Your first Canadian tax return after moving to Canada

When did I become a Canadian tax resident?

For most newcomers, Canadian tax residence begins when they start living in Canada and establish significant residential ties, often the same day. Enter the date you became a resident in the residence information on your return; a landing date alone does not settle the question (CRA: Newcomers; CRA: Completing your return).

A home, spouse or dependants in Canada are significant ties. A bank account, driver's licence and provincial health coverage may also matter. Record when you secured a home, moved your household, started work and brought family members. If your spouse or children remained abroad, see Canadian tax residency before choosing the date.

If you stayed in Canada for 183 days or more during the year, check the deemed-residence and treaty rules before excluding earlier foreign income; deemed residence can require reporting worldwide income for the full year (CRA: Deemed residents).

Do I report income earned before I moved?

Generally, foreign income earned while you were a non-resident is outside Canadian taxable income. Canadian-source income from that period can still belong on your first return, including Canadian employment or business income and a taxable gain on taxable Canadian property (CRA: Completing your return; Income Tax Act, section 114).

Keep a separate record of pre-arrival income from every country. The CRA may request your and your spouse's income for up to two years before arrival to calculate benefits, even though pre-arrival foreign earnings are not taxed on the Canadian return. A pre-arrival Canadian amount may also affect which credits you can claim (CRA: Newcomers).

If you have a spouse or common-law partner, the return asks for their full-year net world income, regardless of where they lived, and their net world income during your resident period. This does not make their foreign income your taxable income (CRA: Completing your return).

What is world income on my first return?

World income means income from Canadian and foreign sources. Report it in Canadian dollars for the part of the year you were a Canadian tax resident, even if it stayed in an account abroad or no Canadian slip was issued (CRA: Completing your return).

An existing foreign account balance is not income. Transferring your own savings to Canada does not itself make them taxable; report interest and other income earned after you became resident (CRA: Newcomer tax discussion).

For each payment, note when it was earned or received, its source, the foreign currency amount and the Canadian-dollar conversion. A tax treaty can exempt some reported income; do not simply omit it. Later-year reporting details belong in Foreign income on a Canadian return.

What cost do I use for property I owned when I arrived?

For many assets, Canadian tax law treats you as having sold and immediately reacquired them at fair market value when you became resident. That value becomes your Canadian cost for a later gain or loss, whether the asset is abroad or in Canada. Keep dated investment statements and support for property values and exchange rates now (Income Tax Act, section 128.1(1); CRA: Completing your return).

The automatic value reset does not cover every asset. Taxable Canadian property, such as Canadian real estate, is excluded; certain Canadian business property and other rights are also excluded. Identify exceptions before using an arrival-date value as cost (Income Tax Act, section 128.1(1)). For rent or a later sale of a home abroad, see Property outside Canada.

If you previously left Canada and reported a deemed disposition, you may be able to elect to unwind it. Send your written election and a list of the affected property and its return-date value to CRA by your filing due date for the year you return (CRA: Dispositions of property).

Do I file Form T1135 in my first year?

If this is the year you first became a Canadian tax resident, you do not file Form T1135 for that year, even if you already owned substantial foreign investments. A returning former resident must check the usual T1135 rules. The first-year exception also covers the foreign-affiliate information return under the same statutory provision; it does not excuse reporting taxable income from those assets (Income Tax Act, section 233.7; CRA: T1135 questions).

The exception ends after the arrival year. Answer the T1 foreign-property question based on what you held, even when the exception means no T1135 is due (CRA: T1 return). Save the fair market value of foreign property on the residency date because CRA uses that cost for later T1135 tests. See Foreign property and affiliate reporting for later-year filing and what property counts.

Can I claim the full basic personal amount?

Usually, the federal basic personal amount is prorated by the days you were resident. You may claim the remaining part under the non-resident rules if you had reportable Canadian-source income before arrival that was at least 90% of your net world income for that period; the full-year amount remains the ceiling (CRA: Federal non-refundable tax credits).

Some credits, such as qualifying pension contributions, employment insurance premiums, tuition and donations, follow their own part-year rules. To claim full federal credits, provide your pre-arrival net world income, showing Canadian and foreign sources separately; attach a note if filing on paper. Provincial or territorial credits may use different amounts (CRA: Completing your return).

Can I contribute to an RRSP or TFSA in my first year?

An RRSP deduction is generally unavailable on a first Canadian return if you have no earlier Canadian RRSP deduction room. A previous Canadian return and unused room can change that answer; check your actual deduction limit before contributing. Contributing beyond your available room may trigger monthly excess-contribution tax (CRA: Completing your return; CRA: RRSP excess contributions).

A resident aged 18 or older begins accruing TFSA room when Canadian residency begins. An eligible new resident can receive the full annual limit, $7,000, for the arrival year, but gets no room for earlier years spent as a non-resident. Track all contributions yourself; an excess contribution can trigger monthly tax (CRA: Before you contribute to a TFSA).

Before opening a TFSA, confirm that the issuer accepts your tax identification number. Some provinces require you to be 19 to sign the account contract, though room can accrue at 18 (CRA: Opening a TFSA; CRA: Saving for the future).

What if I paid tax abroad after arriving?

Report the post-arrival foreign income on the Canadian return first. If the same income is taxable abroad, a federal foreign tax credit may reduce Canadian tax on it; the province or territory may offer a separate credit. Keep the foreign return and proof of tax paid, and check whether a treaty instead exempts the income in Canada (CRA: Completing your return).

Foreign tax paid on pre-arrival income does not create a credit against Canadian tax on post-arrival income merely because both payments occurred in the same year. If timing, income type or the person taxed differs between countries, see Foreign income on a Canadian return or get cross-border tax help.

How do I apply for newcomer benefits?

Eligible newcomers can apply for benefits before filing their first return. The Canada Groceries and Essentials Benefit is the current name for the former GST/HST credit. The application asks for pre-arrival income in the arrival year and preceding year; it asks for the second preceding year only if you became resident from January through May. If you already applied without required income, submit a Statement of Income (Forms RC151 and RC66SCH; CRA: Newcomers).

The Canada child benefit has separate residence, care and immigration-status tests. Either you or your spouse or common-law partner must meet an accepted status. If temporary-resident status is the qualifying route, that person generally must have lived in Canada throughout the previous 18 months and hold a valid permit in the 19th month (CRA: Canada child benefit). Gather immigration documents, children's proof of birth, arrival dates, marital status and both partners' pre-arrival income. Do not enter a non-resident spouse's income on RC151; for the child benefit, CRA may instead request it on Form CTB9 (Forms RC151 and RC66SCH).

When is my first return due, and can I file online?

For most individuals, the return and any balance owing are due April 30 after the tax year. If you or your spouse or common-law partner are self-employed, the usual filing deadline is June 15, while any balance remains due April 30. Business expenditures relating mostly to a tax shelter investment do not qualify for the later filing date. Confirm the dates when CRA publishes the filing season for this tax year (CRA: Due dates; CRA: Filing due dates).

If you receive benefits, file each year even with no income or tax owing so CRA can calculate payments. Your resident spouse or common-law partner should file too; report a non-resident partner's income to CRA as required (CRA: Newcomers).

A first return can generally be sent through NETFILE once the filing service opens and you meet its rules; a prior notice-of-assessment access code is not required. If you have no SIN or eligible temporary tax number, or a NETFILE restriction applies, prepare a paper return instead. Enter your tax-residency date and retain your supporting records (CRA: NETFILE; CRA: Get ready to file; CRA: Completing your return).

I moved to Quebec. What is different?

If you were a Quebec resident on December 31, file both a federal return with CRA and a separate Quebec TP-1 return with Revenu Québec. Quebec generally taxes your worldwide income for the period you were resident in Canada. On the latest TP-1, enter your arrival date on line 18 and your income not subject to Quebec tax from the non-resident period on line 19; this includes pre-arrival foreign income (Revenu Québec: TP-1 return; line 19 instructions). Quebec's separate foreign-property return, TP-1079.8.BE-V, also exempts the year you first become a Canadian resident (Revenu Québec: foreign-property form). Check Quebec's own credit and online-filing rules (Revenu Québec: Entering Québec; New residents).

Quebec's published electronic-filing restrictions allow a new resident to file a part-year return online in some cases, but a temporary identification number can require mailing the return. Check the restrictions for the return year before filing (Revenu Québec: Online filing restrictions).

Example

Illustrative amounts in Canadian dollars. You became a Canadian tax resident for the first time on July 1. Before then, you earned C$30,000 abroad and C$2,000 from Canadian work. After July 1, you earned C$40,000 in Canada and C$5,000 in foreign interest. Your foreign shares were worth C$150,000 on July 1 and you kept them all year.

Your first Canadian return may include the C$2,000 pre-arrival Canadian work income and C$45,000 earned worldwide after arrival (C$40,000 plus C$5,000). The C$30,000 pre-arrival foreign income is generally excluded from taxable income, but is kept for benefit and credit calculations. Record C$150,000 as the shares' Canadian arrival-date cost, subject to any asset-specific exception. Although the shares exceed the usual T1135 cost threshold, no T1135 is required for the year you first became resident. Your basic personal amount is generally prorated for 184 resident days out of 365. Assuming no pre-arrival deductions, Canadian income was C$2,000 of C$32,000 pre-arrival world income, so it does not meet the full-credit test.

Different for you?

• Your spouse or children stayed abroad, or another country still treats you as resident: determine your residence date in Canadian tax residency.
• You receive foreign income after the arrival year: use Foreign income on a Canadian return.
• You rent out or sell a home abroad: see Property outside Canada.
• You own foreign companies, trusts or a large investment portfolio: later filing duties and arrival values may need review; see Foreign property and affiliate reporting and tax preparation.
• You moved from the US: coordinate both countries' arrival-year returns in Moving from the US to Canada.
• You are a US citizen or green card holder: see Americans living in Canada for continuing US filing duties and cross-border tax help.