Tax tips for newcomer

 Starting life in a new country comes with a mountain of paperwork and taxes can feel like a maze. Whether you're working a job, starting a side hustle, or bringing money from back home, we’ll walk you through the key things you need to know to avoid penalties and maximize your returns. 

 Moving to Canada isn’t just about getting a new address it comes with a new set of tax responsibilities. If you established significant ties (like getting a job, renting a home, or bringing your spouse and children), the Canada Revenue Agency (CRA) likely considers you a resident for tax purposes from the date you arrived. That means even if you were only in Canada for a few months in the calendar year, you still need to file a T1 Personal Income Tax Return for that year even if:

• You didn’t earn any Canadian income
• You were on a temporary visa that later changed to permanent
• Your income was earned abroad

 Filing Deadline:
April 30 is the standard personal tax deadline in Canada. If you or your spouse/common-law partner were self-employed, the filing deadline extends to June 15 but any taxes owed are still due by April 30 to avoid interest.

 Keep Proof of Your Arrival Date  

Your arrival date plays a critical role in your first tax return. It determines:

• When you became taxable in Canada
• What income needs to be reported (global income from that date forward)
• Whether you qualify for benefits like GST/HST credits or Canada Child Benefit 

The CRA typically accepts the date on:

• Your passport stamp
• Your Confirmation of Permanent Residence (COPR)
• Your first lease or utility bill

Keep this documentation in a safe place you may need it for future tax years, audits, or immigration applications. applicable accounting standards and regulations.

One of the biggest surprises for many newcomers? Canada taxes residents on their worldwide income not just what you earn within Canadian borders.

Once the CRA considers you a resident for tax purposes, your financial obligations change. From that point forward, you must report all income earned globally, even if:

• It was deposited into a foreign bank account.
• You never transferred the money to Canada
• The income was taxed in another country. 

Types of Foreign Income That Must Be Reported:  

◎  Foreign employment income (if you continued working for an overseas employer)

◎  Rental income from properties abroad (e.g., a house back home)

◎  Dividends or interest from international investments or savings accounts

◎  Foreign pensions, retirement income, or annuities

◎  Capital gains from selling overseas property or shares 

 Example: If you’re receiving rental income from a property in India or France while living in Canada, that rental income needs to be reported on your Canadian tax return — even if you never bring the money to Canada.

Do You Hold Assets Abroad? You May Need to File Form T1135  

If, at any time in the year, you owned foreign assets worth over $100,000 CAD (combined), you’re required to file a special disclosure form called Form T1135 – Foreign Income Verification Statement.

This applies to:

• Foreign real estate (unless used personally, like a vacation home)
• Foreign stocks or mutual funds held outside of Canadian institutions
• Bank accounts outside Canada
• Shares of private overseas businesses

Failing to file Form T1135 can result in steep penalties even if the assets didn’t generate income. 

3. Apply for Benefits Like GST/HST Credit & Canada Child Benefit  

One of the best-kept secrets in Canadian taxes? You don’t need to owe or even earn money to qualify for valuable government benefits. In fact, many newcomers unknowingly leave thousands of dollars on the table simply because they didn’t file a tax return in their first year. Here's what you could be eligible for:

• GST/HST Credit (Quarterly Tax-Free Payments)  

This is a tax-free benefit paid out every 3 months to help lower- and middle-income individuals and families offset the sales tax they pay on everyday purchases.

You may qualify for this credit even if you had zero income in Canada for the year. The CRA uses your tax return to calculate:

• Your eligibility
• Your household income
• How much you’ll receive per quarter

Typical Amount: $300–$800+ per adult per year, depending on your income and marital status

• Canada Child Benefit (CCB)  

If you have children under 18 and you’re living with them in Canada, you may qualify for this monthly, tax-free benefit even if only one spouse is working or the family income is low.

• Based on household income
• Can range from $100 to over $600/month per child.
• Adjusted every July based on your previous year’s tax return

Example: A newcomer family with two young children and limited income could receive over $10,000/year in combined child benefits.

• Climate Action Incentive Payment (CAIP)  

If you live in a province that participates in the federal carbon tax (like Ontario), you may also qualify for quarterly Climate Action payments — even if you don’t drive.

• Paid automatically if eligible
• Helps offset higher fuel and energy costs
• You must file a return to trigger it!

 Action Step: File Your Return — Even If You Didn’t Work  

Many newcomers mistakenly believe they don’t need to file a return if they have no income. But filing is the only way to:

• Prove your residency to CRA
• Get assessed for tax credits
• Start receiving payments

It’s quick, simple, and well worth it especially if you’re supporting a family.   

4. Get a SIN and Keep Your Records Organized  

Before you can file taxes, get paid by an employer, or apply for government benefits, you’ll need one essential piece of Canadian paperwork: your Social Insurance Number (SIN).

Think of your SIN like your tax ID. It’s how the government tracks your earnings, benefits, and tax filings. You can apply for a SIN online or in person at any Service Canada location. It’s fast and free and should be one of your first steps after arriving in Canada.

◎  Protect Your SIN — It’s Sensitive!  

Only share your SIN when absolutely necessary (e.g. with your employer, your bank, or your accountant). Avoid including it in emails or sharing it with people you don’t fully trust — it’s often targeted in identity theft.

◎  Keep Your Tax Records for At Least 6 Years  

Once you begin filing tax returns in Canada, the Canada Revenue Agency (CRA) expects you to maintain good record keeping. If you’re ever audited or reviewed, CRA can go back as far as 6 years and they’ll want to see documentation.

Here are some records to keep organized and accessible:

• Pay stubs & T4s (from employers)
• Tuition and education receipts (e.g. T2202 forms)
• Bank interest and investment statements
• Foreign income reports or bank statements
• Donation receipts (from registered charities)
• Medical expense receipts (prescriptions, dental work, etc.)
• Rent receipts (especially in provinces like Ontario or Quebec)

Scan and store everything digitally in a secure cloud folder. CRA accepts digital records if they’re clear and readable.

◎  Why Good Record-keeping Pays Off  

When your records are organized, you can:

• Claim more deductions (and get a bigger refund)
• Respond quickly if CRA contacts you
• Avoid stress during tax time or benefit applications
• Track your RRSP and TFSA contributions accurately

5. Did You Arrive as an International Student? Here’s What to Know:  

Canada is home to thousands of international students each year and while your main goal might be education, you still have tax responsibilities (and some major opportunities) that many students overlook. Whether you're studying full-time or part-time, paying attention to your taxes now can lead to valuable long-term savings. 

➤  Your Tuition Is Tax Deductible  

The good news? That hefty international tuition bill can actually pay you back.

• You’ll receive a T2202 Tuition and Enrolment Certificate from your college or university.
• This form tells the CRA how much eligible tuition you paid during the year.
• You can claim this amount as a non-refundable tax credit, which helps reduce your income tax owing.

Even if you don’t owe taxes this year, your unused tuition credits won’t go to waste.

➤ You Can Carry Forward Unused Tuition Credits  

If your income is low during your studies (as it often is for students), you probably won’t need all of your tuition tax credit right away. That’s okay you can carry the unused portion forward to future years when your income (and tax bill) is higher.

This means you’ll have a built-in tax break waiting for you once you start working full-time.

Bonus: If your parent or spouse is supporting you financially, you may be able to transfer up to $5,000 of tuition credits to them.

➤  All Work Income Must Be Reported — Even Part-Time Jobs  

Whether you’re working at the campus bookstore, doing Uber Eats on weekends, or tutoring online all employment and self-employment income must be reported on your Canadian tax return.

• Your employer will issue a T4 slip (for part-time jobs)
• For side gigs or freelance work, you’ll report income on a T2125 form.
• Even scholarships and bursaries may be partially taxable depending on your program and status.

CRA takes student tax compliance seriously. Avoid under-reporting income especially from platforms like Door Dash or freelance sites as these are often matched with banking records.

➤  You’re Building RRSP & TFSA Room Use It Wisely  

Even as a student, you’re laying the foundation for long-term financial growth:

• RRSP Contribution Room: If you earn income and file a return, you begin accumulating RRSP room which you can use to reduce taxes in the future.
• TFSA Eligibility: Once you turn 18 and become a resident for tax purposes, you can start contributing to a Tax-Free Savings Account (TFSA) where your money grows tax-free, forever.

Even small investments now can compound massively over time. Filing taxes is how you start unlocking these tools.

6. Avoid Common Newcomer Tax Mistakes  

Canada’s tax system is complex, and if you’re new to the country, it’s easy to get tripped up. But here’s the good news: with a little guidance, you can avoid the most common (and costly) mistakes newcomers make in their first few years.

Below are four red flags that often catch new Canadians off guard and how to stay clear of them:

• Forgetting to Report Foreign Income  

This is by far one of the most common and expensive mistakes.

Once you become a resident for tax purposes, the CRA expects you to report all worldwide income, not just what you earned in Canada. That means:

• Income from rental properties abroad
• Overseas bank interest or dividends
• Pensions or side income from your home country

CRA has information-sharing agreements with over 100 countries. If foreign income is discovered later, penalties and interest can add quickly.

• Assuming You Don’t Need to File Because You Didn’t Earn Canadian Income  

This is a big myth and it costs newcomers real money.

Even if you:

• Just arrived in Canada
• Didn’t work yet
• Had no Canadian income

you still need to file a tax return to:

• Trigger benefit payments (like GST/HST Credit or CCB)
• Build RRSP and TFSA room
• Prove your residency status to CRA

Filing a “zero income return” is still valuable. It gets you in the system and unlocks benefits.

• Missing Out on Free Government Credits  

When you don’t file or file late you risk missing automatic payments like:

• GST/HST Credit (paid quarterly)
• Canada Child Benefit (paid monthly)
• Climate Action Incentive (for eligible provinces)

These are tax-free cash payments that can add to thousands of dollars per year. You must file a tax return to receive them even if you don’t owe taxes.

• Filing Taxes Late — Which Triggers Interest + Penalties  

CRA takes filing deadlines seriously. If you file late and owe money, you could be hit with:

• A 5% late filing penalty on the amount you owe
• An additional 1% per month for up to 12 months
• Interest on unpaid taxes starting the day after the due date

Even if you can’t pay right away, file on time it limits your penalties and shows good faith. 

7. Bring Over Receipts and Docs From Your Home Country  

When you move to a new country, it's easy to leave behind more than just furniture but when it comes to taxes, some of the documents you brought (or forgot) could mean real money in your pocket. If you recently moved to Canada, there are a few key receipts and expenses from your home country that may be partially or fully deductible depending on your personal tax situation. 

Expenses That Might Be Tax Deductible:  

♢ Moving Expenses  

If you moved to Canada to attend school full-time or to start a job at a new location that's at least 40 km closer to that job, you may be able to deduct:

• Plane tickets for you and your family
• Shipping and storage costs
• Temporary lodging while settling in
• Travel meals and accommodations

Must be moving for income or education reasons (not just lifestyle).

♢ Immigration Legal & Professional Fees  

Some immigration-related fees may qualify as deductions especially if they relate to employment or business activity (e.g., obtaining work permits or hiring a consultant for a business move).

• Legal fees to secure a job or self-employment visa may be considered
• Fees related to spousal sponsorships or permanent residency applications are usually not deductible.

Keep all itemized receipts, contracts, or invoices related to legal services.

♢  Medical Care Before or During Your Move  

Canada allows a Medical Expense Tax Credit, and you may be able to include some costs from abroad, such as:

• Doctor or dental bills (within 12 months of your arrival)
• Prescription medications
• Assistive devices or therapies
• Travel costs to obtain medical treatment (in some cases)

Only expenses not reimbursed by insurance and supported with official receipts are eligible.

Bonus: Build a Tax-Smart Foundation for Life in Canada  

• Open a Tax-Free Savings Account (TFSA) — it grows tax-free
• Track all business or side gig income (even Uber, Etsy, or freelancing)
• Keep a log of any vehicle use for work or business
• Set aside at least 25% of your income for taxes if self-employed