Taxes for New Canadians: Step-by-Step Guide to Filing Your Tax Return

What do newcomers need to know about taxes in Canada?

Canada’s tax system is regulated by the Canada Revenue Agency, also called the CRA. Your personal income tax return is called a T1 General. 

Tax Filing Deadlines

• The deadline for filing your annual personal income tax return is April 30th.

• The deadline for self-employed individuals to file their personal tax returns is June 15th, (however, any amounts due to CRA for that tax year are payable by April 30th).
• If April 30th or June 15th falls on a Saturday or Sunday, then the due date is the following Monday.

If your return is filed past the due date, you will be liable for penalties and interest on any amounts owing for that tax year.

How Much Taxes Do New Canadians Have to Pay?

The amount of income tax you have to pay on your Canadian and foreign income while a Canadian resident depends on the total income, your deductions and your family situation.

It also depends on which province you live in, since each province has their own tax brackets, in addition to the federal brackets. 

An easy way to get an estimate on your tax refund or taxes owed is by using a free income tax calculator. 

Why should I file a tax return?

1. To receive a tax refund

A tax refund happens when the government sends you back all or part of the taxes you’ve already paid because either you didn’t earn enough income during the year, or you paid too much tax. 

• To avoid penalties on taxes owed

If you work in Canada, or receive income from foreign sources, you’ll have to pay taxes on the money you receive. Filing makes sure you’re reporting all income you’re aware of, which can help avoid penalties and fees that you may receive if you don’t file. 

• To set up your CRA My Account 

Once you have filed your tax return for the first time, you’ll be able to use that information to complete your registration and access CRA’s My Account. You can use CRA’s My Account to track and maintain your tax information as well as communicate with the CRA.

• To recover any tax you overpaid from your paycheque

If you work as an employee and receive cheques, your employer automatically deduct taxes from each pay cheque, including; CPP, EI, and Income. 

However, if you make less than a certain amount of income during the tax year, some of that tax will be sent back to you. 

• To take advantage of benefits

If you’re 19 years old or older, you may also be eligible for a larger refund through refundable credits such as:

• GST/HST credit
• Canada Child Benefit (CCB)
• Canada Worker Benefit 

Even if you did not receive income during the year, it’s a good idea to file a return so that CRA can determine if you are eligible for any benefits. 

Your First Year Tax Obligations 

Are you a resident of Canada for tax purposes?

According to the CRA, you are considered to be a 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.

The criteria the Canada Revenue Agency (CRA) uses to determine whether you are a resident for tax purposes are not the same as those used for permanent residence status or Canadian citizenship.

If you are considered to be a Resident of Canada or a Deemed Resident of Canada, you should file an income tax return for either the entire tax year or part of the tax year you’ve lived in Canada. 

If you are not sure about the exact date when you officially became a resident of Canada, the CRA offers a Form NR74 called Determination of Residency Status (Entering Canada), which you can complete and submit. The CRA then issues a decision to determine when it considers that you became a resident of Canada. 

How Do I File My Return?

As a new Canadian, there are two ways you can choose to file your taxes. 

• Online: a certified tax preparer can submit your tax return online on your behalf. Or, you can NETFILE your tax return if you prepare it yourself with certified tax software such as TurboTax.
• Mail: you can choose to print and mail your first income tax return to the CRA.

What Information do I need to file my return?

Generally speaking, you’ll have to provide basic personal information such as your full legal name, your address, and all income from the previous year, in addition to the following:

• Make sure to have applied for, and received, your Social Insurance Number (SIN) which is used to identify you for income tax and benefits.
• If you are already employed in Canada, you will receive a slip from each employer you work for during that tax year. The slip is called a T4 – Statement of Remuneration Paid and is to be issued by your employer by the end of February.
• If you have recently arrived in Canada, you need to include information from your employment before arriving in Canada.
• If you had employment income from outside Canada since the day you relocated, you will need those numbers as well.
• If you have foreign assets over $100,000, you will need to report them on form T1135 on your tax return.
• If you have dependents, (such as a spouse, children, or elderly parents), you’ll have to provide all of their details too.
• Credits and deductions you can claim depend on your own individual tax situation. For example, if you have childcare expenses, you may be eligible to claim those on your return. If you incurred medical expenses for yourself, your spouse, or your children, you may be able to claim those as well.
• If you’re bringing any kind of assets to Canada, you would need to include details and market value on the day you arrive. Your capital gains or losses will be calculated based on this amount, if and when you sell them.
• For Québec residents, you must file a tax return to Revenu Québec as well, this is the only province in Canada that files 2 tax returns. One federally and one provincially. (Revenu Québec tax obligations for newcomers to Canada).