You are considered a tax resident of Canada from the moment you arrive. Start by recording Income earned before and after your arrival, as different tax rules apply to other periods.
Determining Residency and Tax Obligations
The Canada Revenue Agency (CRA) determines your tax status based on ties to Canada, such as family connections, membership in organizations, or ownership of property in Canada, which requires filing a tax return.
Filing Your First Tax Return
For new residents, the first tax return includes Income earned from the date of arrival until the end of the year.
Income Earned Before Arrival
It is essential to track Income earned before arriving in Canada, as it is not subject to Canadian taxation. Once you become a tax resident, all worldwide Income must be declared. Remember, double taxation can be avoided using tax treaties with other countries.
Foreign Income Verification Statement T1135
Individuals with foreign property valued at more than CAD 100,000 must file Form T1135. This form is required to report real estate, financial assets, and other foreign investments.
Canadian Income
Any income earned from Canadian sources is subject to taxation in Canada, regardless of residency status at the time of receipt. Filing a tax return allows you to claim any tax refunds owed to you.
Tax Filing Deadlines
Tax returns must be filed by the end of April of the following year for Income earned in the previous year. For self-employed individuals, the deadline is extended to June 15, but any taxes owed must still be paid by April 30. Filing a tax return ensures your eligibility for tax benefits and credits.
Tax Status
You are recognized as a tax resident if you are a permanent resident, have applied for such status, have approval from Immigration, Refugees, and Citizenship Canada, or are a Canadian citizen or protected person.
Becoming a tax resident of Canada marks a new chapter in your financial responsibilities. Correctly filing your tax returns will help you avoid potential penalties and allow you to take advantage of tax benefits.