FAQ: Navigating Tax Season in Canada for Newcomers

It’s the end of the first quarter of the year, you’re getting settled into your new life in Canada, ready to enjoy the longer days and warmer weather of the upcoming spring… And yet, you find yourself a little lost and anxious about that “tax season” that everyone seems to talk about. Relax, it’s not that terrible. We’ve condensed answers to the most common questions about navigating tax season in Canada as a newcomer.

What is tax season in Canada?

Every year, between mid-February and April 30 (or June 15 for self-employed workers), Canadian residents must file their tax returns for the previous year with the Canada Revenue Agency (CRA) to determine if they are due a refund or owe additional taxes. This system funds essential services like healthcare, education, public transportation, and more. Canadian residents are required to pay several taxes, including:

• Income taxes, based on their earnings,
• Sales taxes (GST, HST, PST) on goods and services,
• Payroll taxes, which finance retirement, disability benefits, and unemployment insurance,
• Property taxes, for those who own property.

Note that both temporary and permanent residents must file their taxes, which are collected at the federal, provincial/territorial, and sometimes municipal levels.

For more details on how tax returns work for newcomers, read our dedicated article on preparing to submit your taxes.

Do immigrants pay taxes in Canada?

Yes. Canada considers temporary, permanent residents and refugees as residents for tax purposes if they have residential ties in Canada, such as owning or leasing a home, having a spouse or dependents in the country, having a bank account or a credit card. 

Can immigrants get a tax refund?

Yes. As a resident for tax purposes, filing your taxes each year makes you eligible for tax return as well as certain benefits.

What tax benefits can newcomers get in Canada?

According to Canada.ca, newcomers have access to several tax benefits to help them with the financial challenges that may come during their first years in Canada:

• GST/HST credit: This is the credit you’ll receive based on the taxes on goods and services you paid. You are automatically eligible for the GST/HST credit when you file your taxes.
• Canada Child Benefit (CCB): As a Canadian resident, if you live with and are responsible for a child under 18 years old, you can benefit from the CCB. Offered by the CRA, it is a tax-free monthly payment aiming to help eligible families with the cost of raising a child. The benefit you’ll receive depends on the age of your child. You can calculate how much you can get with this calculator. 
• Canada Workers Benefit (CWB) and Advanced Canada Worker Benefit (ACWB): These are available to workers who are considered actively employed but who earn income below a certain threshold (roughly $30,000 for a single person but it varies from one province to another). 

Provincial/territorial benefits and credits: Since provincial/territorial develop their own tax policies, in addition to federal credits, you may also be entitled to provincial/territorial credits once you file your taxes. Keep in mind that as a newcomer, you may be limited in the amount you can claim. You can get more details on this here.

Note that you’ll need to file your taxes on time each year and keep your personal info updated with the CRA if you want to keep receiving benefits you may be eligible for, even if you have no income.

What is the “welcome to Canada tax benefit”?

The “welcome to Canada tax benefit” isn’t an official thing. According to popular belief, some accountants introduced this term a few years ago to encourage their clientele, primarily international students, to file their taxes, even if they made no revenue. Even though international students and newcomers to Canada can get benefits once they file their taxes, the “welcome to Canada tax benefit” is not an actual government program or benefit.

Do I have to file taxes in Canada if I am an international student?

Yes, as an international student in Canada, you are also considered a resident for tax purposes so you are also required to file your tax, whether you receive income or not. But you are also eligible for tax return.

What are the tax benefits for new international students in Canada?

International students in Canada are eligible for the following tax benefits:

• GST/HST credit
• Canada Child Benefit (CCB)
• Tuition Tax credit: As a student, you can inform the CRA of the amount you pay for tuition and other educational costs so that they can lower of income tax you will owe.

What is the 90% rule for newcomers to Canada?

If you just arrived in Canada and have spent part of the previous year outside of the country, this is how the CRA will look at your income and consider that 90% rule:

• If 90% or more of your revenue during the period you weren’t a Canadian resident came from Canadian sources, then you can claim the full tax credits, 
• If less than 90% of your income came from Canadian sources, your tax credit will be prorated based on the number of days you were a Canadian resident.

What is the line 15000 in tax filing for newcomers?

When filing your taxes, you will fill in certain key lines in your T1 tax return document. Arguably the most important of them is line 15000 where you’ll include your total income from all sources of revenue (employment, pensions, investments, etc.)

When are taxes due in Canada?

Each year, Canadian residents must submit and pay their tax returns by April 30. For self-employed workers, the deadline is June 15. 

Who can help me file my taxes in Canada?

If, like many Canadian residents, you don’t feel like spending hours heads down in number, you can get help from expert tax accountants to support you with your tax filing.