First Canadian Tax Return for a Newcomer

Tax residence begins from the facts

Immigration status and tax residence are related but not identical. The relevant date is generally when significant residential ties with Canada are established, considering the home, spouse or dependants and other ties. Keep travel, lease, employment and family-arrival records.

Split the year

A newcomer generally reports worldwide income for the period of Canadian residence. Income earned before residence may still be requested for calculating certain credits or benefits, even if it is not taxed as resident income.

Create a schedule showing each income item, the earning period, country, currency and foreign tax paid.

Property owned before arrival

For certain capital property, Canadian tax cost may be based on fair market value when the person becomes resident. Obtain statements or valuations close to the arrival date. Without this evidence, a later Canadian gain can be difficult to calculate.

Foreign accounts and property

Foreign investment income after arrival generally needs to be reported. A separate foreign-property information return may apply depending on the type and cost amount of specified foreign property, subject to first-year and other rules.

A bank account used for daily living abroad may have different reporting than foreign shares or rental property, but income reporting should still be reviewed.

Benefits and family income

Canada Child Benefit and GST/HST credit calculations may require the newcomer and spouse to provide worldwide income for periods before arrival. Both spouses may need to file or submit information, even where one had no Canadian income.

Practical file

Keep passports and travel history, immigration documents, Canadian lease or purchase records, foreign tax returns, pay statements, property valuations, investment statements and exchange-rate support. Review treaty and foreign-tax-credit issues where the same income is taxed in two countries.