Canadian Tax Return Basics for Newcomers to Canada
- SMR CPA
As a newcomer to Canada, it is important to understand the basics of the Canadian tax return system. The Canada Revenue Agency (CRA) is the government agency responsible for collecting taxes and administering various benefits and credits. In this blog, we will cover the essential information you need to know about income taxes and benefit payments for the first year you are a resident of Canada.
Firstly, it is important to know that the CRA considers you a newcomer to Canada for the first year you are a resident of Canada. You become a resident of Canada for income tax purposes when you have enough residential ties in Canada. Your residency status for income tax purposes is different from your immigration status.
To start getting benefit payments, you must get a social insurance number (SIN) from Service Canada. A SIN is a 9-digit number that is personal, confidential, and unique to you. You need a SIN to receive benefits and credits, work in Canada, and open most types of bank accounts. If Service Canada is unable to give you a permanent or temporary SIN, the CRA may give you a temporary tax number (TTN) you may use to get benefits and credits, file taxes, and sign up for CRA's online services.
Canada has benefits and credits to help financially support you. If you or your spouse or common-law partner are a resident of Canada for income tax purposes, you may be eligible to receive payments such as the goods and services tax/harmonized sales tax (GST/HST) credit, climate action incentive payment, and the Canada child benefit (CCB). To start receiving these payments, you must apply for the benefit and credit you are eligible for.
It is important to note that you do not need to do your first tax return before you can get these benefits and credits the first year you arrive in Canada. However, you do need to file a tax return to continue getting benefits and credits after your first year in Canada, even if you had no income. Once you have filed your first tax return, you may be eligible to receive more tax credits and benefits.
There are 2 main ways to complete and send your tax return to the CRA. You can file your taxes electronically using certified tax software or manually using a paper return. If you need help with your taxes, the CRA and community organizations offer free tax help. You can also let someone you trust contact the CRA to file your taxes and access your tax information for you by authorizing them to be a representative.
Understanding the Canadian tax return system is crucial for newcomers to Canada. The information covered in this blog is just the tip of the iceberg, and there is much more to learn. If you have questions about your taxes, credits, or benefits, you can reach out to SMR CPA.
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