Accounting for newcomers to canada.

Questions worth getting ahead of

• Working out the date you became a resident for tax purposes
• Reporting world income for the part of the year you lived here
• Recording the value of property you owned on arrival
• Applying for benefits before your first return
• Understanding what you can and cannot deduct in your first year

Pin down your date of residency

Your tax obligations depend on residency status, not immigration status. The CRA says you become a resident for income tax purposes when you establish enough residential ties, and for most newcomers that starts the first day they live in Canada. Significant ties include a home, a spouse or common-law partner and dependants in Canada. Secondary ties include a car, bank accounts, a driver’s licence and provincial health coverage. Your date of entry goes on your return. If your situation is unclear, the CRA offers Form NR74 for a determination. Gather your arrival date, lease or purchase documents and family details before you file.

Report world income for the part of the year you were resident

For the part of the year you were a resident, the CRA says you report your world income, meaning income from all sources inside and outside Canada, in Canadian dollars. Income earned before you became a resident is not taxed in Canada. Some foreign pensions may be exempt under a tax treaty, but they still have to be reported, and the exempt part is deducted on line 25600. Keep foreign slips, statements and the exchange rates you used. Bring your date of entry and any foreign tax paid so the right treatment can be discussed.

Record the value of property you bring with you

If you owned certain property when you became a resident, such as shares, jewellery, paintings or a collection, the CRA treats you as having sold it and immediately reacquired it at its fair market value on that date. That value becomes your cost when you later sell it in Canada. The CRA advises keeping a record of the value on your arrival date. Without that record, a future gain can be hard to calculate. Bring brokerage statements from around your arrival date, appraisals or receipts, and a list of what you own abroad.

Apply for benefits before you file your first return

The CRA says newcomers are not required to file until the year after they become residents, but they can apply for benefits as soon as they arrive. New residents use Form RC151 to apply for the Canada Groceries and Essentials Benefit, or Form RC66 when they also qualify for the Canada child benefit. A temporary resident can generally start receiving the Canada child benefit in the 19th month in Canada, with a valid permit and other eligibility met. The CRA may ask for your income from up to two years before arrival. Keep documents and update the CRA if your permit is renewed.

Know what changes in your first return

A few first-year rules differ from what many newcomers expect. The CRA says you generally cannot deduct RRSP contributions in your first year of filing a return in Canada, and you generally cannot deduct moving expenses incurred to move to Canada, with an exception for certain full-time post-secondary students. You can elect to split pension income with a spouse if you were both resident on December 31. If you cannot get a social insurance number in time, the CRA says to file without one to avoid late-filing penalties. Bring your SIN or temporary tax number details.

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