Your first tax year in Canada.

First, the practical things

A Social Insurance Number. You need one to work, to file a return and to receive benefits. Apply through Service Canada, in person at a Service Canada Centre or online. It is free, and nobody should be charging you for it.

A bank account. Worth opening early, because benefits and refunds are paid by direct deposit and it is far quicker than waiting for cheques.

A CRA My Account. Set it up once you have filed for the first time. It shows your benefit payments, your notices, and eventually your contribution room.

When you become a resident for tax

Canada taxes people based on residency, not citizenship or immigration status. Some countries do it the other way around, so this is worth reading carefully.

You generally become a resident for tax purposes on the date you arrive and establish significant residential ties: a home, a spouse or dependants here, and to a lesser extent bank accounts, a licence and health coverage. Immigration status matters less than where your life is.

From that date onward you are taxed on your worldwide income, not only what you earn in Canada. Income earned before that date, while you were living elsewhere, is generally outside the Canadian system.

Generally, because Canadian source income can be taxable here even for the part of the year before you became a resident. Employment carried out in Canada, a business operated here, or the sale of certain Canadian property are the usual examples.

So the first year is split. Part of it you were not a Canadian tax resident, part of it you were, and the return reflects that.

Tax treaties

Canada has tax treaties with a large number of countries. Two things they do that matter to a newcomer: they prevent the same income being taxed twice in both places, and they contain rules for deciding where you are resident when two countries both consider you to be theirs.

For most people arriving with a clear intention to settle here, a treaty operates quietly in the background and never needs to be argued. Where it is doing real work, because your residency is contested or because a foreign pension or specific type of income is involved, that is specialist territory and worth establishing at the outset rather than at filing time.

Your first return

File for the year you arrived, even if you were here only part of it and even if you earned very little. Filing is what starts the benefits, and several of them are backdated only so far.

Some things specific to a first return:

• You enter your date of entry. That is what tells the CRA you are a part-year resident and drives the rest
• Some credits are prorated for the part of the year you were resident, unless nearly all of your income for the non-resident portion was from Canadian sources. This catches people who expect the full basic personal amount in year one
• Income from before you arrived is generally not taxed here, but it can still be relevant to certain calculations, so it may need to be reported even where it is not taxable
• Foreign income after you arrive is taxable here, including rent from a property you kept overseas and interest on accounts you left open. Foreign tax you paid on it may be creditable
• Foreign property over the reporting threshold has to be declared on a separate form once your total cost exceeds $100,000 Canadian. The penalties for missing it are severe and it catches people who left a house or investments behind. See voluntary disclosure if this has already been missed

Benefits you have to apply for

These do not arrive because you moved here. Most require an application, and some require extra forms in the first year because the CRA has no income history for you.

• Canada Child Benefit, if you have children. There is a separate form for newcomers asking about your income before you arrived, because the benefit is income tested and they have nothing on file
• GST/HST credit, paid quarterly to lower income households
• Ontario Trillium Benefit, which includes help with energy costs and property tax or rent. You claim it on the return
• Canada Workers Benefit, if you are working and earning below the thresholds

Filing a return is the mechanism for most of this. Someone with no income at all should still file, because that is how the system learns you exist.

Registered accounts

This one causes confusion, and the two accounts work differently.

TFSA. Contribution room starts accumulating from the year you become a resident, or from the year you turned 18 if that is later. You do not get credit for the years before you arrived. So a newcomer aged 40 does not have the large accumulated room a Canadian of the same age has.

RRSP. Room is based on earned income reported on a previous Canadian return. In your first year here you have none, because there is no prior year. Room appears the year after your first return showing employment income. People are frequently told to open an RRSP immediately and then find they have nothing they can contribute.

FHSA, the first home savings account, has its own rules and can be worth looking at if buying a home here is the plan.

If you are working for yourself

Plenty of newcomers arrive with skills and start earning before they find employment. If that is you, the business rules apply from the start: keep records separately, understand when you have to register for HST, and be aware that self-employed people pay both halves of CPP. See starting a business.

Free help, locally

Settlement organizations do a great deal that an accountant does not, and they do it at no charge. Speak to them first.

Organization	What they do
Northumberland County Settlement Services Cobourg	Information, resources and support for people who have recently moved to the county or are considering it
New Canadians Centre Northumberland branch, Cobourg	Immigration and settlement support covering employment, education, health, housing and finances, plus help obtaining Canadian identity documents and a school outreach program for newcomer families
Welcome to Northumberland	Local information for people moving to the area
IRCC newcomer services	The federal directory of free settlement services, searchable by location

The CRA also runs free tax clinics through community organizations for people with modest incomes and simple returns. If that describes your first year, a clinic may be all you need.

Questions