Tax Considerations for Sponsored Family Members in Canada

When you apply for Canadian family sponsorship, immigration officials don’t just review your relationship with the person you want to sponsor; they also look at your financial history through your tax records. As a sponsor, you must show they can support their relatives financially — and that’s where taxes come into play.

To be approved by Immigration, Refugees and Citizenship Canada (IRCC), a sponsor must meet the minimum necessary income (MNI) requirement. This is usually shown by submitting a Notice of Assessment (NOA) from the Canada Revenue Agency (CRA) with the sponsorship application. The NOA demonstrates to the IRCC that the sponsor has the financial stability to care for their family members without relying on social assistance.

For newcomers, filing a Canadian tax return is often part of settling in. But it’s the newcomer's tax residency that matters, not the immigration or common-law status. A newcomer become a tax resident once the CRA deems they have sufficient residential ties. Once considered a tax resident, the newcomer is required to report their income, even if earnings were minimal or delayed. Filing also opens the door to benefits like the Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit and the Canada Child Benefit (CCB).

Here's how to understand the tax piece of being a sponsor to ensure the process goes smoothly for the newcomer — and the yourself.

Why do your taxes matter in family sponsorship?

Your tax return confirms whether your total (pre-tax) income meets the MNI requirement, which ensures you can cover food, housing, and other essentials for your sponsored family members. The simplest way to prove you've met the threshold is with your NOA from the CRA. Since the NOA shows your total income and taxes paid each year, it’s the document the IRCC uses to confirm your eligibility as a sponsor.

The MNI varies based on your household size and the number of people you’re sponsoring. Sponsors of parents or grandparents generally need to show 3 consecutive years at or above the required level. Before applying, review which income sources count toward the MNI—such as employment, self-employment, pensions, and investments—and which don’t, like social assistance.

Income required for the 3 tax years before you apply (for the 2025 intake)

What do sponsored family members need to know about taxes?

Sponsored immigrants pay taxes in Canada once they become tax residents. That means they must file a Canadian tax return, even if they didn’t earn much, or any, income in their first year. Filing is how they meet their legal obligations and access valuable benefits.

The CRA decides residency for tax purposes based on a variety of factors, including residential ties. These ties can include where you live, whether you have a home in Canada, and whether your spouse or children are living with you.  Other factors, such as spending 183 days or more in Canada during the year, can also affect residency status.

Once the CRA considers someone a resident, they must report their worldwide income — both inside and outside Canada — starting from the date they arrived. For example, if a sponsored parent moves to Canada in July, they would report worldwide income earned from July to December that year.

Even if a sponsored family member doesn’t owe tax, filing is mandatory. Not filing can have serious consequences, including late-filing penalties, interest on any taxes owed, and potential complications with immigration or benefit eligibility. Filing is also the only way to qualify for credits such as the GST/HST credit or the CCB, which can help new families cover everyday costs.

Key rules for sponsored newcomers:

• Newcomers must file a Canadian tax return once they meet the CRA’s criteria for tax residency.
• The CRA looks at residential ties to decide when residency starts.
• They must report worldwide income starting from the date they become a tax resident.
• Filing is required to access benefits and credits, even with no income.

How does sponsorship work?

If you sponsor a family member, you’re responsible for helping them file a Canadian tax return once they arrive. Sponsored parents, for example, generally need to file a return each year to establish their tax record and qualify for credits and benefits — even if they have little or no income.

You can also claim certain relatives as dependants on your own return if they meet eligibility rules. A spouse or common-law partner is claimed through the spousal amount. Children under 18 are usually claimed for the CCB and may also be eligible for child-related deductions. Parents or grandparents who live with you and rely on you for support can often be claimed through the Canada caregiver credit. These dependant claims either reduce your taxes owed or increase your refund.

To file correctly, you’ll need a few key documents:

• Social Insurance Number (SIN)
• T-slips for any income earned
• Receipts for eligible expenses

There are several filing options. You can use certified software such as NETFILE, access CRA My Account, or work with a tax expert to help ensure accuracy and compliance.

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What benefits and credits can sponsored newcomers access?

Filing a tax return doesn’t just meet legal requirements — it also unlocks valuable benefits for sponsored newcomers. Even with little or no income, these credits can provide much-needed financial support as families settle into life in Canada.

Common benefits include the GST/HST credit, which helps offset sales tax on everyday purchases, and the CCB, which provides monthly support for families with children under 18. If you're supporting a dependant parent, grandparent, or a relative with a disability, caregiver credits may also be available.

What is Form T1135?

If sponsored newcomer owns assets outside of Canada, it's important they know about foreign reporting rules. They must file Form T1135, the foreign income verification statement, if the cost amount of their specified foreign property exceeds $100,000 at any time during the year.

For example, if the sponsored newcomer holds CAD $90,000 in a foreign bank account and later acquires a U.S. stock portfolio worth CAD $20,000, their total foreign property reaches CAD $110,000 — even if they sell part of it later in the year and it drops back to CAD $90,000, they still need to file. This disclosure doesn’t increase their tax directly; it ensures the CRA has a complete picture of the sponsored newcomers foreign holdings.

Comparison of sponsor vs. sponsored newcomer duties:

Sponsor duties	Sponsored newcomer duties
Prove income meets the MNI	File a Canadian tax return
Provide NOAs from the CRA	Report the worldwide income from the arrival date
Commit to covering the family’s basic needs	Apply for benefits and credits
Repay government assistance if needed	File Form T1135 if required

Understanding the tax rules around sponsorship — from proving income to helping newcomers file returns — can feel like a lot to keep track of. But once you know your responsibilities as a sponsor and your family member’s duties as a newcomer, it becomes simpler to stay on top of everything.

How can you keep things clear and compliant?

Sponsorship isn’t just about paperwork — it’s about financial responsibility. As a sponsor, your role is to prove your income and meet your undertaking. For newcomers, the responsibility is to file a Canadian tax return, report worldwide income starting from their arrival date, and claim benefits they qualify for.

Keeping these obligations straight helps avoid delays with immigration, ensures eligibility for credits, and makes settling into Canada easier for everyone.

How can TurboTax help you and your family stay on track?

Helping a relative navigate Canada’s tax system can feel overwhelming, especially if foreign income or complex filing rules are involved. TurboTax makes it easier. You can get quick answers to common sponsorship tax questions, hand over the full return to a tax expert, or get guidance with tricky issues like reporting worldwide income or filing Form T1135.

FAQs

What income counts toward the MNI?
Most forms of taxable income reported on your NOA count toward the MNI. This includes employment earnings, self-employment income, pensions, and investment income.

Which income is excluded from the MNI?
Social assistance and certain non-taxable benefits don’t count toward the MNI. These exclusions are designed to make sure sponsors are relying on stable, sustainable income.

How long does the sponsorship undertaking last?
The length depends on who you sponsor. For example, spouses and partners are usually 3 years, while parents and grandparents can be up to 20 years.

Do sponsored parents need to file a Canadian tax return?
Yes. Sponsored parents must file a return each year once they meet the CRA’s criteria for tax residency to establish their tax record and access benefits, even if they have little or no income.

What benefits can sponsored newcomers claim?
Depending on their situation, they may qualify for the GST/HST credit, the CCB, and caregiver credits. Filing a return is required to receive these.

When is Form T1135 required?
Form T1135 must be filed if the cost of specified foreign property is more than $100,000 at any time during the year.

TurboTax gives you support every step of the way

You can focus on your family’s new start while staying confident that the tax side of sponsorship is handled right.

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