Once you become a resident of Canada, you must report your worldwide income. World income is income from all sources in and outside of Canada. However, all or part of the income may be exempt from Canadian tax. This can happen if Canada has a tax treaty with the country or region where you earned the income, and there is a provision in the treaty that prevents Canada from taxing the type of income you received. You can deduct the exempt portion on line 25600 of your tax return.

Who, as an immigrant, has to file tax returns

Even if you only lived in Canada for part of the year, you may still need to file a tax return and a benefit return.

Submit a 2021 return if:

  1. You must have to pay taxes for the year
  2. you want to request a refund
  3. they want to get benefits and credit payments

In order to continue to earn benefits and credits to which you are entitled, you must pay taxes annually, even if you have no income. The CRA uses your return information to calculate the Goods and Services Tax / Harmonized Sales Tax (GST / HST) credit, Canada Family Benefits (CCB), and any related provincial or territorial taxes you would have to pay. If you lived in Quebec on December 31, 2021, you might need to file a separate provincial tax return. Talk to a tax accountant or tax preparation services provider for more clarity.

Look up for tax preparation services provider near me if you need more guidance.

Frequently asked questions

Which Income Tax Package should one Use?

Most Canadian resident individuals file only one tax return per tax year because the Canadian government collects taxes on behalf of all provinces and territories except the province of Quebec. For the tax year in which you are new to Canada and for each tax year in which you continue to be a resident of Canada for income tax purposes, use the income tax package for the province or territory in which you were resident on the December 31 of the fiscal year.

What deductions can you claim?

You can lower your total income by taking the deductions you’re eligible for. The deduction is the amount you are awarded if you are eligible. If so, it will be deducted from your total income. The result is called taxable income, which is used to calculate federal and provincial or territorial tax. The following precipitations are some of the more common ones.

Can I deduct my moving expense to Canada?

Generally, it is not possible to deduct moving expenses incurred in moving to Canada. However, if you entered Canada to take courses as a full-time student enrolled in a post-secondary level program at a university, college, or other educational institution and received a scholarship, bursary, Canadian taxable scholarship, or research grant to participate in that institution’s education, you may have a claim to deduct moving expenses. You can’t deduct moving expenses if your only income in the new location is a fully tax-exempt stipend, stipend, or scholarship income.

What if I become a resident? Would I still be eligible for the tax credit?

For part of the year when you are not a resident of Canada, you can claim the tax credit above for eligible supply expenses paid in 2021 related to the non-resident period if:

  1. the Canadian-source income you reported for the part of the year when you were not a resident of Canada is 90% or more of your worldwide net income for that part of the year
  2. you had no income from sources inside or outside of Canada during that part of the year

However, the total amount you can claim cannot exceed the amount you could claim if you were a resident of Canada for the entire year.

Can I make contributions to any Registered Retirement Savings (RRSP)?

You usually can’t deduct Registered Retirement Savings (RRSP) contributions in 2021 if it’s the first year you file a return in Canada. If you filed a return in Canada for any tax year from 1990 to 2020, you might be able to claim a deduction for RRSP contributions you made in Canada for 2021. The CRA determines the maximum amount you can deduct based on certain types of income that you have achieved in previous years.

Bottom Line

If you are unsure whether the applicable tax treaty contains a provision that your income from sources outside of Canada is exempt from tax in Canada, contact the CRA or look up tax preparation services near me or, in short, a tax accountant.

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