Last year, more than 300,000 newcomers arrived in Canada, the highest number since 1971.
For all the new arrivals who are stuck filing taxes like the rest of us Canadians, we'd like to say, "welcome to Canada." Filing taxes is as Canadian as maple syrup!
It can be challenging for new Canadians to determine which credits and deductions they can claim to complete their first income tax return, especially while they're experiencing their first Canadian winter at the same time. The good news is that there are a lot of benefits to filing taxes, and new Canadians qualify for the same tax credits and deductions as the rest of us.
Here's what newcomers need to know when preparing to file their taxes.
Newcomers are considered to be official residents once they have ties to Canada, which could take place well before actually setting foot on Canadian soil. The Canada Revenue Agency (CRA) considers ties to be things like getting a home, owning a car or getting a license, having a gym membership or a bank account based in Canada.
Newcomers should apply for the GST/HST credit, which is a tax-free quarterly payment. Even those who think their income is above the qualifying limit should apply, because if their income changes, they could be entitled to it. If they meet the requirements, the payment is determined by what they earned the previous year.
New residents who have children under eighteen may qualify to receive the Canada Child Benefit (CCB.) This is a tax-free monthly payment for families to help them offset the cost of raising children. The payment varies based on the age of the child and the overall income of the family.
In Canada, residents must report all income they earned from anywhere in the world when filing their taxes. However, income from another country may be exempt from Canadian tax or subject to special tax treatment if Canada has a tax treaty with the country in which they earned income. Canada currently has tax treaties with nearly 100 different countries.
New Canadians may be able to claim moving expenses if they've come to Canada to start a new job or their own business. Costs of transportation and storage are often claimed, but even meals and accommodation during the process can sometimes qualify.
Even those that already own a home outside of Canada can still claim the First-Time Home Buyer's Tax Credit on their first home in Canada. It's a $5,000 tax credit that can help to offset costs.
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Overall, new Canadians can benefit from having guidance from a tax professional to ensure they understand the process and don't miss out on eligible credits.
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