Filing Taxes for the First Time as a Canadian Resident? Here’s What You Need to Know.

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Tips and tricks for Canadian tax filers at every stage of life from UFile's tax expert Gerry Vittoratos

Filing Taxes for the First Time as a Canadian Resident? Here’s What You Need to Know.

by UFile Team Équipe ImpôtExpert | Nov 27, 2017   Comments:
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Filing Taxes for the First Time as a Canadian Resident? Here’s What You Need to Know.

Canada is on track to welcome as many as 320,000 newcomers to the country in 2017, which means there will be many first time tax filers learning how to navigate the Canada tax system. If this is your first year in Canada, we've got you covered!

As a newcomer, filing your own taxes may be a completely new experience for you. Although the process may seem complicated, it doesn’t have to be, especially if you prepare your taxes using CRA recommended tax software like UFile. Still, you may be wondering where to start, how credits work, and when you become a resident in the eyes of the CRA. We’ve got some handy tips to keep in mind to make your first return simple.

Qualifying for credits - the 90% rule

As a new resident in Canada, your tax credits will be determined by something called the 90% rule. This simply means that if you had no income, or if 90% or more of your total income while you were living outside of Canada is Canadian-earned, you will be allowed to claim full credits just like any other year-round resident of Canada. Otherwise, you may see your tax credits prorated based on the number of days you’ve resided in Canada. In order to determine whether you qualify under the “90% rule,” you need to track the income you gained for the portion of the year you were not in Canada. This includes the income you earned in another country. You will not be taxed on that income, but it will be considered towards the “90% rule.”

When are you considered a “Factual Resident”?

You might physically enter Canada on a certain date, but when does that date become your official date of entry? In order for the CRA to consider you a resident of Canada, you need to have established residential ties during that year. So, what does the CRA consider “significant residential ties”? Generally speaking, you need both the location of your home, and the place of residence of your spouse and dependents to both be in Canada in order for the CRA to consider you a factual resident.

Other considerations can include personal property (furniture, clothing), economic ties (a job or business in Canada, bank accounts), provincial medical insurance cards, provincial driver's licence, the list goes on. If you do not have what the CRA considers as significant residential ties, you will be considered as a non-resident even if you are physically in Canada at the time. The moment you have established significant residential ties with Canada, make sure to apply for you Social Insurance Number or SIN to be able to work and file your income tax return.

When are you considered a “Deemed Resident”?

The CRA does not consider you a Canadian resident unless you have established significant residential ties. However, if you have stayed in Canada for over half the year, you are labelled as a “deemed resident.” For students or employees on contract, this means you should take careful note of your residency status. The rules for income tax filing are different for deemed residents than factual resident. You may claim your full credits, but you should expect to pay a surtax instead of provincial taxes.

Ask an Expert

There’s no need to feel overwhelmed by it all. For more information on finding out your residential status, consult the CRA website. If you’re using UFile software for taxes, our step by step interview set-up and automatic optimisation ensures that you get the best return without having to know all of the specifics. If you have any additional questions or need assistance, our tax experts are  always just an email away!


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