Presentation on theme: "International Tax Services Office"— Presentation transcript:
1 International Tax Services Office Welcome to CanadaInternational StudentsInternational Tax Services Office
2 Session objectiveTo give you important information on how to file an income tax return as a newcomer to Canada.Brief overview of residency and how it affects tax.To tell you about the tools and resources offered by the Canada Revenue Agency (CRA) that are available to help you file your tax returns.We at the Canada Revenue Agency are here to help you, as newcomers to Canada, understand what you need to know when you file your income tax return for the first time in Canada. We also want to make sure you receive all the benefits you are entitled to, and that you understand your right to be treated fairly and with respect in your dealings with us.This session is for you if in the last year you left another country to settle in Canada. This information does not apply to you if you were in Canada temporarily last year.You should use this information with our General Income Tax and Benefits Guide and our booklet called Newcomers to Canada. You can get detailed information on types of income, deductions, and credits from the General Income Tax and Benefits Guide and from our Web site.
3 Canada’s tax system Based on residency not on citizenship. Self-assessment system means you are responsible for reporting your income and paying the correct amount of income tax.The Canadian system is based on the residency of an individual—not citizenship.Self-assessment systemAn important feature of the Canadian tax system is that it is based on the principle of self-assessment. This means that each individual is responsible for determining their income tax status, and making sure they pay the correct amount of tax each year.Canada’s tax system is similar to that of many countries. Employers and other payers usually deduct tax from the income they pay you, and people with business or rental income normally pay their tax by instalments.Each year, you calculate what you owe in tax by completing an income tax return and sending it to us. On the return, you list your income and deductions, calculate federal and provincial or territorial tax, and see if you have a balance of tax owing for the year, or whether you are entitled to a refund of some or all of the tax that was deducted from your income during the year.
4 Resident of CanadaAm I a resident of Canada for tax and credit purposes?At the Canada Revenue Agency, we consider you to be a resident of Canada for tax and credit purposes when you establish residential ties in Canada.You usually establish these ties on the date you arrive in Canada.We look at a number of factors to determine a person’s residency. The most important of these is whether you established residential ties in Canada. We also look at your intention or purpose. For example, did you come to Canada to live? Or are you in Canada for a short period as a visitor?A person who moves to Canada and establishes a home here and other residential ties becomes a resident for tax purposes. Residency status for income tax purposes is not the same as residency for immigration purposes.Residential ties include a home in Canada, a spouse or common-law partner and dependants who moved to Canada to live with you, personal property in Canada such as a car or furniture, a Canadian driver's licence, bank accounts, and provincial or territorial health insurance.Newcomers with residential ties to Canada may include:refugees (protected persons)people who've applied for or received landed immigrant status from Citizenship and Immigration Canadapeople who've received approval-in-principle from Citizenship and Immigration Canada to stay in Canada
5 Residential Ties in Canada Dwelling place availableSpouse and/or dependentsPersonal propertyMembershipsEconomic tiesDwelling;Spouse or dependants;Furniture;Guaranteed job upon your return;Vehicle registered in Canada;Bank accounts;Credit Cards;Etc…
6 Residency Why is residency important? A resident of Canada pays tax in Canada on his or her world income.You must be a resident of Canada to be eligible for social benefits (GSTC and CCTB).A resident of Canada can claim all deductions and credits that apply to them to reduce their tax.It is important to understand that when you become a resident for tax purposes in Canada you are taxed on your world income. This means amounts you earn from all sources including income from outside Canada.If you are a resident of Canada, you may be eligible for the goods and services/harmonized sales tax credit and/or Canada Child Tax Benefit payments in the year you became a resident of Canada.When you become a resident of Canada there are many deductions and tax credits that, if they apply to you, you can claim to reduce the amount of tax you must pay.
7 Residency Status Resident Non-Resident Deemed Resident Deemed Non-ResidentThere a four types of residency. However, most of you will fall under the first category.We will explain the different types of residency status as we go along.
8 Resident of CanadaAn individual who enters Canada and who has established significant residential ties with Canada.Resident’s of Canada are taxable on their world income from the date they become resident.Here’s an example of a resident:Mr. Lebrun has left France to study in Canada for approximately 4 years. He has brought all of his belongings from France. He has been renting an apartment in Canada, has purchased furniture, opened a bank account, obtained his driver’s license, medical coverage, and established a normal routine of life.Mr. Lebrun would be viewed as a resident of Canada as he has established significant residential ties with Canada.
9 Deemed ResidentA deemed resident is a resident of another country who has sojourned in Canada for 183 days or more in a calendar year and has not established significant residential ties with Canada.
10 Non-ResidentA non-resident is a resident of another country who has not established significant residential ties with Canada.
11 Deemed Non-ResidentA deemed non-resident is an individual who under a tax treaty is considered a resident of another country.
12 More information Where can I get more information? Publication T4055, Newcomers to CanadaForm NR74, Determination of Residency Status (Entering Canada)Interpretation Bulletin IT221R3, Determination of an Individual’s Residence StatusCRA Web site:If you are not sure about your residency status and you would like our opinion, you can complete and send us Form NR74, Determination of Residency Status (Entering Canada). You only need to send us a completed Form NR74 if you are not sure about your residency status—this is not a mandatory form.You can also call our International Tax Services Office at or visit the international pages of the our Web site at:We also have a number of publications that will help you. The Newcomers to Canada pamphlet will help you file your first income tax return, and Are You a Newcomer to Canada? is a one page fact sheet that has the basic information and telephone numbers that you might need. Both of these publications are available in French and English, and on our Web site they are available in simplified and traditional Chinese. The Chinese versions are only available online.Send your first income tax return to the International Tax Serves Office. Use the envelope in the booklet called Newcomers to Canada, not the envelope in the General income tax and benefit package. At the end of this session, we will give you the address for the International Tax Services Office.
13 Do you have to file? You owe taxes We sent you a request to file These are the most common reasons for filing a return. However, for a complete list refer to “Do you have to file” in the “General Income Tax Guide”.(as a non-resident)There are other situations where a resident must file but they are unlikely in your case.
14 Should you file?You want to claim a refund of tax that has been withheldTuition and education amountsGoods & Services Tax Credit / HarmonizedSales Tax Credit (if eligible)Canada Child Tax Benefit (if eligible)Even if you don’t have to file, you still may want to if any of the following applies:(1st bullet)Regardless of your residency status you may want to file if you want to claim a refund. (good place to add a joke similar to: unless your feeling very generous…)(2nd & 3rd bullet)The GST/HST credit & CCTB are only available to residents. Therefore, a non-resident would not want to file because they are not entitled to these credits.(4th bullet)The income you report as a resident or non-resident may create an RRSP room limit. We will talk about RRSP’s a little later in our presentation.
15 Tax PackageThe Canadian tax return comes in two booklets – one is a Guide and the other a Forms booklet. The Forms booklet is for a province or territory.ResidentFile under the province or territory where you normally resided on December 31st.(Hold up provincial tax package, explain blue and pink pages)This is the package you will use if you have moved to Canada, and have established residential ties.(Make sure you let them know that when we refer to the provincial tax package, the one for their province that it includes both the federal (blue pages) and provincial (pink pages) components.)
16 How to complete a return ? Now that we’ve look at residency status and your filing requirements, let’s look at key elements required to complete your return.
17 Income tax return – “Identification” area No social insurance number (SIN)?Contact a Service Canada (SC) office for information about applying for a SIN or visit their Web site for more information.Can I use my expired 900 SIN to file my income tax return?Yes—you can use your expired 900 SIN to file your income tax return.Most of the information you need to complete your tax return is in the General Income Tax and Benefit Guide. However, the next few slides in our presentation include more information that you will need. It is important that you complete the entire “Identification” area on page 1 of your tax return. As a newcomer to Canada, you will need a social insurance number (SIN). The SIN is a nine-digit identification number that is personal and confidential. Since your SIN is unique, we use it to identify you for income tax and benefit purposes.If you do not already have a SIN, you can apply for one at any Social Development Canada (SDC) office. You can find the telephone number for your local SDC office in the government section of your telephone book. You can also visit the SDC Web site at for information on how to get a SIN.If you applied for a SIN, but have not yet received one and the deadline for filing your tax return is near, file your return without a SIN to avoid the late-filing penalty and interest charges. Include a note to explain that you have applied for a SIN but have not yet received one .If you are an international student and are not allowed to get a SIN, you may need to apply for an Individual Tax Number. To find out more, please see Form T1261, Application for a Canada Customs and Revenue Agency Individual Tax Number (ITN) for Non-Residents, on our Web site or contact the International Tax Services Office at Form T1261 is only to be used by individuals who are not eligible to get a SIN from Social Development Canada.
18 No Social Insurance Number (SIN)? Not allowed to get a SIN?File Form T1261,Application for a Canada Revenue Agency Individual Tax Number (ITN)
19 Information about your residence Date of entryNewcomers—enter the date you became a resident of Canada for tax purposes.We need this information to calculate any benefits that you may be entitled to.It is important that you complete the “Identification” area on page 1 of your tax return. We need this information to assess your return and calculate your goods and services tax/harmonized sales tax credit, plus any benefits to which you may be entitled under the Canada Child Tax Benefit.On page 1 of your return in the section called “Information about your residence” enter the date you arrived in Canada last year. This is the date on which we will consider you to have established residential ties in Canada. This date is not associated with your status with Citizenship and Immigration Canada.
20 How long in Canada?Did you become a resident of Canada before last year?If you became a resident before last year, you should file an income tax return for each year you lived in Canada.You should put your date of entry only on the tax return for your first year in Canada.You can get tax returns for previous years on our website at or by callingYour date of entry should only go on the income tax return for the year you arrived in Canada.If you came to Canada before last year, you should file a tax return for each year that you lived in Canada.If you need to file for a few years, you can send all of the tax returns to the International Tax Services Office. At the end of this presentation, we will give you the address for that office.
21 Be sure this is an address where you can be reached between May and August
22 If you are a resident who entered Canada for the first time in 2012, put in your date of entry
25 World Income This is taxable from your date of entry. Report world income in Canadian dollars.Exchange rates are available from the Bank of Canada at:For the part of the year that you were a resident of Canada, you have to report your world income. World income is income from all sources, both inside and outside Canada.Report your income in Canadian dollars. For any foreign income you received after your date of entry, you can get the exchange rate from the Bank of Canada.You have to report all foreign-source income that you received after you became a resident of Canada.
26 Information Slips T4 Employment Income T4A Other Income T Statement of Investment IncomeT2202A Tuition, Education and Textbook Amounts Certificate
27 Teacher – Research Assistants Report employment income at line 101See your T4 slip
30 You can always refer to the reverse side of a slip for more information
31 T4A Other Income research grants Box number 104= Research Grant Scholarships andresearch grants105= Scholarship
32 Research Grants (line 104) Report your net research grantSubtract your expenses from your grant;Your expenses cannot be more than your grant;Attach to your return a list of your expenses.For more information see IT-75, Scholarships, Fellowships, Bursaries, Prizes, and Research GrantsResearch expenses do not include personal or living expenses other than travel expenses incurred to do the research.
33 Other Income (line 130) Scholarship Bursaries Fellowship Artist Project GrantPrize for Achievement in field of studyIf you have these types of income regardless if they are from Canada or another country, you must report them and in Canadian dollars on line 130 of your return.Fellowships are generally considered scholarship income, but will be taxable as a research grant depending on the primary purpose (terms and conditions) of the fellowship. You will be able to tell when you look at your T4A slip from the payer of the fellowship.For a definition of each type of income you can read our Interpretation bulletin that is listed on the Fact sheet. However, the slip that you will receive from a Canadian payer should state the type of income.Whenever your not certain on how to report income, just flip your slip. On the back of most information slip you will get instructions on how to report the income.
34 Scholarship Income 2006 and future years The full amount of scholarships, fellowships, or bursaries that are received by you as a student if you are entitled to the education amount (see line 323) are no longer reported as income on your tax return.If you are not eligible for the education amount, report on line 130 only the amount that is more than $500.
35 DeductionsYou may be entitled to deductions which may reduce your taxable income, for example:Moving expensesChild Care expensesOther expensesGenerally, you cannot deduct moving expenses that you paid to move into Canada. To deduct moving expenses, your move must be from one place to another in Canada. For more information, see Form T1-M, Moving Expense Deduction.Generally, you cannot deduct contributions you made to a registered retirement savings plan (RRSP) for the first year that you file an income tax return in Canada.You also cannot deduct on your Canadian tax return contributions you made to retirement savings plans in other countries.For more information on RRSPs, see line 208 in the General Income Tax and Benefit Guide or Guide T4040, RRSPs and Other Registered Plans for Retirement.
37 International students and moving expenses An international student can deduct moving expenses if he or she is:Attending post-secondary courses in Canada as a full-time student and;Receiving taxable-award income (e.g., scholarship) after the move. You cannot deduct moving expenses against non-taxable scholarship, fellowship, and bursary income.See Form T1-M for more information.There is an exception to claiming moving expenses to move into Canada. If you entered Canada to attend courses as a full-time student at a college, university, or other institution offering post-secondary education and you received a scholarship, bursary, fellowship, or research grant to attend that educational institution, you may be eligible to deduct your moving expenses.For more information, see Form T1-M, Moving Expenses Deduction.
38 Foreign income Contact us at this toll-free number: 1-855-284-5942 Are there exemptions under a tax treaty?Contact us at this toll-free number:Do I have to pay tax in both countries?See “Federal foreign tax credit,” line 405, on Schedule 1.If you have income that you think should be exempt under a tax treaty, you should contact us.If you receive income from another country that taxed you on that income, you may be able to claim a foreign tax credit on your Canadian return. This credit is for foreign income or profits tax that you paid on income you received from outside Canada and reported on your Canadian return. For more information, see lines 431 and 433 in the General Income Tax and Benefit Guide.
40 Tax Credits Help Reduce the Amount of Tax You Pay – Non-refundable tax credits can only be used to reduce the amount of tax you pay to zero and any excess cannot be refundedRefundable tax credits can be used to reduce the amount of tax you pay to zero and any excess may be refunded
43 Calculating federal non-refundable tax credits You may have to prorate your non-refundable tax credits based on the number of days you are resident in Canada.The rules are the same for calculating provincial or territorial non-refundable tax credits.Non-refundable tax credits are used to lower your federal tax. They are called non-refundable because, even if the total of such credits is greater than the federal tax, the difference is not refundable.As a newcomer to Canada, you may be limited in the amount you can claim this year for certain federal non-refundable tax credits.The rules for claiming provincial or territorial non-refundable tax credits are the same as for federal non-refundable tax credits. However, the value and calculation of most provincial and territorial non-refundable tax credits are different from the corresponding federal credits.If you prorated any of the amounts you claimed on your federal Schedule 1, you have to prorate the corresponding provincial amounts.
44 Example Jane arrived in Canada from Australia on May 6, 2012. She entered “05-06” in the Identification area of her return. She calculated that from May 6 to December 31 there were 240 days.Jane claims the basic personal amount calculated as follows:240 days in Canada x $10, = $7,096.39365 days in 2012Jane will enter $7, on line 300 of her Schedule 1.See Booklet T4055, Newcomers to Canada, for complete detailed instructions on how to calculate your non-refundable tax credits.
45 Claim full non-refundable tax credits? Yes—if you have no income for the part of the year that you were not a resident of Canada.Yes—if you meet the 90% rule for the part of the year you were not resident in Canada.You must attach a note to your return showing your world income for the part of the year you were not resident in Canada.If you had no income from sources inside or outside Canada for the part of the year that you were not a resident of Canada, you can claim the non-refundable tax credits in full that apply to you. For example, you can claim the full basic personal amount as in the previous example if you had no income before you came to Canada.You can also claim the non-refundable tax credits in full that apply to you if the Canadian-source income you are reporting for the part of the year you were not a resident of Canada is at least 90% of your net world income for that part of the year.ExampleJoe is a non-resident who came to work in Canada for two weeks in January, and then he returned to his home country. In March, he was offered a full-time job in Canada so he moved to Canada and established residential ties in Canada on March 15. Joe’s only income between January 1 and March 15 was from his job in Canada. So his income in the period was 100% from Canada. Joe meets the 90% rule, and on line 300 he can claim the full basic personal amount. Joe will attach a note to his tax return showing his income from January 1 to March 15, which will tell us that he meets the 90% rule.
46 Tuition, education, and textbook amount Use Schedule 11Take the information from T2202A
49 Textbook amount 2006 and future years You are eligible to claim an amount for textbooks only if you are entitled to claim the education amount.The amount is:$65 for each month you qualify for the full-time education amount; and$20 for each month you qualify for the part-time education amount.
50 Public Transit Passes Amount For transit after June 30, 2006, you can claim the cost of monthly public transit passes if you had Canadian source income during the year.Public transit includes transit by local bus, streetcar, subway, commuter train or bus, and local ferry.Receipts – Keep all your receipts and passes in case we ask to see them.
51 Canada Employment Amount All employees are eligible to claim an employment tax credit.Claim the lesser of:$1,095; andthe amount reported at line 101 of your return.
53 Goods and Services Tax/Harmonized Sales Tax Credit As a newcomer, you should:complete Form RC151, GST/HST Credit Application for Individuals Who Become Residents of Canada; andsend the completed Form RC151 to the tax centre that serves your area.The goods and services tax/harmonized sales tax (GST/HST) credit helps individuals and families with low or modest incomes offset all or part of the GST or HST that they pay.To receive the GST/HST credit, you have to apply for it each year. To apply, complete the GST/HST credit application area on page 1 of your tax return. If you qualify, we will send you payments in July and October this year and January and April next year. In the year you became a resident of Canada, you may be entitled to the GST/HST credit issued after your arrival.You can apply for the GST/HST credit in the year you became a resident of Canada by completing Form RC151. On this form, we ask you to let us know what your income was before you came to Canada. We ask you this because we need to know how much you are entitled to. We base your GST/HST credit on your and your spouse or common-law partner's world income (if he or she is a resident of Canada) and on the number of children you have. World income is income from all sources inside and outside Canada.
54 Canada Child Tax Benefit As a newcomer, you:Need to complete Form RC66, Canada Child Tax Benefit Application; andMay have to complete Schedule RC66SCH, Status in Canada/Statement of IncomeSend your completed forms to the tax centre that serves your area.If you are primarily responsible for the care and upbringing of a child who is under 18 years of age, you may be eligible for monthly Canada Child Tax Benefit (CCTB) payments for that child.We base the amount of your payments on the number of children you have, their age, and your family net income. Both you and your spouse or common-law partner (if applicable) have to file tax returns every year so that we can calculate the amount of your CCTB payments.To apply for the CCTB and related provincial or territorial benefits and credits, get the Canada Child Tax Benefit package. The package includes Form RC66, Canada Child Tax Benefit Application. Depending on your immigration and residency status, you may have to complete Schedule RC66SCH, Status in Canada/Statement of Income.File a completed application along with any required schedules and documentation as soon as possible after you and your child arrive in Canada. You can get this package by callingInternational students may be eligible for CCTB payments if they are considered residents for tax purposes. But if they are temporary residents as defined in the Immigration and Refugee Protection Act, they can only apply after they have lived in Canada throughout the previous 18 months, and have a valid permit in the 19th month.
55 Filing Date On or before April 30th On or before June 15th for self-employed individualIn all cases, any outstanding balance is due on or before April 30thIt is important to file on time. If you owe tax and the return is late you will incur penalties of 5% plus 1% for each full month on the balance owing for a maximum of 12 months. You would also incur interest charges on the balance due.Payments are made by cheque or by bank/postal money order should be made payable to the Receiver General.You may obtain tax guides from our web site which is listed on the fact sheet.Or at any CCRA office, at some Canadian embassy, and at most Canadian post offices.
56 More information Newcomers should send their tax return to: International Tax Services Office2204 Walkley RoadOttawa ON K1A 1A8For more information, you can call toll free , or go to :Your first tax return should be sent to the International Tax Services Office. If you have a copy of our booklet called Newcomers to Canada, you can use the envelope that is attached.If you have any questions about your first tax return as a newcomer or you are not sure about your residency status in Canada, you can call toll free:Thank you