Eight Tax Planning Tips for Newcomers to Canada

Understanding taxes in Canada doesn’t have to be complicated.

March 31, 2025

Welcome, fellow Newcomers, to the land of maple syrup and friendly faces! As you settle into your new life in Canada, understanding taxes is key to keeping your finances in order. Let’s break it down into simple terms so you can navigate the Canadian tax system with ease

Eight Tax Planning Tips for Newcomers to Canada

  1. Filing Taxes Based on Where You Live: In Canada, you need to file taxes based on where you live, not where you’re from. If you’re living here, you’re considered a resident for tax purposes, and you’ll need to report all your income to the Canada Revenue Agency (CRA), whether you earned it in Canada or abroad.
  2. Reporting All Your Income: Don’t forget to declare all your income, including what you earned back home. Whether it’s from a job, investments, or any other source, it all needs to be on your tax return.
  3.  Utilizing Tax-Sheltered Investment Accounts*: Canada offers various tax-sheltered investment accounts, such as Registered Retirement Savings Plans (RRSPs), Tax-Free Savings Accounts (TFSAs) and Tax-Free First home savings accounts (FHSAs). These accounts provide opportunities for tax-deferred or tax-free growth on investments, helping you build your financial future while minimizing tax liabilities.
  4.  Filing Taxes Individually: Unlike some jurisdictions where couples may file joint tax returns, individuals in Canada must file their taxes separately, irrespective of relationship status. Each person is responsible for reporting their income and claiming applicable deductions or credits.
  5. Claiming Dependents: If you’re supporting family members back home, you might be able to claim them as dependents on your taxes here in Canada. This could mean more money back in your pocket through tax credits and benefits.
  6.  Understanding How Tax Rates Work: The amount of tax you pay in Canada depends on how much you earn. It’s like climbing a ladder – the higher you go, the more tax you pay. This is called a progressive tax system.
  7. How Long You’ve Been in Canada Matters#: If you’ve been in Canada for more than 183 days in a year, you’re considered a resident for tax purposes. That means you need to report your worldwide income to the CRA and become eligible for most tax-sheltered accounts if you have an eligible Social Insurance Number(SIN).
  8. Move Your Foreign Investments to Tax-Sheltered Accounts: If you have investments held in your home country, think about moving them into your TFSA or RRSP. This way, you can avoid paying taxes on any profits you make when you sell them in the future.

In summary, understanding taxes in Canada doesn’t have to be complicated. By remembering to report all your income, taking advantage of tax-sheltered accounts, filing your taxes individually, claiming dependents, knowing how tax rates work, meeting residency requirements, and moving your foreign investments into tax-sheltered accounts, you’ll be well on your way to mastering the Canadian tax system. Welcome to Canada, where managing your taxes is just a part of everyday life!

*# Always check with CRA to ensure your contribution limits to accounts before acting on any information you see online. 

Mutual funds, approved exempt market products and/or exchange-traded funds are offered through Investia Financial Services Inc.

The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. 

This newsletter was prepared by Mukesh Patel,CFP who is a Investment Funds Advisor with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability.