Taxes for Newcomers to Canada

For newcomers to Canada, navigating the complex mazes of the Canadian tax and benefits system can become a daunting task. If you moved to Canada in 2023, you will need to file your taxes in order to be eligible for benefits such as the GST credit and the Climate Action Incentive Payment (CAIP) to name a few. In this blog we will discuss the basics of the Canadian taxation for newcomers and discuss some of the benefits they may be entitled to.

The Canada Revenue Agency (CRA) being the governmental body responsible for collecting taxes and distributing benefits, defines a newcomer as:

Permanent residents,

Refugees, and

Temporary residents. A temporary resident may include students and workers on temporary visas, and temporary residents.

You are considered a resident of Canada for tax purposes when you establish enough “residential ties” to Canada. Significant residential ties to Canada are:

Owning or leasing a home in Canada

Having a spouse or common-law partner in Canada

Having dependants in Canada

There are also secondary residential ties such as having a valid driver's licence, Canadian credit card, and bank accounts which may also be used as grounds for having residential ties with Canada.

The first step in filing your taxes and getting the benefits you are entitled to is to apply for your Social Insurance Number (SIN). If for whatever reason Service Canada can not issue you a SIN number, the CRA may issue a Temporary Tax Number (TTN) which can be used to file your taxes and access CRA online services.

To receive the first benefits payments, you do not need to file taxes.

However, to continue receiving these payments in the following year, you are required to file your taxes. Some the benefits newcomers are entitled to are:

Goods and services tax/harmonized sales tax (GST/HST) credit and Climate Action Incentive Payment (CAI): GST/HST credit is a quarterly payment that helps individuals and families with low and modest incomes offset all or part of the GST or HST that they pay. It may also include payments from provincial and territorial programs. Climate Action Incentive Payment (CAIP) is a tax-free amount paid to help individuals and families offset the cost of the federal pollution pricing.

To apply for both credits, you must fill out Form RC66-Canada Child Benefits Application if you have children. This form in addition to Canada Child Benefit, also enrols the family for GST/HST Credit as well as the Climate Action Incentive Payment. If you do not have children, you must fill out Form RC151-GST/HST Credit and Climate Action Incentive Payment Application for Individuals Who Become Residents of Canada. The forms should be mailed to the tax centre applicable to your province of residence.

Canada Child Benefit (CCB): Eligible individuals who have at least one child under the age of 18, can apply for the tax-free child benefit. Temporary residents will be eligible to apply for the benefit on the 18th month of their stay in Canada and must have a valid visa on the 19th month. Eligible individuals may be entitled for additional provincial benefits depending on their income. There is no need to apply separately as individuals are enrolled automatically for the provincial benefits if they qualify.

By filing your first tax return, you will be eligible to apply for additional benefits such as:

Climate Action Incentive Payment (CAIP)

Canada Workers Benefit (CWB)

Disability Tax Credit (DTC)

Child Disability Benefit

Canada Caregiver Credit

Canada Training Credit

Home Accessibility Tax Credit

Canada Dental benefit

For further information please contact Softron at 1-877-SOFTRON or visit www.softrontax.com