Tax Checklist For Immigrants To Canada

People from all over the world now see Canada as a home Canada. Have you seen the multitude of flags flying high during the World Cup taking place over the next few weeks?. Before moving to Canada, it is pertinent to acquaint yourself with the Tax Checklist For Immigrants.

Start making Canadian tax filings

Canada taxes people if they are residents of the country. Keep in mind that you’ll face tax on all of your income, including income from outside Canada. If you earn passive (investment) income inside a foreign corporation that you control, there is a need to report that income on your Canadian personal tax return, and you’ll be required to file Form T1134 in addition to your Canadian tax return. There are consequences if you fail to report this income, called FAPI (Foreign Accrual Property Income).

You are also required to report, using Form T1135, the existence of your foreign assets (except personal use property) if your total cost exceeds $100,000 at any time during a year. Each year,  property received from foreign trusts and the ownership of foreign subsidiaries must also be reported to the Canada Revenue Agency (CRA).

Obtain a Social Insurance Number

You’ll need to request this important document. This document will be your account number for any personal tax filings you’ll have to make. You’ll also need a Social Insurance Number to receive government benefits, arrange for certain banking services and work for an employer in Canada. If you own a business in Canada, you’ll need a business number as well as a GST/HST number. Contact the CRA to obtain these numbers.

Track your Canadian cost base.

When coming to Canada, you’ll be deemed to have acquired any of your capital property – that is, assets – at fair market value immediately before becoming a Canadian resident. The result? Your adjusted cost base for Canadian tax purposes will equal the fair market value of those assets at the time of your arrival in Canada. Therefore, you’ll only face tax on gains (and you can only claim losses) accruing and realized after taking up residency in Canada.

Check the status of your non-Canadian trusts.

 If you transferred property to a non-Canadian trust, or you’re the beneficiary of one, be sure to visit a tax pro to determine whether the trust will now be considered resident, and therefore taxable in Canada. You might even be liable personally for the tax of the trust.

Consider the status of your non-Canadian corporations.

If you control one or more foreign corporations, it’s possible that they may now be resident in Canada for tax purposes because the “mind and management” of the companies may now be here. However, the corporations may be required to file Canadian tax returns and pay tax here. It is possible that there may be relief available under a tax treaty with Canada to avoid double-taxation in this case.

Be aware of withholding tax requirements.

When you relocate to Canada and continue to make payments of passive income such as rent, royalties or certain interest to non-residents of Canada, there may be the need to withhold tax from these payments in order to remit the tax to the CRA. Even if the payments are made from a foreign bank account, this requirement can still exist

Understand that immigration trusts have changed.

 In the past, before arriving in Canada, you should have considered creating an offshore “immigration trust” to own certain of your assets for the first five years of Canadian residence. The trust would have avoided Canadian tax on any foreign income earned on those assets for the period of that five years. If you may, think of this as a tax holiday. Well, as bad as it may sound, the 2014 Canadian federal budget did away with this tax holiday.

Apply for other important cards.

Finally, there is the need to obtain a permanent resident card as official proof of your Canadian residence status and a provincial health card to obtain health benefit.

You may also see how to file tax for a Non-Canadian