Welcome to Canada International Students International Tax Services Office
Session objective To give you important information on how to file an income tax return as a newcomer to Canada. Brief overview of residency and how it affects tax. To tell you about the tools and resources offered by the Canada Revenue Agency (CRA) that are available to help you file your tax returns. 2
Canada s tax system Based on residency not on citizenship. Self-assessment system means you are responsible for reporting your income and paying the correct amount of income tax. 3
Resident of Canada Am I a resident of Canada for tax and credit purposes? At the Canada Revenue Agency, we consider you to be a resident of Canada for tax and credit purposes when you establish residential ties in Canada. You usually establish these ties on the date you arrive in Canada. 4
Residential Ties in Canada Dwelling place available Spouse and/or dependents Personal property Memberships Economic ties 5
Residency Why is residency important? A resident of Canada pays tax in Canada on his or her world income. You must be a resident of Canada to be eligible for social benefits (GSTC and CCTB). A resident of Canada can claim all deductions and credits that apply to them to reduce their tax. 6
Residency Status Resident Non-Resident Deemed Resident Deemed Non-Resident 7
Resident of Canada An individual who enters Canada and who has established significant residential ties with Canada. 8
Deemed Resident A deemed resident is a resident of another country who has sojourned in Canada for 183 days or more in a calendar year and has not established significant residential ties with Canada. 9
Non-Resident A non-resident is a resident of another country who has not established significant residential ties with Canada. 10
Deemed Non-Resident A deemed non-resident is an individual who under a tax treaty is considered a resident of another country. 11
More information Where can I get more information? Publication T4055, Newcomers to Canada Publication T4133, Are you a Newcomer to Canada? Form NR74, Determination of Residency Status (Entering Canada) Interpretation Bulletin IT221R3, Determination of an Individual s Residence Status CRA Web site: www.cra.gc.ca/internationalstudents 12
Do you have to file? You owe taxes We sent you a request to file 13
Should you file? You want to claim a refund of tax that has been withheld Tuition and education amounts Goods & Services Tax Credit / Harmonized Sales Tax Credit (if eligible) Canada Child Tax Benefit (if eligible) 14
Tax Package The Canadian tax return comes in two booklets one is a Guide and the other a Forms booklet. The Forms booklet is for a province or territory. Resident File under the province where you normally resided on December 31 st 2008 15
How to complete a return?
Income tax return Identification area No social insurance number (SIN)? Contact a Service Canada (SC) office for information about applying for a SIN or visit their website for more information. www.servicecanada.gc.ca Can I use my expired 900 SIN to file my income tax return? Yes you can use your expired 900 SIN to file your income tax return. 17
No Social Insurance Number (SIN)? Not allowed to get a SIN? File Form T1261, Application for a Canada Revenue Agency Individual Tax Number (ITN) 18
Information about your residence Date of entry Newcomers enter the date you arrived in Canada. We need this information to calculate any benefits that you may be entitled to. 19
How long in Canada? Did you become a resident of Canada before last year? If you became a resident before last year, you should file an income tax return for each year you lived in Canada. You should put your date of entry only on the tax return for your first year in Canada. You can get tax returns for previous years on our website at www.cra.gc.ca, or by calling 1-800-959-2221. 20
Be sure this is an address where you can be reached between May and August 21
If you are a resident who entered Canada for the first time in 2008, put in your date of entry 22
GST/HST Credit and Foreign Property Reporting 23
Total Income 24
World Income This is taxable from your date of entry. Report world income in Canadian dollars. Exchange rates are available from the Bank of Canada at: www.bankofcanada.ca 25
Information Slips T4 T4A T5 Employment Income Other Income Statement of Investment Income T2202A Tuition, Education and Textbook Amounts Certificate 26
Teacher Research Assistants Report employment income at line 101 See your T4 slip 27
T4 Information Slip 2008 L. 101 QC 28
2008 10,391 58 310 00 ON 116 00 29
You can always refer to the reverse side of a slip for more information 30
T4A Other Income Scholarships and research grants Footnote Code 04= Research Grant 05= Scholarship
Research Grants (line 104) Report your net research grant Subtract your expenses from your grant; Your expenses cannot be more than your grant; Attach to your return a list of your expenses. For more information see IT-75 Scholarships, Fellowships, Bursaries, Prizes, and Research Grants 32
Other Income (line 130) Scholarship Bursaries Fellowship Artist Project Grant Prize for Achievement in field of study 33
Scholarship Income 2006 and future years The full amount of scholarships, fellowships, or bursaries that are received by you as a student if you are entitled to the education amount (see line 323) are no longer reported as income on your tax return. If you are not eligible for the education amount, report on line 130 only the amount that is more than $500. 34
Deductions You may be entitled to deductions which may reduce your taxable income, for example: Moving expenses Child Care expenses Other expenses 35
Net and Taxable Income
International students and moving expenses An international student can deduct moving expenses if he or she is: Attending post-secondary courses in Canada as a full-time student and; Receiving taxable-award income (e.g., scholarship) after the move. You cannot deduct moving expenses against nontaxable scholarship, fellowship, and bursary income. See Form T1-M for more information. 37
Foreign income Are there exemptions under a tax treaty? Call the International Tax Services Office at: 1-800-267-5177 Do I have to pay tax in both countries? See Federal foreign tax credit, line 405, on Schedule 1. 38
Tax Credits
Tax Credits Help Reduce the Amount of Tax You Pay Non-refundable tax credits can only be used to reduce the amount of tax you pay to zero and any excess cannot be refunded Refundable tax credits can be used to reduce the amount of tax you pay to zero and any excess may be refunded 40
Credits Non-Refundable Tax Credits Refundable Tax Credits Personal amounts Tuition fees Education amount Medical expenses Provincial property tax credit Sales tax credit 41
Schedule 1 42
Calculating federal non-refundable tax credits You may have to prorate your non-refundable tax credits based on the number of days you are resident in Canada. The rules are the same for calculating provincial or territorial non-refundable tax credits. 43
Example Jane arrived in Canada from Australia on May 6, 2008. She entered 05-06 in the Identification area of her return. She calculated that from May 6 to December 31 there were 240 days. Jane claims the basic personal amount calculated as follows: 240 days in Canada x $9,600.00 = $6,312.33 365 days in 2008 Jane will enter $6,312.33 on line 300 of her Schedule 1. 44
Claim full non-refundable tax credits? Yes if you have no income for the part of the year that you were not a resident of Canada. Yes if you meet the 90% rule for the part of the year you were not resident in Canada. You must attach a note to your return showing your world income for the part of the year you were not resident in Canada. 45
Tuition, education, and textbook amount Use Schedule 11 Take the information from T2202A 46
T2202A Months part-time Months full-time Tuition Fees 47
Schedule 11 48
Textbook amount 2006 and future years You are eligible to claim an amount for textbooks only if you are entitled to claim the education amount. The amount is: $65 for each month you qualify for the full-time education amount; and $20 for each month you qualify for the part-time education amount. 49
Public Transit Passes Amount For transit after June 30, 2006, you can claim the cost of monthly public transit passes if you had Canadian source income during the year. Public transit includes transit by local bus, streetcar, subway, commuter train or bus, and local ferry. Receipts Keep all your receipts and passes in case we ask to see them. 50
Canada Employment Amount All employees are eligible to claim an employment tax credit. Claim the lesser of: $1,000; and the amount reported at line 101 of your return. 51
Refund or Balance Owing? 52
Goods and Services Tax/Harmonized Sales Tax Credit As a newcomer, you should: complete Form RC151, GST/HST Credit Application for Individuals Who Become Residents of Canada; and send the completed Form RC151 to the tax centre that serves your area. 53
Canada Child Tax Benefit As a newcomer, you: Need to complete Form RC66, Canada Child Tax Benefit Application; and May have to complete Schedule RC66SCH, Status in Canada/Statement of Income Send your completed forms to the tax centre that serves your area. 54
Filing Date On or before April 30 th On or before June 15th for self-employed individual In all cases, any outstanding balance is due on or before April 30th 55
More information Newcomers should send their tax return to: International Tax Services Office 2204 Walkley Road Ottawa ON K1A 1A8 For more information, you can call toll free1-800-267-5177, or go to our Web site at www.cra.gc.ca/internationalstudents 56
Thank you