Tax FAQ: Everything Newcomers Need to Know About Canadian Taxes

Do I have to file a tax return as a newcomer to Canada?

If you are a tax resident of Canada, you are required to file a tax return if you owe taxes or if the Canada Revenue Agency (CRA) requests you to file. Even if you do not owe taxes, it is strongly recommended that all newcomers file a return. Filing is how you access benefits such as the GST/HST credit, the Canada Child Benefit, and provincial tax credits. You become a tax resident of Canada when you establish significant residential ties, such as having a home, a spouse, or dependents in Canada. The CRA considers you a resident from the date you arrive and establish ties. According to the CRA, you should file your first tax return for the year you arrived, reporting only the income you earned from your date of arrival onward.

When is the tax filing deadline in Canada?

The tax filing deadline for most individuals is April 30 each year, for the previous calendar year's income. For example, your 2025 tax return is due by April 30, 2026. If you or your spouse is self-employed, the filing deadline extends to June 15, but any taxes owed are still due by April 30. If the deadline falls on a weekend or holiday, it moves to the next business day. Late filing results in penalties (5 percent of the balance owing plus 1 percent per month, up to 12 months) and interest charges. Filing on time is important even if you cannot pay the full amount owed, as the penalty for late filing is separate from interest on unpaid taxes.

What is a Social Insurance Number and why do I need one?

A Social Insurance Number (SIN) is a nine-digit number issued by Service Canada that you need to work in Canada and to access government programs and benefits. You need a SIN to file a tax return, to be paid by an employer, and to open certain financial accounts. You can apply for a SIN in person at a Service Canada centre with your immigration documents (work permit, study permit, or PR card) and a valid passport. Processing is usually done on the same day. Temporary residents receive a SIN starting with the number 9, which expires with their immigration document. Permanent residents and citizens receive a permanent SIN. You should protect your SIN and share it only when legally required, such as with employers, banks, and government agencies.

What income do I need to report on my Canadian tax return?

As a Canadian tax resident, you must report your worldwide income from the date you became a resident. This includes employment income, self-employment income, investment income (interest, dividends, capital gains), rental income, pension income, and any other income from any source, including from outside Canada. Income earned before you arrived in Canada is generally not reported on your Canadian return. If you have foreign income, you may be entitled to a foreign tax credit to avoid double taxation if you paid taxes on that income in another country. Canada has tax treaties with many countries to prevent double taxation. The CRA requires you to report amounts in Canadian dollars, using the Bank of Canada exchange rate for the date of the transaction or the average annual rate.

What is the GST/HST credit and how do I get it?

The GST/HST credit is a tax-free quarterly payment from the Government of Canada that helps individuals and families with low or modest income offset the GST or HST they pay. For the 2025-2026 benefit year, eligible individuals can receive up to $519 per year, with additional amounts for children. To receive it, you must file a tax return and be a Canadian resident for income tax purposes. Newcomers should file their first tax return as soon as possible to start receiving this benefit. Payments are made quarterly in July, October, January, and April. You do not need to apply separately; the CRA determines eligibility based on your tax return. Your spouse's income is also considered when calculating the amount. For newcomers, you should also complete Form RC151 (GST/HST Credit Application for Individuals Who Become Residents of Canada) and submit it to the CRA to begin receiving payments sooner.

What is the Canada Child Benefit?

The Canada Child Benefit (CCB) is a tax-free monthly payment to eligible families to help with the cost of raising children under 18 years old. The maximum annual benefit for the 2025-2026 period is $7,787 per child under 6 and $6,570 per child aged 6 to 17. The amount decreases as family net income increases above $36,502. To receive the CCB, you must file a tax return every year, be a Canadian resident for tax purposes, and be primarily responsible for the care of the child. Newcomers should apply using Form RC66 (Canada Child Benefits Application) as soon as they arrive with their children. Both parents must file tax returns for the family to receive the correct amount. The CCB is a significant benefit that can make a substantial difference to families with children.

What tax credits and deductions are available to newcomers?

Several tax credits and deductions may be particularly relevant to newcomers. The basic personal amount ($16,129 in 2025) means the first portion of your income is tax-free. Moving expenses can be deducted if you moved to Canada to start a new job or business (the move must be at least 40 km closer to your new workplace). Tuition credits are available if you are a student at a qualifying Canadian institution. Medical expenses not covered by insurance can be claimed. Child care expenses are deductible if you paid for child care to earn income or attend school. The Canada Workers Benefit provides a refundable tax credit for low-income workers. RRSP contributions are deductible, though newcomers typically do not have RRSP contribution room in their first year. Charitable donations to registered Canadian charities provide tax credits.

How does the Canadian tax system work?

Canada has a progressive income tax system where you pay higher rates on higher portions of your income. You pay both federal and provincial taxes. Federal tax rates for 2025 range from 15 percent on the first $57,375 of income to 33 percent on income over $253,414. Provincial rates vary and are added on top of federal rates, meaning total marginal tax rates can range from about 20 percent to over 50 percent at the highest income levels. Employers withhold income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums from your paycheque. When you file your tax return, you either receive a refund (if too much was withheld) or owe additional tax (if not enough was withheld). The CRA administers the system.

What is an RRSP and should I contribute?

A Registered Retirement Savings Plan (RRSP) is a tax-sheltered account designed for retirement savings. Contributions are tax-deductible, meaning they reduce your taxable income in the year you contribute. Investment growth inside the RRSP is tax-free until withdrawal. When you withdraw funds in retirement, the withdrawals are taxed as income. Your RRSP contribution room is 18 percent of your previous year's earned income, up to a maximum ($32,490 for 2025). As a newcomer, you have no contribution room in your first year since it is based on the previous year's income. You will accumulate room starting the year after you first earn income in Canada. The RRSP Home Buyers' Plan allows first-time homebuyers to withdraw up to $60,000 tax-free for a home purchase.

What is a TFSA and how is it different from an RRSP?

A Tax-Free Savings Account (TFSA) allows you to earn investment income tax-free. Unlike an RRSP, contributions are not tax-deductible, but all withdrawals are completely tax-free. The annual contribution limit is $7,000 for 2025 and 2026. Contribution room accumulates starting from the year you turn 18 and become a Canadian resident for tax purposes. As a newcomer, your TFSA room starts accumulating from the year you arrive (assuming you are 18 or older). You can hold various investments inside a TFSA, including savings, GICs, stocks, and mutual funds. The TFSA is often recommended as the first investment account for newcomers because of its flexibility and tax-free withdrawals.

Do I have to report foreign property and accounts?

If at any time during the year you owned foreign property with a total cost exceeding $100,000 CAD, you must report it on Form T1135 (Foreign Income Verification Statement). Foreign property includes bank accounts, investment accounts, rental properties, and shares of foreign companies held outside of Canadian registered accounts. The $100,000 threshold applies to the total cost of all specified foreign property combined, not each individual property. Failure to file Form T1135 can result in significant penalties ($25 per day, up to $2,500). Many newcomers have savings or property in their home country that may exceed this threshold, so it is important to be aware of this requirement. Note that personal-use property (such as a home you lived in) and property inside registered accounts (RRSP, TFSA) are excluded.

Can I claim immigration and settlement expenses on my taxes?

Most immigration expenses, such as immigration lawyer fees, application fees, and document translation costs, are not deductible on your Canadian tax return. However, if you moved at least 40 kilometres closer to a new place of work or business in Canada, you can deduct moving expenses. Eligible moving expenses include transportation and storage costs, travel costs (meals and accommodation), temporary living expenses (up to 15 days), and costs of selling your previous home. Keep all receipts and records. The move must be to earn employment or self-employment income at the new location. You can only deduct moving expenses against income earned at the new location.

How do I file my tax return?

You can file your tax return in several ways. Free online tax software certified by the CRA (such as Wealthsimple Tax, TurboTax, and others) is the most popular method. The CRA's own NETFILE system accepts electronically filed returns. You can also file by paper, though this is slower. Community organizations and some libraries offer free tax clinics for low-income individuals through the Community Volunteer Income Tax Program (CVITP). For newcomers filing their first return, using free software or a CVITP clinic is recommended. You will need your T4 slips (from employers), any other income slips, receipts for deductions and credits, your SIN, and your notice of assessment from the previous year (for subsequent returns). First-time filers need to mail their return or register for CRA My Account.

What is a T4 slip?

A T4 slip (Statement of Remuneration Paid) is issued by your employer by the end of February each year. It summarizes your total employment income, income tax deducted, CPP contributions, EI premiums, and other deductions for the previous calendar year. You need your T4 to file your tax return accurately. If you had multiple employers, you will receive a T4 from each one. Other common slips include T5 (investment income), T3 (trust income), T2202 (tuition), and T4A (other income such as scholarships). All slips are also sent to the CRA, so they will know if you do not report income shown on a slip.

What happens if I make a mistake on my tax return?

If you discover an error after filing, you can request a change through CRA My Account using the "Change my return" feature, or by submitting Form T1-ADJ (T1 Adjustment Request). You generally have up to 10 years from the original assessment to request changes. The CRA will reassess your return and send you a notice of reassessment. If the error resulted in overpaid tax, you will receive a refund. If you underreported income, you may owe additional tax plus interest. Voluntary disclosure of errors is treated more favourably than errors discovered by the CRA during an audit. Always keep records and receipts for at least six years in case of a CRA review.

How do I set up a CRA My Account?

CRA My Account is an online portal where you can view your tax information, check benefit payments, update personal information, and manage your account. To register, go to the CRA website and select "My Account." You can sign in using a Sign-In Partner (such as your bank's online banking) or by creating a CRA user ID and password. First-time users will need to verify their identity, which may involve entering information from a previous tax return or receiving a security code by mail. The security code takes 5 to 10 business days to arrive. Once set up, My Account gives you immediate access to your notices of assessment, RRSP and TFSA contribution room, benefit payment schedules, and tax slip information.

Do I need to pay taxes on money I bring to Canada?

Money you bring with you when you immigrate is generally not taxable in Canada. These are considered previously accumulated assets. However, you must declare any amount over $10,000 CAD (or equivalent in foreign currency) when you arrive at the border, as required by the Canada Border Services Agency (CBSA). This declaration is for anti-money-laundering purposes and does not create a tax obligation. Once you are a Canadian tax resident, any income earned on those assets (interest, dividends, capital gains) is taxable in Canada. It is a good idea to document the value of your assets on the date you become a Canadian tax resident, as this establishes your cost base for future capital gains calculations.

What is the principal residence exemption?

If you buy a home in Canada and it is your principal residence, any capital gain when you sell it is generally tax-free under the principal residence exemption. To qualify, you must designate the property as your principal residence for each year you owned and lived in it. You can only have one principal residence at a time (per family unit). You must report the sale on your tax return even if the gain is exempt. If you owned a home in your previous country and sell it after becoming a Canadian resident, the gain from the date you became a resident onward may be taxable unless you designate the Canadian property as your principal residence. Tax planning around principal residences can be complex, and consulting a tax professional is recommended.