Tax and Benefit

 

Are you a resident of Canada?


You become a resident of Canada for income tax purposes when you establish significant residential ties in Canada. You usually establish these ties on the date you arrive in Canada.

Newcomers to Canada who have established residential ties with Canada may be:

  • protected persons (including refugees) within the meaning of the Immigration and Refugee Protection Act;
  • people who have applied for or received permanent resident status from Immigration, Refugees and Citizenship Canada; or
  • people who have received "approval-in-principle" from Immigration, Refugees and Citizenship Canada to stay in Canada.

If you were a resident of Canada in an earlier year, and you are now a non-resident, you will be considered a resident of Canada for income tax purposes when you move back to Canada and re-establish your residential ties.

As a newcomer to Canada, you will need a Social Insurance Number (SIN). For more information, visit Service Canada.

 

When should you apply to receive benefits and credits?

Apply right away to get benefits and credits you may be entitled to

To get these benefits and credits, you or your spouse or common-law partner must be one of the following:

a permanent resident, even with a temporary address; or
a protected person.
As soon as you get your social insurance number, apply for benefits.

Note
If you are a temporary resident, you must live in Canada for 18 months in a row and have a valid permit on your 19th month of living in Canada before you can apply for the Canada child benefit and any related provincial and territorial programs.

Are you eligible for benefits and credits?
 Married or common-law with children under 18 years old

Married or common-law with children

Single with children under 18 years old

Single with
children

Married or common-law with no children

Married or
common-law with no children

Single and 19 or older with no children

Single and 19 or older with no children 

Canada child benefit Yes Yes No No
Goods and services tax/harmonized sales tax (GST/HST) credit Yes Yes Yes Yes
Provincial and territorial benefits and credits Yes Yes Yes Yes

How to apply for benefits and credits

To apply for the Canada child benefit and to register your child or children for the GST/HST credit, fill out and send the following two forms to the Canada Revenue Agency (CRA):

To apply for the GST/HST credit for you or your spouse or common-law partner, fill out Form RC151, GST/HST Credit Application for Individuals Who Become Residents of Canada for the year that you became a resident of Canada.

If you live in Quebec, you should also apply for child assistance through Retraite Québec.

Include the following information with your application:

  • Record of Landing or confirmation of permanent residence issued by Citizenship and Immigration Canada;
  • Citizenship certificate;
  • Notice of Decision or a Temporary resident’s permit issued under the Immigration and Refugee Protection Act;
  • valid temporary or permanent mailing address;
  • a void cheque if you are applying for direct deposit; and
  • proof of birth for your children who were born outside Canada.

Note: Include the amount of income you earned before you entered Canada on Form RC66SCH and Form RC151.

 
After you apply for benefits and credits

You don’t have to apply for the benefits and credits every year. But every year you must:

  • file your income tax and benefit return:
    to continue receiving the benefit and credit payments that you are entitled to, you have to file your income tax and benefit return on time every year, even if you have no income in the year. If you have a spouse or common-law partner, they also have to file a return every year.
  • keep your personal information up to date:
    to make sure you are getting the right amount of benefits and credits, you must keep your personal information updated with the CRA for 6 years.
  • keep your supporting documents in case we ask for them:
    in the future, you may receive a letter from the CRA as part of the validation process, asking you to confirm your personal information.

Sign up for:

direct deposit to make sure you never miss a payment in the mail.
the MyCRA mobile application or My Account so you can get your personalized benefit information anytime, anywhere.
the benefits and credits electronic mailing lists to know when you will get your next payment.

 

Property you owned before you arrived in Canada

If you owned certain properties, other than taxable Canadian properties, at the time you immigrated to Canada, we consider you to have sold the properties and to have immediately reacquired them at a cost equal to their fair market value (FMV) on the date you became a resident of Canada. This is a deemed disposition.

Your property could include the following: shares, jewelry, paintings or a collection.

Usually, the FMV is the highest dollar value you can get for your property in a normal business transaction.

You should keep a record of the FMV of your properties on the date you arrived in Canada. The FMV will be your cost when you calculate your gain or loss from disposing the property in the future.

You dispose of your property when:

  • you sell it;
  • you give it;
  • it's destroyed; or
  • it's stolen

If you have a loss resulting from the disposition of your property, you can only deduct this loss from any gains you had from selling the same type of property. You cannot use this type of loss to reduce any capital gains you had from selling other types of properties.

Note: If you are re-establishing Canadian residency and you had a deemed disposition when you left Canada, go to Dispositions of property.

 

Do you have to file a tax return?

As a resident of Canada for income tax purposes for part or all of a tax year (January 1 to December 31), you must file a tax return if you:

  • have to pay tax; or
  • want to claim a refund.

Even if you have not received income in the year, you have to file a tax return to continue receiving the benefit and credit payments that you are entitled to.

If you have a modest income and a simple tax situation, and require assistance with filing your return, you may be eligible to use the Community Volunteer Income Tax Program.

 

Which tax package should you use?

You should be aware that most individuals who reside in Canada file only one income tax return for the tax year, because the Canadian government collects taxes on behalf of all provinces and territories, except the Province of Quebec.

For the tax year that you are a newcomer to Canada and for each tax year that you continue to be a resident of Canada for income tax purposes, use the general income tax and benefit package for the province or territory where you resided on December 31 of the tax year.

Notes: It is important to use the forms book for your province or territory because tax rates and tax credits are different in each province and territory. If you live in the province of Quebec on December 31, you may have to file a separate provincial income tax return. For more information, visit Revenu Québec.

 

Transmitting your tax return by Internet

EFILE

Your EFILE service provider can complete and file your return for you. For more information, go to EFILE.

NETFILE

You can file your return by Internet if you prepare your return with a tax preparation software or Web application. For more information, go to NETFILE.

Note: You will not be able to file electronically without a SIN.

If you have requested a SIN, but have not yet received one, and the deadline for filing your tax return is near, file your tax return without a SIN to avoid any possible late-filing penalty and any interest charges. Attach a note to your return to let us know why you did not enter your SIN.

If you are mailing your tax return, send it to the International and Ottawa Tax Services Office. Do not mail your tax return to any other address.

 

When do you have to send us your tax return?

Generally, your return for 2016 has to be filed on or before April 30, 2017.

 

How to complete your tax return

Identification and other information
It is important that you complete the entire identification and other information area on page 1 of your tax return. We need this information to assess your tax return and calculate your goods and services tax/harmonized sales tax (GST/HST) credit, plus any benefits to which you may be entitled under the Canada child benefit.

Date of entry into Canada
When completing this area on your return, enter the date you became a resident of Canada for income tax purposes.

Information about your spouse or common-law partner

Enter your spouse or common-law partner's net world income for 2016 regardless of their residency status. Net world income is the net income from all sources both inside and outside of Canada. Underneath, enter your spouse or common-law partner's net world income for the period you were a resident of Canada. If applicable also enter the amount of universal child care benefit (UCCB) included on line 117, and the amount of UCCB repayment included on line 213 of his or her tax return.

 

What income do you have to report?

For the part of the tax year that you WERE NOT a resident of Canada

You have to report the following amounts:

  • income from employment in Canada or from a business carried on in Canada;
  • taxable capital gains from disposing of taxable Canadian property; and
  • taxable part of scholarships, bursaries, fellowships, and research grants you received from Canadian sources.

Note: For the part of the year that you were not a resident of Canada, do not include on your tax return any gain or loss from disposing of taxable Canadian property, or a loss from a business carried on in Canada, if, under a tax treaty, the gain from that disposition or any income from that business would be exempt from tax in Canada.

 

For the part of the tax year that you were resident of Canada

You have to report your world income (income from all sources both inside and outside Canada) earned after becoming a resident of Canada for income tax purposes on your Canadian tax return.

In some cases, pension income from outside of Canada may be exempt from tax in Canada due to a tax treaty, but you must still report the income on your tax return. You can deduct the exempt part on line 256 of your tax return.

If you are a protected person and you received funds from a charitable organization such as a church group, you generally do not have to report the amounts on your tax return. However, if a charitable organization hired you as an employee, the employment income you received is taxable.

 

Underground economy

The underground economy is defined as income earned but not reported for income tax purposes and the sale of goods or services on which taxes or duties have not been paid.

 

What deductions can you claim?
  • Registered retirement savings plan contributions
  • Pension income splitting
  • Moving expenses
  • Support payments
  • Treaty-exempt income
  • Other deductions

 

What non-refundable tax credits can you claim?

Federal non‑refundable tax credits

The federal non-refundable tax credits you can claim are limited to the total of the following amounts:

  • the federal non‑refundable tax credits that apply to the part of the year that you were a resident of Canada; and
  • the federal non‑refundable tax credits that apply to the part of the year that you were not a resident of Canada.


Provincial or territorial non-refundable tax credits

Similar to the amount of federal non refundable tax credits, as an immigrant, you may be limited in the amount you can claim this year for certain provincial or territorial non refundable tax credits.

Generally, the rules for calculating your provincial or territorial non-refundable tax credits are the same rules as those used to calculate your corresponding federal non‑refundable tax credits. However, the amounts used in calculating most provincial or territorial non‑refundable tax credits are different from the corresponding federal credits.

 

Refund or Balance Owing
  • Federal tax credits
  • Provincial or territorial tax credits
  • Federal foreign tax credits
  • Provincial or territorial foreign tax credits