Tax Deductions Newcomers Can Claim For 2024

Remember, everyone’s situation is different, and this post is meant for general guidance. You should always double-check with the Canada Revenue Agency (CRA) website or speak to a certified tax professional for the most accurate information. Still, if you’re ready to save on your taxes, let’s dive in. 

Key Takeaways 

• This post is not intended to be individual tax advice. For personalized advice, speak with a tax professional.  

• It’s important to know the difference between tax credits and tax deductions.  

• If you don’t file taxes in Canada, you may lose access to financial benefits the government offers (like GST/HST credits and one-off payments).  

• There are a range of credits and deductions newcomers can access in Canada to minimize the total tax payable. This might mean a bigger refund than you expected!  

• We’ve partnered with TurboTax to help you file your taxes for 2024 – for less. Get a 20% discount on your 2024-2025 tax filing here.  

Tax Credits vs Tax Deductions: What’s The Difference? 

The difference between tax credit and tax deduction may seem semantic – but it’s a very important difference with very real impacts on the amount of tax you pay.  

Tax Credit 

A tax credit is a direct reduction of the taxes you owe. For instance, if you qualify for a $300 tax credit, your total taxes owed will be reduced by $300. An example of this in the Canadian tax environment is the Canadian Workers Benefit, which gives low-income earners a tax credit of up to $1500 for singles and $2616 for families each year.  

In Canada, some credits are “refundable”, meaning you can get a refund even if they exceed the tax you owe. Others are “non-refundable,” which means they only reduce or eliminate the tax you owe, but that you won’t get a tax refund if your tax credits are higher than your taxes payable. Some tax planning can help you make the most of the different types of tax credits.  

Tax Deduction 

A tax deduction reduces the amount of income on which you pay taxes. For example, if you claim a $2,000 deduction, and your taxable income was originally $40,000, you now only pay tax on $38,000. In effect, you shrink your taxable income by the amount of the deduction. Here’s what that could look like in practice for a taxpayer in British Columbia:  

Taxable Income: $40,000 

Taxes payable on income (with no tax deductions): $4,245 

Taxes payable on income with a $2,000 tax deduction (let’s say it’s for an RRSP contribution): $3,773 

So, this person pays $472 less in taxes thanks to a $2,000 tax deduction.  

Why It’s Important to File Taxes as a Newcomer 

Filing your taxes unlocks benefits and credits that can make life more affordable. When you file your return, you may become eligible to receive payments like the GST/HST credit or the Canada Child Benefit, if you qualify. 

Skipping your tax filing could mean missing out on these benefits. You might also face penalties for late filing, and you don’t want to start your financial journey in Canada with unnecessary fees. Even if you didn’t earn much income during the tax year, or if you just arrived, filing a return can open the door to future credits and tax advantages. 

Finally, filing taxes helps you build a financial record in Canada. This can be useful if you decide to apply for a mortgage or other types of credit in the future. Lenders often check your Notice of Assessment (a document you receive from the CRA after filing) to confirm your income. When you stay on top of your tax responsibilities, you strengthen your financial position and make life easier down the road.  

Common Tax Deductions in Canada That Newcomers Can Use 

A reminder that we suggest working with a tax professional to get personalized advice and guidance when it comes to tax planning.  We’ve partnered with TurboTax to help newcomers get tax advice for less — get 20% off with TurboTax.

With that said, we’ve put together a list of some of the most common tax deductions we know about that newcomers to Canada can take advantage of. They are:

• RRSP 

• FHSA 

• GST/HST Credit 

• Certain moving expenses 

• Charitable Tax Credits 

• Eligible Medical Expenses 

• Multigenerational Home Costs 

• Childcare expenses 

• Work from home expenses 

• Side hustle/Self-employed income. 

Let’s dig into these in more detail: 

Tax Deduction: RRSP 

An RRSP is one of the most popular ways for Canadians to reduce their taxable income. When you contribute to an RRSP, you’re allowed to deduct that amount from your earnings for tax purposes, up to your annual contribution limit. This means if you earn $50,000 and contribute $5,000, you’ll only pay tax on $45,000. 

You may wonder why you should contribute to an RRSP if you’re a newcomer. It’s beneficial because it lowers your immediate taxable income, giving you a tax break in the short term. Down the road, your RRSP also grows tax-free until you withdraw it in retirement, at which point you might be in a lower tax bracket. 

As a newcomer, your RRSP contribution room might be lower at first because it depends on previous year’s income earned in Canada. However, if you started earning income as soon as you arrived, or if you already have an RRSP from working in Canada in the past, you might have some contribution room. Keep an eye on your Notice of Assessment to see exactly how much you can contribute without penalties. If you haven’t set up an RRSP yet, you can do so at many Canadian financial institutions, and some employers also offer group RRSP programs. 

Learn more about RRSPs in our dedicated post. 

Tax Deduction: FHSA 

The First Home Savings Account (FHSA) is a newer option in Canada designed to help first-time homebuyers save up for a down payment. It combines some of the best features of RRSPs and Tax-Free Savings Accounts (TFSAs). Like an RRSP, your contributions can be tax-deductible, and like a TFSA, withdrawals for a qualifying home purchase can be tax-free. 

Before jumping into an FHSA, confirm your eligibility. You must be at least 18, a Canadian resident, and a first-time homebuyer (or at least not owned a home in the year you open the FHSA or the previous four calendar years). If you meet these conditions, the FHSA can offer a powerful tax break while helping you save for your new home. 

Tax Credit: GST/HST Credit 

The GST/HST credit is a refundable tax credit that can help lower-income families and individuals manage the goods and services tax (GST) or harmonized sales tax (HST). The Canadian government distributes this credit quarterly, and you don’t pay it back. 

You’re generally eligible if your net family income is below a certain threshold. To apply, you simply file your income tax return each year, even if you have no income. Newcomers are usually assessed automatically once the CRA has your income information on file, so make sure to complete the required forms to declare your worldwide income. If you qualify, you’ll start receiving the GST/HST credit in the payment cycle following your tax assessment. 

Tax Deduction: Certain Moving Expenses 

Newcomers may claim certain moving expenses. To qualify, your new home must be at least 40 kilometres closer to your new workplace than your old home. These rules also apply if you’re moving to attend a full-time program at a university, college, or other post-secondary institution. 

• Here’s a link to the CRA’s guidance about claiming moving from a location abroad to Canada.  

If eligible, moving expenses can include the cost of hiring movers, renting a moving vehicle, storage, packing materials, travel expenses (including vehicle expenses, accommodation, and meals), temporary living expenses (up to 15 days), and even costs related to selling your old home (like real estate commissions) or cancelling a lease. This deduction can significantly lower your taxable income, especially if your move was expensive. 

Keep all your receipts and documents related to the move, as the CRA can ask you to prove your claim. Also remember that you can’t deduct moving expenses paid by an employer or reimbursed in another way. If you are partially reimbursed by your employer, you can only claim the unreimbursed portion. 

Tax Deduction: Charitable Tax Credits 

Canadians who donate to registered charities are eligible for a charitable donations tax credit. This allows you to support causes you care about and get a tax benefit, which is a win-win. 

As soon as you have a Canadian tax obligation and make a donation to a recognized Canadian charity, you can claim this credit. To confirm the charity is registered, you can check the CRA’s online list of qualified organizations. Keep your donation receipts, as you’ll need them for your records.  

The amount you can claim at the federal level is typically 15% on the first $200 of donations and 29% on any amount over $200. Then there’s a further deduction at the provincial level, which we won’t get into detail here. If you’re interested, you can use the Globe and Mail’s tax credit calculator.  

Tax Credit: Eligible Medical Expenses 

Medical expenses in Canada can add up, especially if you’re still waiting to qualify for provincial health coverage or need treatments not covered by public health plans. The CRA allows you to claim a non-refundable tax credit for many medical costs paid out of pocket that exceed 3% of your net income or a specific dollar amount (whichever is less). The dollar amount is adjusted annually, but for 2025 it is $2,834. 

Eligible expenses can include things like prescription drugs, dental work, certain types of therapy, eyeglasses, ambulance services, and even travel costs for medical treatment if you must travel more than 40 kilometres. 

It’s crucial to keep all invoices, receipts, and supporting documents for these medical expenses. You can claim expenses for any 12-month period that ends in the tax year, which offers some flexibility for meeting the threshold, even if you have a Health Spending Account or health insurance.  

Multigenerational Home Renovation Tax Credit

For newcomers living in larger households, sharing space with parents or grandparents can make financial sense and support family bonds. In recognition of this, Canada introduced a Multigenerational Home Renovation Tax Credit to help families afford renovations that allow seniors or adults with disabilities to live with their adult children. 

If you’re planning significant renovations to create a secondary suite for a family member aged 65 and over (or an adult with a disability), you might be eligible to claim up to $50,000 of renovation costs. The tax credit is 15% of qualifying expenses, which could lead to a sizeable reduction in your taxes. 

Examples of eligible renovations include installing a separate entrance or additional bathroom, broadening doorways for wheelchairs, and any construction that ensures a self-contained living area. You must keep receipts, construction plans, and any other proof of expense. This credit isn’t for minor touch-ups; the goal is to help you make real changes that facilitate multigenerational living. 

Childcare Expenses 

Childcare costs add up quickly, especially if you aren’t enrolled in a $10-a-day childcare provider. Fortunately, the CRA allows you to deduct a portion of these expenses, which can include daycare, nanny fees, or day camp costs. This applies to anyone who is working, running a business, or studying.  

But, you need to follow the rules to successfully claim this deduction. Some of these are that the lower-income spouse must claim the amount (unless certain exceptions apply), and that you will need certain information from the childcare provider.  

Work from Home Expenses 

If you’re employed by a company and work from home, you might be able to claim certain home office expenses, such as utilities, rent or mortgage interest, and home internet if they relate directly to your workspace. You must calculate the percentage of your home used for work and apply this proportion to the eligible expenses. You also need a signed form (T2200S or T2200) from your employer confirming that you’re required to work from home. 

Side Hustle Expenses 

Side hustles are an increasingly popular way to earn extra money – and you’re able to claim certain deductible expenses on your tax return to minimize the taxes owing on the amount you earned.  

Common deductible expenses include advertising costs, office supplies, a portion of your home internet, and even some transportation costs. However, you have to show a reasonable expectation of profit over time. If your side hustle is more like a hobby, the CRA might deny your business expense claims. 

The more accurate your records, the easier it is to claim legitimate deductions and avoid issues if the CRA asks questions. 

Quick Tips For Newcomers Claiming Deductions 

• Get your SIN (Social Insurance Number): You’ll need a SIN to work, file taxes, or receive government benefits in Canada. Apply for one as soon as possible upon arrival. 

• Stay organised: Keep all receipts, invoices, and supporting documents for any claim you plan to make. Set aside a folder or a digital space where you can store everything, and label documents clearly.. 

• Watch the deadlines: The general deadline for individual tax returns in Canada is April 30 each year. If you or your spouse are self-employed, the filing deadline is usually June 15, but any balance owed is still due by April 30. 

• Disclose worldwide income: If you’re a tax resident of Canada and you earned money outside Canada, you need to report that income. Canada has tax treaties with many countries to avoid double taxation, but it’s crucial to file accurately. 

• Use certified tax software: Plenty of affordable or even free options exist. These programs guide you step by step, helping you claim the credits and deductions you’re entitled to. They also submit your return electronically, ensuring faster processing. 

On this last point, we’ve partnered with TurboTax for filing 2024 taxes. Use our link to save 20% on your tax filing this year.