What do newcomers to Canada need to know about the Canadian tax system?
First, a newcomer needs to know if he or she is considered a resident of Canada for tax and benefit purposes. Even if you are not a permanent resident or a landed immigrant, you may still be considered a resident of Canada for tax and benefit purposes.
When you’re considered a resident of Canada for tax and benefit purposes, you have to report your income from all sources, both inside and outside of Canada, and you have the right to claim certain deductions, credits, and benefits.
The CRA considers you to be a resident of Canada for income tax and benefit purposes when you establish significant residential ties in Canada. You usually establish these ties on the date you arrive in Canada.
For more information on residential ties, please call Y&C Accounting Inc. at 604-370-6000.
If you already paid tax on income from another country? Do you pay again on my Canadian return?
Canada has agreements, commonly referred to as tax treaties, with various countries. These tax treaties are designed to avoid double taxation for people who would otherwise have to pay tax in two countries on the same income. Generally, tax treaties determine how much each country can tax your income.To find out how to report the income you received, please discuss with our accountant,Danny Yu, PBA at 604-370-6000
What is the reporting requirement for new immigrants? How is the cost amount determined for property that was owned at the time of immigration to Canada?
An individual does not have to file Foreign Property Statement (Form T1135) for the tax year in which he or she first became resident in Canada. For a new resident, the cost amount of foreign property is its fair market value at the time he or she first became resident in Canada. Use this fair market value in determining the new resident’s Form T1135 filing requirement in future years.
What penalties amount for failing to file foreign properties return?
When failing to file is done knowingly or under circumstances amounting to gross negligence, the penalty is $500 per month for up to 24 months (maximum $12,000), less any penalties already levied.
After 24 months, the penalty is 5% of whichever of the following resulted in the requirement to file the information return, less any penalties mentioned above already levied:
- the cost of the foreign property;
- the fair market value of the property transferred or loaned to the trust;
- the cost of the shares and indebtedness of the foreign affiliate
