Moving to a new country can require a lot of adjustment and cause some serious inconvenience whether it is adjusting to the new culture, familiarizing yourself with the local rules and regulations or fitting in with your new neighbours and acquaintances. Just like all the other factors and features, adapting to the new environment demands of you to be financially prepared and well-informed about the tax situation in the new land. Similarly, if you are a newcomer to Canada, it is imperative for you to acquaint yourself with the Canadian income tax laws and liability.
Why should I file a tax return?
If you are a new immigrant, considered to be a resident of Canada, then you are required by law to file a tax return for all or part of the tax year as well as declare your worldwide income to the Canada Revenue Agency. What is important to note is that your Canadian residency status does not determine whether you are required to file your income tax returns. It only changes the specifics of how these tax returns are submitted.
Also, the Canada Revenue Agency (CRA) requires you to submit tax returns if you meet any of its requirements regardless of your age or profession. Escaping the filing of Canadian tax returns can prove to be very unwise. This is especially emphasized by the fact that tax filers become eligible for many benefits and deductions from the Canada Revenue Agency (CRA).
How to file Canadian income tax return?
With CloudTax, filing your Canadian income tax returns is easy as spelling out your A-B-C’s. Our online tax preparation software allows you to file your income tax returns electronically through either an E-FILE or a NETFILE system. We are an approved online tax service dedicated to easing the hectic tax filing process and its requirements for you.
Keep in mind, if your Social Insurance Number (SIN) begins with a “08” or “09”, you may not be able to NETFILE your taxes, due to certain restrictions. With CloudTax Pro, a tax expert will be able to help you file your taxes regardless.
This way you don’t have to stress about the details and intricacies as it will save you a lot of time which might have had to be devoted to the understanding of the tax return systems of your new country. We offer comprehensive and problem-solving tax strategies to help you fulfill this necessary obligation.
Canada’s tax system
The tax system in Canada is fairly simple. Either your employers will deduct from the income you are paid, or you will pay your taxes yourself in instalments if you are self-employed or run a business. According to the Government of Canada, after calculating the amount you owe to both provincial and territorial taxes, you can determine if you have a balance of tax owing for the year or if you are entitled of any refunds. You can determine your tax status with our simple tax calculator here.
Am I subject to Canadian income tax?
Canadian residents must file Canadian income taxes on their worldwide income. However, this filing of tax returns is not limited to just Canadian residents. Non-Residents and deemed residents are also required by the Canadian Revenue Agency (CRA) to file their income tax returns in some cases. You have to pay taxes and file tax returns if you have significant residential ties in Canada. Residential ties include you having dependents, a spouse or a house in Canada.
In any of these cases, you become liable for Canadian tax returns. There are, however, slightly different procedures and rules that apply to Canadian residents and non-residents which are discussed below:
You become a resident of Canada for income tax purposes when you establish significant residential ties in Canada or if you have any relatives (or dependents such as children), bank accounts or any other social or financial ties with Canada. In any of these cases, you will be liable for the filing of Canadian income tax returns to the CRA. This will still apply even if you have to move to another country for travelling or living purposes as you will still be considered a resident of Canada.
For newcomers, becoming a resident happens on the date you enter Canada. This also includes refugees, individuals who have applied for or received permanent resident status and 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.
For newcomers, it is required by the Canadian Revenue Agency to submit their income tax returns for the part of the tax year during which they were a resident of Canada. What’s more, according to the CRA you are required to file tax returns for a year even if you have not received any income in that particular year. The benefit for this specific action tips in your favour, as we shall discuss under the following headings.
See also ‘Filing Tax as a Non-Resident‘
Non-residents & Deemed residents
If you are a non-resident and visit Canada for less than 183 days a year, you will only be required to pay income taxes on Canadian Income. However, if you visit Canada for more than 183 days a year, you can be deemed a resident, and in this case, you will be required to pay income taxes for the whole year on your worldwide income. The tax regulations which apply to non-residents and deemed residents are more complicated and detailed. Please refer to the CRA’s website for non-residents and deemed residents for further details.
Filing tax returns can make you eligible for benefits and deductions
The most prominent and greatest advantage of filing your Canadian income tax returns is that this act can make you eligible for benefits, deductions and refunds. These income tax filing benefits include the Canada Child Benefit and the HST/GST whereas the income tax filing deductions include pension income splitting, moving expenses, support payments, employment and child care expenses as well as RRSP contributions made to a registered retirement savings plan. These benefits and deductions vary from person to person depending on your personal financial and social situations. But you surely do not want to miss out on the chance if you do qualify for any of these!
You do not have to file multiple tax returns
Another advantage of filing your Canadian income tax return with the Canadian Revenue Agency (CRA) is that the procedure is simple and free of any hassle. Say goodbye to filling out numerous forms and the filing of multiple tax returns as we provide an easy route for your tax filing processes. Instead of submitting different returns for your provincial/territorial and your federal taxes, you can get it done in one go. You can submit your Form 428 relating to your province/territory along with your federal income tax returns. This proves to be much more convenient and suitable especially for newcomers to Canada who are not very familiar with the Canadian income tax filing procedures. When you are filing your return, you will have to provide the Canadian sourced income and foreign-sourced income earned when you were not a resident of Canada. Based on your income, your non-refundable tax credit may be prorated.
Penalties and interests for late filing of taxes can be financially burdensome. Therefore, it is essential that you start your tax filing procedures on time. Our online tax filing preparation software ensures that your tax filing processes are on time and thorough. Furthermore, we also make sure that you do not miss out on any benefits, deductions or refunds that you are eligible for. Get in touch with us now at www.cloudtax.ca to begin your Canadian income tax filing procedures with us!