadians, but you have to apply for these benefits and file your income tax return, (and your spouse’s if you have one). Because you are becoming a resident during the tax year, you may be able to get additional refunds if you know how the tax system works.
Benefits include payments for qualifying families with children, a rebate of the Goods and Services Tax (GST), or Harmonized Sales Tax (HST) – known as the GST/HST Credit, and certain Provincial & Territorial benefits and credits. For new arrivals, the date you become a resident affects the calculation of your taxes for income earned inside and outside Canada. Payment of most of the benefits for which you are eligible are spread out over the year, but any tax refund you get is paid in a lump sum.
Residency for Tax Purposes
The Canada Revenue Agency (CRA) considers you a resident for tax purposes when you have strong residential ties to Canada. Such ties could be ownership of property, family links, membership in Canadian organizations or Canadian employment. For new Canadians, your residency usually starts when you arrive in the country, and this date helps determine whether income is taxable when filing your tax return. Be sure to contact the CRA for residency status, as residency in Canada is determined on a case by case basis. For more detailed information on residency status, review this link from TurboTax.
Goods and Services Tax/Harmonized Sales Tax Credit
The GST/HST tax credit is a rebate of sales tax which you have paid for the purchase of goods and services. If eligible, the government calculates the amount of the credit based on your family’s net income, plus the number of dependent children. When you become a resident, you have to file the RC151 GST/HST Credit Application Form. If eligible, you will receive payments every three months, and both you and your spouse (if you have one) must file your tax returns on time each year in order to continue with these payments.
New residents of Canada must complete a form to apply for the credit
If you are a new resident of Canada, follow the steps below to apply for the GST/HST credit:
Complete one of the following forms:
- If you have children: fill out and sign Form RC66, Canada Child Benefits Application to apply for all child and family benefits, including the GST/HST credit
- If you do not have children: fill out and sign Form RC151, GST/HST Credit Application for Individuals Who Become Residents of Canada
- Mail the completed form to your tax centre.
Benefits for Minors
If you have children under the age of 18, you may be eligible for benefits designed to help with the expense of raising a child. The Canada child benefit (CCB) is a tax-free monthly payment made to eligible families to help them with the cost of raising children under 18 years of age. The CCB might include the child disability benefit and any related provincial and territorial programs. You have to be eligible to receive the CCB and must apply for it. One of the requirements is that you are a Canadian resident for tax purposes and if you’re eligible, you’ll receive monthly payments once your application has been processed.
You have to apply for these benefits using Form RC66, Canada Child Benefits Application and RC66SCH, Status in Canada/Statement of Income, and both you and your spouse (if you have one) must file your tax returns on time each year in order to continue with these payments. Learn more about the CCB on our web page Canada Child Benefit.
Becoming familiar with the income tax system allows you to make sure you are receiving all the benefits of being a Canadian resident. You may qualify for certain payments as soon as you arrive in Canada, but submitting the required application forms and filing your income tax return are key steps toward receiving these benefits.
The first time you file your return doesn’t have to be as daunting as it may seem. If you’re feeling overwhelmed, you can always count on TurboTax to help you claim all your eligible benefits and credits as a Newcomer to Canada. Consider TurboTax Live Assist & Review if you need further guidance, and get unlimited help and advice as you do your taxes, plus a final review before you file. Or, choose TurboTax Live Full Service* and have one of our tax experts do your return from start to finish.
For more detailed information about TurboTax, the following link will explain – Everything You need to know about TurboTax software and our Support Options!
*TurboTax Live™ Full Service is not available in Quebec.
- How Does Residency Status Impact Your Tax Return?
- Tax Filing Tips for Newcomers to Canada
- New Canadians: Your Tax FAQ or Canadian Taxes 101
References & Resources:
Jennifer is the Social Care Manager for TurboTax Canada. When she’s not helping customers on Facebook, Twitter, and TurboTax’s community forum AnswerXchange, Jennifer is busy researching the latest tax changes.
Jennifer has been preparing tax returns for over 30 years and enjoys holding tax seminars for seniors in her hometown of St. Vincent’s, Newfoundland.