T4055(E) Rev. 12
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This pamphlet is for you if you left another country to settle in Canada in 2012.
This pamphlet will introduce you to the Canadian tax system and help you to complete your first income tax and benefit return as a resident of Canada.
If you are in Canada temporarily in 2012, this pamphlet does not apply to you. Instead, see Guide T4058, Non Residents and Income Tax.
You become a resident of Canada for income tax purposes when you establish significant residential ties in Canada. You usually establish these ties on the date you arrive in Canada.
Residential ties in Canada include:
Other residential ties that may be relevant include a Canadian driver's licence, Canadian bank accounts or credit cards, and health insurance with a Canadian province or territory.
Newcomers to Canada who have established residential ties with Canada may be:
If you were a resident of Canada in an earlier year, and you are now a non-resident, you will be considered a Canadian resident when you move back to Canada and re‑establish your residential ties.
If you are not sure whether you are a resident of Canada for income tax purposes, complete Form NR74, Determination of Residency Status (Entering Canada). Send us the form as soon as possible so we can give you an opinion on your residency status before your tax return is due.
For more information about residency status, see Interpretation Bulletin IT-221, Determination of an Individual's Residence Status.
Canada's tax system is similar to that of many countries. Employers and other payers usually deduct taxes from the income they pay you, and people with business or rental income normally pay their taxes by instalments.
Many of the benefits people enjoy in Canada are made possible through taxes. Canada’s tax system pays for roads, schools, health care, social security and public safety.
Each year, you determine your tax obligation by completing an income tax and benefit return and sending it to us. For more information see Do you have to file a tax return?. On the return, you list your income and deductions, calculate federal and provincial or territorial tax, and determine 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.
Under Canada's tax system, you have the right and the responsibility to determine your income tax status and make sure you pay your required amount of taxes for each year according to the law.
Guide RC17, Taxpayer Bill of Rights Guide: Understanding your rights as a taxpayer, outlines the fair treatment you are entitled to receive when you deal with us. You have other rights under Canadian laws including the Canadian Charter of Rights and Freedoms.
Each year, the Canada Revenue Agency (CRA) promotes compliance and taxpayer education through many review programs.
We review deductions and credits on the individual income tax and benefit return and ensure that income amounts have been correctly reported. We also review benefits and credits such as the Canada child tax benefit (CCTB), and the goods and services tax/harmonized sales tax (GST/HST) credit.
The underground economy is defined as income earned but not reported for income tax purposes and the sale of goods or services on which taxes or duties have not been paid. The underground economy is often associated with the exchange of goods and services for cash where no records are kept.
The CRA works to maintain the confidence of Canadians in the fairness and honesty of Canada’s tax system. As part of its efforts to fight the underground economy, the CRA works with the provinces, territories, private sector, and other countries to encourage compliance with Canada’s tax laws and ensure that those who do not comply have no unfair advantage over honest taxpayers.
The CRA has developed a balanced approach to fighting the underground economy. This approach includes:
activities such as audits which ensure that income and expenses are properly reported. An audit may lead to a reassessment of tax, and the imposition of penalty and interest; and
A criminal investigation and prosecution may result if tax evasion is suspected; this could lead to fines and imprisonment.
As a newcomer to Canada, you will need a social insurance number (SIN). The SIN is a nine-digit identification number that is unique, personal and confidential.
We use it to identify you for income tax and benefit purposes. You have to give your SIN to anyone who prepares tax information slips (such as a T4 slip) for you.
If you have a SIN that starts with the number 9, a temporary tax number (TTN), or an individual tax number (ITN), and you decide to become a permanent resident of Canada, you have to apply for a new SIN. Once this new SIN has been assigned to you, do not use any other SIN, TTN, or ITN that was previously assigned to you.
If you do not already have a SIN, you can apply for one at the nearest Service Canada office. For more information on how to apply for a SIN or to find a Service Canada location near you, visit the Service Canada Web site or call 1-800-206-7218.
If you are responsible for the care and upbringing of a child who lives with you and is under 18 years of age, you may be eligible for the CCTB and payments from certain related provincial or territorial programs for that child.
We base the amount of your payments on the number of qualified children you have and their ages, your province or territory of residence, your adjusted family net income, and your child’s eligibility for the disability tax credit. You and your spouse or common-law partner (if applicable) must both file tax returns every year so that we can calculate the amount of your CCTB, even if there is no income to report.
To apply for the CCTB and payments from certain related provincial or territorial programs, complete Form RC66, Canada Child Benefits Application. Depending on your immigration and residency status, you may have to complete Schedule RC66SCH, Status in Canada/Statement of Income. Send us your Form RC66 along with any required schedules and documentation as soon as possible after you and your child arrive in Canada.
You can also receive a CDB, in addition to the CCTB, if your child meets the criteria for the disability amount and we approved Form T2201, Disability Tax Credit Certificate, for the child. You can get these forms at Canada Child Benefits package or by calling 1‑800‑959‑2221.
Families receive $100 per month for each child under six years of age.
We will determine if your family is eligible to receive the UCCB based on the information in your Canada child benefits application (see the previous section for more details on applying for the CCTB).
If you ceased to be a resident of Canada after October 1, 1996, and you later re-establish Canadian residency for income tax purposes, you can elect to make an adjustment to the deemed dispositions you reported when you emigrated from Canada. We refer to this as an election to "unwind" a previous deemed disposition.
You can make this election to unwind if you still own some or all of the property that was deemed disposed of when you emigrated. If you make this election for taxable Canadian property, you can reduce the gain reported on your tax return for the year you emigrated by an amount you specify-up to the amount of the gain you reported.
If you make this election, the amount of the gain from the deemed disposition on other than taxable Canadian property that you reported on your tax return for the year you emigrated can be reduced by the least of:
The definition of taxable Canadian property changed on March 5, 2010. As a result, property that was considered taxable Canadian property when you became a non-resident may no longer be considered taxable Canadian property when you return to Canada. If this is the case, special rules may apply. For more information, contact us.
The election to unwind may result in the reduction or elimination of the tax owing for the gain from the previously reported deemed disposition of property on emigration. If you make this election, and you had previously elected to defer payment of the tax owing on the income from the deemed disposition, some or all of the security you may have provided may be returned to you.
You can make this election by sending the International Tax Services Office your request in writing on or before your filing-due date for the year you re-establish Canadian residency for income tax purposes. You must also include a list of the properties you own and the FMV of each property to which this election applies.
When you immigrate to Canada, you are generally considered to have disposed of, and to have immediately reacquired, most properties you own on the date you immigrate. If you had previously elected to defer payment of the tax owing on the income from the deemed disposition of property, on other than taxable Canadian property on emigration, you may now have to pay the deferred tax.
For more information, contact us.
Even if you lived in Canada for only part of the year, you may have to file a tax return. For example, you have to file a tax return if you have to pay tax, or if you want to claim a refund.
Even if you have no income to report or tax to pay, you may want to file a tax return to apply for the goods and services tax/harmonized sales tax (GST/HST) credit, or if you or your spouse wants to begin or continue receiving the Canada child tax benefit and payments from certain related provincial or territorial programs.
For more information, see “Do you have to file a return?” in the General Income Tax and Benefit Guide.
If you lived in Quebec on December 31, 2012, you may have to file a separate provincial tax return. For more information, visit the Revenu Québec Web site or call 1‑800‑267‑6299.
Use the General Income Tax and Benefit Guide and the forms book for the province or territory where you resided on December 31, 2012. Tax rates and tax credits are different in each province and territory, so it is important to use the correct forms book.
The electronic filing options are not available to newcomers to Canada for the 2012 tax year.
Generally, your 2012 tax return has to be filed on or before April 30, 2013.
Self-employed persons - If you or your spouse or common-law partner carried on a business in 2012 (other than a business whose expenditures are primarily in connection with a tax shelter), your return for 2012 has to be filed on or before June 15, 2013. However, if you have a balance owing for 2011, you still have to pay it on or before April 30, 2013.
Deceased persons - If you are the legal representative (the executor, administrator, or liquidator) of the estate of an individual who died in 2012, you may have to file a tax return for 2012 for that individual. For more information about your filing requirements of the final return and optional returns, including what documents are required, see Guide T4011, Preparing Returns for Deceased Persons, and Information Sheet RC4111, What to do following a death.
If you owe tax and do not file your tax return by the due date, we will charge you a late-filing penalty and interest on any unpaid amounts owing. For more information, see "What penalties and interest do we charge?” in the General Income Tax and Benefit Guide.
When a due date falls on a Saturday, a Sunday, or a holiday recognized by the Canada Revenue Agency, we consider your tax return to be filed on time or your payment to be made on time if we receive it or it is postmarked on the next business day. For more information, go to Important dates.
Mail your 2012 tax return to the International Tax Services Office (ITSO). This pamphlet includes a return envelope addressed to the ITSO. Do not mail your tax return to any other address.
You will find most of the information you need to complete your 2012 tax return in the General Income Tax and Benefit Guide. However, in the following section, you will find other useful information that will help you complete your return.
It is important that you complete the entire 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 (GST/HST) credit, plus any benefits to which you may be entitled under the Canada child tax benefit.
When completing this area on your return, enter the date you became a resident of Canada for income tax purposes as shown in the example below.
Harinder arrived in Canada on June 8, 2012. She will enter the date of entry as shown below.
|If you became or ceased to be a resident of Canada for income tax purposes in 2012, enter the date of:|
If you have requested a social insurance number (SIN), but have not yet received one, and the deadline for filing your tax return is near, file your tax return without a SIN to avoid any possible late-filing penalty and any interest charges. Attach a note to your return to let us know why you did not enter your SIN.
Enter your spouse or common-law partner's net world income for 2012. Net world income is the net income from all sources both inside and outside of Canada. Underneath, enter your spouse or common-law partner's net world income for the period you were a resident of Canada. If applicable also enter the amount of universal child care benefit included on line 117, and the amount of universal child care benefit repayment included on line 213 of his or her tax return.
If your marital status changes, and you are entitled to receive Canada child tax benefit (CCTB) payments, you must tell us by the end of the month following the month in which your status changes. However, in the case of separation, do not notify us until you have been separated for more than 90 consecutive days. Let us know by going to My Account, or by sending us a completed Form RC65, Marital Status Change.
The GST is a tax that you pay on most goods and services sold or provided in Canada. In some provinces, the GST has been blended with provincial sales tax and is called the HST.
The GST/HST credit helps individuals and families with low and modest incomes offset all or part of the GST or HST that they pay.
We will base your credit on the number of children you have and on your adjusted family net income. This information is also used to calculate any payments from related provincial programs.
If you become a resident of Canada in the year, you may be entitled to the GST/HST credit after your arrival. For more information, see Form RC151, GST/HST Credit Application for Individuals Who Become Residents of Canada.
To get the GST/HST credit for any eligible children, you will have to register them by completing Form RC66, Canada Child Benefits Application.
To get the GST/HST credit, and any payments from related provincial programs, you have to apply for them each year. Complete the GST/HST credit application area on page 1 of your tax return. If you qualify, we will make payments in July and October 2013, and in January and April 2014.
For more information, see Booklet RC4210, GST/HST Credit.
For the part of the year you were considered as a resident of Canada you have to report your world income. World income is income from all sources both inside and outside Canada. In some cases, pension income from outside of Canada may be exempt from tax in Canada due to a tax treaty, but you must still report the income on your tax return. You can deduct the exempt part on line 256 of your tax return.
However for the part of the year that you were not a resident of Canada, you have to report the following amounts:
For the part of the year that you were not a resident of Canada, do not include on your tax return any gain or loss from disposing of taxable Canadian property, or a loss from a business carried on in Canada, if, under a tax treaty, the gain from that disposition or any income from that business would be exempt from tax in Canada. For more information about the disposition of taxable Canadian property, see Guide T4058, Non-Residents and Income Tax.
If you are a protected person and you received funds from a charitable organization such as a church group, you generally do not have to report the amounts on your tax return. However, if a charitable organization hired you as an employee, the employment income you received is taxable.
If you owned certain properties, other than taxable Canadian properties, while you were a non-resident of Canada, we consider you to have disposed of the properties and to have immediately reacquired them at a cost equal to their fair market value on the date you became a resident of Canada. This is called a deemed acquisition.
Usually, the fair market value is the highest dollar value you can get for your property in a normal business transaction.
You should keep a record of the fair market value of your properties on the date you arrived in Canada. The fair market value will be your cost when you calculate your gain or loss from selling the property in the future.
If you ceased to be a resident of Canada after October 1, 1996, and you later re-established Canadian residency for income tax purposes, you can elect to make an adjustment to the deemed dispositions you reported when you emigrated from Canada. See Unwinding a deemed disposition for returning residents.
Generally, you cannot deduct contributions you made to a registered retirement savings plan (RRSP) in 2012 if this is the first year that you will be filing a tax return in Canada.
However, if you filed a tax return in Canada for any tax year from 1990 to 2011, you may be able to claim a deduction for RRSP contributions in Canada for 2012. We base the maximum amount you can deduct on certain types of income you earned in earlier years.
For more information, see line 208 in the General Income Tax and Benefit Guide or see Guide T4040, RRSPs and Other Registered Plans for Retirement.
If you and your spouse or common law partner were residents of Canada on December 31, 2012, you can elect to split your pension income that qualifies for the pension income amount (see line 314 on Schedule 1). To make this election, you and your spouse or common law partner must complete and attach Form T1032, Joint Election to Split Pension Income, to your tax returns.
Generally, you cannot deduct moving expenses incurred to move to Canada.
However, if you entered Canada to attend courses as a student in full time attendance enrolled in a program at a post-secondary level at a university, college, or other educational institution, and you received a taxable Canadian scholarship, bursary, fellowship, or research grant to attend that educational institution, you may be eligible to deduct your moving expenses
You cannot deduct moving expenses if your only income at the new location is scholarship, fellowship, or bursary income that is entirely exempt from tax.
For more information, see Form T1-M, Moving Expenses Deduction.
If you make spousal or child support payments, you may be able to deduct the amounts you paid, even if your former spouse or common-law partner does not live in Canada. For more information, see Guide P102, Support Payments.
You have to report your world income that you received after you became a resident of Canada. World income is income from all sources both inside and outside Canada. However, part or all of the income may be exempt from Canadian tax. This may be the case if Canada has a tax treaty with the country in which you earned the income and there is a provision in the treaty that prevents Canada from taxing the type of income you received. You can deduct the exempt part on line 256 of your tax return.
For a list of the countries with which Canada has a tax treaty, see Tax treaties. If you are not sure if the applicable tax treaty contains a provision that makes your income from sources outside of Canada exempt from tax in Canada, contact us.
Complete Schedule 1, Federal Tax, to calculate your federal tax and any federal credits that apply to you.
As a newcomer to Canada during 2012, you may be limited in the amount you can claim this year for certain federal non-refundable tax credits.
To determine the total amount you can claim, add:
The total amount you can claim for each federal non-refundable tax credit cannot be more than the amount you could have claimed if you were a resident of Canada for the whole year.
You can claim the following federal non-refundable tax credits, as long as they apply, if you are reporting Canadian-source income (as listed under Income) for the part of the year you were not a resident of Canada:
In addition, if the Canadian-source income you are reporting for the part of the year that you were not a resident of Canada represents 90% or more of your net world income for that part of the year (or if you had no income from sources inside and outside Canada for that part of the year), you can claim the remaining applicable federal non-refundable tax credits in full. See the General Income Tax and Benefit Guide for a list of the remaining federal non-refundable tax credits.
If you are claiming full federal non-refundable tax credits, attach a note to your tax return stating your net world income (in Canadian dollars) for the part of the year that you were not a resident of Canada. Show separately the net income you received from sources inside and outside Canada for that part of the year. We cannot allow the full amount of these federal credits without this note.
You can claim the following federal non-refundable tax credits, as long as they apply to the part of the year that you were a resident of Canada:
In addition, you can claim, as long as they apply to your situation, the other remaining federal non refundable tax credits based on the number of days you were a resident of Canada in the year.
Use the date you arrived in Canada, entered in the “Identification” area on your tax return, to calculate the number of days you were a resident of Canada. See the General Income Tax and Benefit Guide for a list of the other remaining federal non refundable tax credits.
David arrived in Canada on May 6, 2012.
He claims a basic personal amount of $7,096.39 calculated as follows:
|240 days in Canada||× $10,822 =||$7,096.39|
|366 days in 2012|
David claims $7,096.39 on line 300 of his Schedule 1.
Jennifer is 70 years old. She arrived in Canada on March 31, 2012. Her net income between March 31 and December 31, 2012, was $30,000. Jennifer can claim an age amount calculated as follows:
1) Prorate the maximum age amount of $6,720.
|276 days in Canada||× $6,720 =||$5,067.54 (A)|
|366 days in 2012|
2) Prorate the base income amount of $33,884.
|276 days in Canada||× $33,884 =||$25,551.87 (B)|
|366 days in 2012|
Since Jennifer’s net income is greater than (B), she must reduce amount (A) by 15% of the amount of her income that is more than the prorated base income amount (B), as follows:
|$30,000 – $25,551.87 =||$4,448.13 (excess amount)|
|$4,448.13 × 15 % = $667.22 (C)|
The age amount that Jennifer can claim is (A) minus (C):
|$5,067.54 – $667.22 =||$4,400.32|
Jennifer claims $4,400.32 on line 301 of her Schedule 1.
Suzanne and her spouse Richard arrived in Canada permanently on September 23, 2012. Suzanne's net income between September 23 and December 31 was $100,000 and Richard's was $800 in the same period. Suzanne can claim a spouse or common-law partner amount calculated as follows:
1) Prorate the maximum spouse or common-law partner amount of $10,822
|100 days in Canada||× $10,822 =||$2,956.83|
|366 days in 2012|
2) Subtract spouse's or common-law partner's net income.
|$2,956.83 – $800.00 =||$2,156.83|
Suzanne claims $2,156.83 on line 303 of her Schedule 1.
After you become a resident of Canada, you may receive income from the country where you used to live or from another country. This income may be subject to tax in Canada and the other country. This could happen if:
If this is your situation, you may be able to reduce the amount of federal tax you have to pay in Canada by claiming a federal foreign tax credit for the foreign tax you paid. For information about federal foreign tax credits, see Form T2209, Federal Foreign Tax Credits, or line 405 in the General Income Tax and Benefit Guide.
Your province or territory of residence may offer a similar credit. For more information, see the forms book for the province or territory where you lived on December 31, 2012, unless you were a resident of Quebec. In that case, see the guide for the Quebec tax return.
In the year you immigrated, you usually have to pay tax to the province or territory where you lived on December 31, 2012.
If you lived in Quebec on December 31, 2012, you can get information on filing a Quebec tax return and calculating your provincial tax by contacting Revenu Québec.
If you lived in another province or territory on December 31, 2012, see the General Income Tax and Benefit Guide and forms book for the province or territory you lived in. This will provide information on how to calculate your provincial or territorial tax. You will have to complete Form 428.
Similar to the amount of federal non-refundable tax credits, as an immigrant, you may be limited in the amount you can claim this year for certain provincial or territorial non-refundable tax credits.
Generally, the rules for calculating your provincial or territorial non-refundable tax credits are the same rules as those used to calculate your corresponding federal non-refundable tax credits. However, the amounts used in calculating most provincial or territorial non-refundable tax credits are different from the corresponding federal credits.
Certain provinces and territories have tax credits. For information on these credits and how to claim them, see the General Income Tax and Benefit Guide and the forms book for the province or territory where you lived on December 31, 2012.
Canada has income tax conventions or agreements (commonly referred to as tax treaties) with the countries that are listed below. These tax treaties are designed to avoid double taxation for those 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 get the status and text of Canada’s tax treaties, visit the Department of Finance’s Web site at Notices of Tax Treaty Developments.
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You can now use your online banking information to log in to My Account. You can still use your CRA user ID and password, if you prefer.
For more information, go to My Account.
You can authorize a representative (such as your spouse or common-law partner, tax preparer, or accountant) to get information about your tax matters and give us information on your behalf. We will accept information from and/or provide information to your representative only after we are satisfied that you have authorized us to do so through My Account, in writing, or by sending us a completed Form T1013, Authorizing or Cancelling a Representative. Your authorization will stay in effect until you cancel it, it reaches the expiry date you choose, or we receive notification of your death. You or your representative may request by telephone, in person, or in writing, that the consent you have given be cancelled.
If you move, let us know your new address as soon as possible.
Keeping us informed will ensure that you keep getting any GST/HST credit (including those from certain related provincial payments), universal child care benefit, and Canada child tax benefit payments (including those from certain related provincial or territorial programs) to which you may be entitled. Otherwise, your payments may stop, whether you receive them by cheque or by direct deposit.
You can advise us by calling or writing. If you are writing, send your letter to your tax centre. Sign it, and include your social insurance number, your new address, and the date of the change.
Use the following telephone numbers to contact us:
|Calls from Canada and the United States||1-855-284-5942|
|Calls from outside Canada and the United States||613-940-8495|
|We accept collect calls.|
Monday to Friday (holidays excluded)
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From February 18, 2013, to April 30, 2013, except Easter weekend:
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