Do you have to pay taxes in Canada if you have just moved there?

The first few months after arriving in Canada are full of new concerns, and it is at this point that the question arises: are newcomers required to file and pay taxes this year? Canadian tax law is based on tax residency, not citizenship, so the answer depends on how quickly you establish “substantial residential ties” with the country and when that happens. In most cases, the obligation to file a tax return and, if necessary, pay taxes arises in the first calendar year of residence, even if you have only spent a few months here.

Introduction: why taxes arise immediately upon arrival

Canada taxes the worldwide income of those it considers residents for personal income tax purposes. The sooner you understand the rules, the easier it is to avoid penalties and access government benefits such as the GST/HST credit or the Canada Child Benefit. The fact that you have not yet earned any income in Canada does not exempt you from filing a tax return: filing your first return is often the only way to confirm your eligibility for benefits and credits.

Basics of the Canadian system and the importance of resident status

The tax year runs from January 1 to December 31, and the deadline for filing personal tax returns for most people is April 30 of the following year. The key concept is “resident of Canada for tax purposes.” If you are considered a resident for even one day of the year, you must report your worldwide income for that period; for the rest of the year when you were a non-resident, you only report Canadian sources.

Resident status is determined by a combination of factors. The main ones include permanent residence, the residence of a spouse or children in Canada, and the existence of other residential or social ties. When such ties were established on the date of arrival, that date is recorded in the tax return as the start of residency.

Categories of residency and their tax implications

Canadian law distinguishes between actual full-year residents, partial-year residents, deemed residents, and non-residents. Newcomers most often find themselves in the status of a partial-year resident: until the moment of arrival, they were considered non-residents, and after that, residents, so they must proportionally separate their income “before” and “after” the date of entry. If a person stays in Canada for 183 days, even without significant ties, they automatically become a “deemed resident” and are taxed on their worldwide income for the entire year.

Typical “part of the year” situation: what and how to declare

Let's say you arrived on June 8. In your tax return for that calendar year, you will indicate the date of arrival and declare your worldwide income earned from June 8 to December 31. Income earned before arrival is included only if it had a Canadian source, such as remote work for a Canadian company. The tax regime is governed by Section 114 of the Income Tax Act, which allows foreign income earned before acquiring resident status to be excluded.

Do you always have to file a tax return if your income was zero?

Yes. The CRA strongly recommends filing a return even if you have no income so as not to lose your entitlement to credits and benefits that can significantly support a newcomer's budget. You can apply for a GST/HST credit after filing Form RC151 for your date of arrival, but you will still need to file a return to maintain your payments for the following year.

Global income and double taxation

Canadian residents must, in principle, declare all income from worldwide sources, but double taxation is eliminated through a network of more than 90 bilateral conventions and the foreign tax credit mechanism. If tax has already been paid abroad, it can be credited against the Canadian liability within the limits of the corresponding credit. Supporting documents must be collected: certificates from the tax authorities of the other country, payment orders, or bank statements.

File or pay: two different actions

Filing is a formal reporting of income. Payment arises only if there is tax to pay after calculation. A newcomer can file a return and receive a refund of excess amounts withheld or a zero balance; however, if the employer did not withhold tax during the year, there will be an obligation to pay the additional amount, which must be paid by April 30 to avoid penalties.

Practical steps for preparing your first tax return

Newcomers should start by obtaining a SIN, as it is not possible to file a tax return online without it. Next, you need to register for a My Account to download your T4 and other electronic documents. If your resident status is unclear, you should submit Form NR 74, which allows the CRA to officially express its opinion on your status, but you usually do not need to wait for a response — the return should be filed within the usual time frame. The value of your worldwide property at the time of entry should be recorded, as it will later be used as the basis for calculating capital gains.

Social benefits that are lost without a declaration

GST/HST credit, Canada Child Benefit, and Canada Carbon Rebate are only available to those who have filed a return for the previous year; otherwise, payments are suspended until the return is filed. Even if you have no income, you still need to file a return, as the CRA uses it to calculate your entitlement to benefits.

Special features of different statuses: CUAET, students, temporary workers

Ukrainians who arrived under the CUAET program receive an open work permit, which does not in itself determine tax status; everything depends on residential ties. If a family rents accommodation in Calgary, the children attend school, and the parents work, then resident status is established from the date of arrival, regardless of whether the individuals only have a temporary visa. Foreign students who have been in Canada for more than 183 days or have permanent accommodation on campus are also mostly recognized as residents and file a tax return. Temporary foreign workers with short-term contracts and no family may remain non-residents if they have not established significant ties and have stayed in the country for less than six months.

Typical examples

Scenario one: a family arrived on July 1, both adults found jobs, and the children enrolled in a local school. In their tax return for the current year, they report their worldwide income for the period from July 1 to December 31 and file a T1 by April 30 of the following year; income received from abroad before July 1 is not reported unless it has a Canadian source. Scenario two: a student arrived on September 5 for a one-year course, lives on campus, and works part-time. He becomes a resident on September 5, so he reports his worldwide income only for the fall months, but files a return to get a refund of the tax withheld and the right to a GST/HST credit.

Common mistakes made by newcomers

People often put off their tax affairs “until they get their PR,” confusing immigration and tax status; the CRA does not take into account the absence of a permanent resident card when determining tax obligations. Another mistake is ignoring foreign investment income after the date of arrival; the CRA has extensive information-sharing capabilities with tax authorities in other countries, and concealment can result in significant penalties.

Tax treaties and double taxation avoidance

Canada has treaties with most countries, and if tax is paid in another jurisdiction, it can be credited in Canada as a foreign tax credit, which is equal to the amount paid or the Canadian tax on the same income, whichever is less. To do this, keep all foreign tax slips, statements, and tax withholding certificates to include them in section T2209 of your return.

What to do with income earned exclusively outside Canada after moving

If a resident continues to conduct business online with customers in Europe, the income is taxable in Canada regardless of where the work is physically performed, although tax credits may be available for the amount paid in the other country. If income is received only in cryptocurrency, its value in CAD on the date of receipt is included in worldwide income; conversion does not affect the liability itself.

Answers to frequently asked questions in detailed explanations

Can I file a return without a SIN? The CRA allows you to send a paper return with an explanatory letter, but online filing is not possible, and payments will only be available after a SIN has been assigned. Do I need to file a return if I am staying in a hotel and plan to leave Canada within 183 days? If you have no significant residential ties and are staying for less than six months, you are likely to remain a non-resident; however, income from Canadian sources is still taxable and requires a return or at least proper withholding at source.

Summary

In the vast majority of life scenarios, newcomers acquire tax resident status in their first year from the date of arrival, after which they must declare their worldwide income for part of the year, pay taxes if liable, and file a return every year, even if their income is zero, in order not to lose access to government benefits. Understanding this principle, obtaining a SIN in a timely manner, keeping records of foreign income, and filing a tax return by April 30 will ensure financial stability and help you avoid penalties. Tax resident status does not require a PR card; it begins when you settle in Canada and establish your center of vital interests there. Therefore, the answer to the question “Do you have to pay taxes if you have just moved?” is almost always the same: “Yes, you do,” and it is advisable to do so competently and without delay, because tax discipline is an integral part of successful integration into Canadian society.