Tax support for newcomers

01
Residency overview
02
Canadian Tax landscape
Tax filing requirements, Tax
Residential ties types, Tax rates, and
benefits

Table of contents
03 04
Arrivig canada Estate tax planning
Things you need to Things happen after a
prepare before becoming a person is deceased
tax resident
Does holding a Canadian passport
make you a tax resident of Canada?
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.

Significant residential ties to Canada include:

 a home in Canada
 a spouse or common-law partner in Canada
 dependants in Canada

Secondary residential ties that may be relevant include but not limited to:
 personal property in Canada, such as a car or furniture
 social ties in Canada, such as memberships in Canadian recreational or religious organizations
 economic ties in Canada, such as Canadian bank accounts or credit cards
 a Canadian driver's licence
 a Canadian passport
 health insurance with a Canadian province or territory
183-day rule
You may be considered an immigrant if you left another country to settle in Canada, established
significant residential ties with Canada and became a resident of Canada in the tax year.

You may be considered a deemed resident of Canada if you have not established significant
residential ties with Canada to be considered a factual resident, but you stayed in Canada for 183
or more days in the year.

If you normally, customarily or routinely live in another country:

You may be considered a non-resident of Canada if you did not have significant residential ties
with Canada and one of the following applies:

• You lived outside Canada throughout the year (except if you were a deemed resident of
Canada)
• You stayed in Canada for less than 183 days in the tax year
NR74 - Determination of Residency Status
If you are not sure if you are
a resident of Canada for
income tax purposes,
complete Form NR74,
Determination of Residency
Status (Entering Canada).

Send your form to the

Canada Revenue Agency
(CRA) as soon as possible to
receive an opinion on your
residency status before your
return is due.
 Adult child is studying in Canada and

CASE 1
living in dormitory.
Parents are working and residing in Hong
Kong and will visit the child and stay in

STUDY Canada for 30 days a year

Canadian passport holders decided to

move Hong Kong and work in Hong
2 Kong. They don’t have a home nor a
spouse or dependent in Canada. They
terminated their health insurance but
keep a Canadian bank account and the
driver’s license.

Dad is working in Hong Kong but mom and

3 child are residing in Canada. Child is
attending local school and mom is a
housewife. They have access to health
insuance but dad doesn’t and he is staying
in Canada for less than 183 days per year.
Tax filing requirement, Tax rates,
deductions, benefits, tools to save tax
and Foreign account reporting
Types of tax
 Income Tax (Federal and Provincial)
Individuals resident in Canada are subject to Canadian income tax on worldwide income. Income
includes employment income, equity compensation, business income, capital gain, dividend, interest
rental income and other investment income.

Non-resident individuals are subject to Canadian income tax on income from employment in Canada,
income from carrying on a business in Canada and capital gains from the disposition of taxable
Canadian property.

 Social security contributions (CPP/EI)

 Consumption taxes (GST/HST/PST)
 Estate Tax
 Property taxes
 Land transfer tax
 Luxury and excise taxes
TAX NUMBER
Social insurance number
As a newcomer to Canada, you will need a social insurance number (SIN). The SIN is a nine-digit
identification number that is unique, personal and confidential.

The CRA uses your SIN to identify you for income tax and benefit purposes. You have to give your
SIN to anyone who prepares tax information slips for you, such as a T4 slip.

When you decide to become a permanent resident of Canada, you have to apply for a SIN with
Service Canada if you are currently using any of the following:
• a temporary SIN (starting with the number 9) from Service Canada
• a temporary tax number (TTN) from the CRA
• an individual tax number (ITN) from the CRA

Once this new SIN has been assigned to you, do not use any other SIN, TTN or ITN that was
previously assigned to you.
Tax rates
2024 income tax rates are as follows:
Estimated income Bristish
Federal (%) Ontario (%) Alberta (%) Quebec (%)
(CAD) Columbia (%)
50000 15 5.05 5.06 10 14
100000 20.5 9.15 7.7 10 19
120000 26 11.16 10.5 10 24
150000 26 11.16 12.29 12 24
175000 29 12.16 14.7 13 24
200000 29 12.16 16.8 14 24
250000 33 13.16 20.5 14 24
350000 33 13.16 20.5 15 24
The province with the highest tax rate is Quebec while the one with lowest tax rate is Alberta
DEDUCTIONS
Income tax is based on taxable income, not total income. Deductions are amounts subtracted from
total income. When you claim deductions, you can lower your taxable income, lower your income tax
and lower taxable income may increase benefits.

Some key deductions:

 Annual union, professional and similar dues (line 21002)
 Child care expenses (line 21400)
 Expenses a person with a disability paid to earn income or go to school (line 21500)
 Some types of losses in a business you own, including capital losses (line 21700)
 Moving expenses if you had to move more than 40 kilometres to take a job (line 21900)
 Support payments to a spouse, common-law partner or child (line 22000)
 Interest and fees required for investments (line 22100)
 Half of the money a self-employed person paid into the Canada Pension Planand
 Quebec Pension Plan (line 22200)
Registered accounts
 Registered Retirement Savings Plans (RRSPs)
• Defers income tax on deposit and income the deposit earns until withdrawn
• Deposit limited to 18% of employment income
• Can include most common types of investments
• If withdrawn early, part is withheld for taxes
• Temporary withdrawal allowed for home buying and education

 Tax-Free Savings Accounts (TFSAs)

• Income earned is tax-free
• Deposit up to $6,500 for 2023
• Can include most common types of investment

 Registered Education Savings Plans (RESPs)

• Saving for a child to pay for education after high school
• Contribution is not tax deductible
• Income earned is tax-free until withdrawn then income and Grant are taxed as income of
the child (possibly at a lower tax rate)
• Eligible for grants from Canada and Quebec
TAX FILING REQUIREMENT
Even if you lived in Canada for only part of the year, you may have to file a Income Tax and Benefit
Return if you:
• have to pay tax for the year
• want to claim a refund
• want to get benefit and credit payments

To continue getting the benefits and credits you may be entitled to, you have to do your taxes each
year, even if you had no income.

For most people, the return and the payment date is both due April 30 (or the first business day after
April 30 if it falls on a holiday) after a calendar year.

Keep all receipts and documents for at least six years after you file your return. If the CRA chooses to
review your return, you will have to provide your receipts to support your claims.
BENEFITS AND REBATES
You can get these benefits and credits after filing your first tax return in Canada:

 GST/HST credit and Canada Carbon Rebate (CCR)

The goods and services tax/harmonized sales tax (GST/HST) credit helps you offset the tax you
pay on things you buy. If you are at least 19 years old, have a low or modest income, and are
eligible, apply for a tax-free quarterly payment.

The Canada Carbon Rebate (formerly known as the Climate action incentive payment (CAIP)) is a
tax-free amount to help eligible individuals and families offset the cost of the federal pollution
pricing. If you are at least 19 years old and are eligible, apply for a tax-free quarterly payment.

 Canada child benefit (CCB)

If you have at least one child under 18 years old and are eligible, apply for a tax-free monthly
payment to help with the cost of raising your family.
Foreign Income Verification Statement
If you held “specified foreign property” with a total cost in excess of C$100,000 at any time
during the taxation year, you are required to report to the Canada Revenue Agency (CRA), for the
year, certain information related to your foreign property on Form T1135 – Foreign Income
Verification Statement.

Due date for filing the T1135:

Your T1135 is due on or before the due date of your income tax return. For individuals the filing
deadline is generally April 30 of the following year

Consequences of failure to file accurately and on time

If you fail to file Form T1135 by the due date, you may face a penalty. The penalty is $25 per day,
subject to a minimum penalty of $100 and a maximum of $2,500.

Voluntary Disclosures Program may be available if certain conditions are met. Taxpayers who
have provided incomplete information, omitted information, or who have not filed Form T1135 are
encouraged to come forward and correct their tax affairs through the program. To qualify for the
program, a taxpayer must file a valid disclosure.
What preparation do you need to do
before commercing Canadian tax
residency?
Property you owned before you arrived
If you owned certain property at the time that you immigrated to Canada, the CRA considers you
to have sold the property and to have immediately reacquired it at a cost equal to the fair market
value (FMV) on the date that you became a resident of Canada. This is a deemed disposition.

Your property could include items such as shares, jewelry, paintings or a collection. Usually, the
FMV is the highest dollar value that you can get for your property in a normal business
transaction.

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

You dispose of your property when, for example:

 You sell it
 You give it away
 It is destroyed or stolen
There is no inheritance tax in Canada but
what happens after a person is deceased?
Estate tax calculation
There is no inheritance tax in Canada. Instead, after a person is deceased, a final tax return must
be prepared on income they earned up to the date of death. Any monies owing are paid out from
the estate assets before the remaining funds are transferred to the various beneficiaries.

The tax is applied beforehand, so the person getting taxed is the deceased, not the heirs.

Any assets included in the estate (income properties and non-registered investment) are
considered to have been sold for fair market value at the time of death. This includes any real
estate, businesses, land, investments, even RRSPs. It's important to note that each of these
assets will generate income differently, and they are not all taxed the same way.

Example: Shirley passes away with $230,000 of individual stock held in a non-registered
discount brokerage account. It's determined that the stock has an adjusted cost base of
$150,000, leaving Shirley's estate with a capital gain of $80,000. Her executor will need to report
$40,000 as income on Shirley's final tax return (50% of $80,000).
 Cases with/without a surviving spouse
Cases with a surviving spouse
Where there is a surviving spouse or common-law partner, a non-registered capital property can
be transferred to them, without a capital gain having to be reported as income. Eventually, when
the spouse passes away, the property will be disposed in their name, and the capital gain reported
at that time. With respect to RRSP and RRIF investments, if an eligible person has been named as
a beneficiary, then the income from the investment does not have to be reported, and any tax is
deferred. Eligible beneficiaries include a spouse or common-law partner, a financially dependent
child or grandchild (under 18 years of age), or a mentally or physically disabled child or grandchild
of any age.

Cases with no surviving spouse

With no surviving spouse, common-law partner, or other eligible beneficiary, all estate assets are
deemed to have been sold at fair market value immediately at the time of death. For real estate
properties, a capital gain will have to be reported at 50%. The same goes for any non-registered
investment, where the capital gain will be the difference in the market value when the investment
was purchased, and the value at the time of death. All registered investments, such as RRSPs and
RRIFs, are deemed sold at their full market value upon death. The full balance of the RRSP or
RRIF will need to be reported as income on the final tax return.
 Foreign inheritance tax in Canada
When a Canadian receives an inheritance from another country, it is generally not considered
taxable income. However, there are a few important things to consider:

• If the income earned by the foreign estate is taxed at the trust level, Canadian beneficiaries
typically do not owe additional tax. But if the estate's income is taxed in the hands of the
beneficiaries, beneficiaries may owe tax on the foreign inheritance they receive.

• Any future income generated from the inherited assets will be subject to Canadian taxation,
even if the income is not brought back to Canada.

• Canadians inheriting foreign property must report the inheritance to the CRA by filing a T1142
form. Failure to file can result in penalties.

• If an inherited property generates income, such as from renting out foreign real estate, that
income must be reported to the CRA and may be subject to tax.
Useful RESOURCES
● Newcomers to Canada - Canada.ca
● Learn about your taxes - Canada.ca
● Purpose of taxes – Learn about your taxes - Canada.ca
● Tax credits and benefits for individuals - Canada.ca
● Income tax rates for individuals - Canada.ca
● Doing taxes for someone who died - Canada.ca
● FAQ on Foreign Income Verification Statement: https://www.canada.ca/en/revenue-
agency/services/tax/international-non-residents/information-been-moved/foreign-reporting/questions-
answers-about-form-t1135.html
● Preparing Returns for Deceased Persons 2023: https://www.canada.ca/en/revenue-
agency/services/forms-publications/publications/t4011/preparing-returns-deceased-persons.html
Do you have any questions?

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