Welcome to Canada International Students International Tax Services Office Revised January 2009 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. Revised January 2009 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. Revised January 2009 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. Revised January 2009 4 Residential Ties in Canada Dwelling place available Spouse and/or dependents Personal property Memberships Economic ties Revised January 2009 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. Revised January 2009 6 Residency Status Resident Non-Resident Deemed Resident Deemed Non-Resident Revised January 2009 7 Resident of Canada An individual who enters Canada and who has established significant residential ties with Canada. Revised January 2009 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. Revised January 2009 9 Non-Resident A non-resident is a resident of another country who has not established significant residential ties with Canada. Revised January 2009 10 Deemed Non-Resident A deemed non-resident is an individual who under a tax treaty is considered a resident of another country. Revised January 2009 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 Revised January 2009 12 Do you have to file? You owe taxes We sent you a request to file Revised January 2009 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) Revised January 2009 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 31st 2008 Revised January 2009 15 How to complete a return ? Revised January 2009 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. Revised January 2009 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) Revised January 2009 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. Revised January 2009 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. Revised January 2009 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 Revised January 2009 23 Total Income Revised January 2009 Revised January 2009 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 Revised January 2009 25 Information Slips T4 Employment Income T4A Other Income T5 Statement of Investment Income T2202A Tuition, Education and Textbook Amounts Certificate Revised January 2009 26 Teacher – Research Assistants Report employment income at line 101 See your T4 slip Revised January 2009 27 T4 Information Slip 2008 L. 101 QC 28 Revised January 2009 2008 10,391 58 ON 116 310 00 00 Revised January 2009 29 You can always refer to the reverse side of a slip for more information 30 Revised January 2009 T4A Other Income Scholarships and research grants Footnote Code 04= Research Grant 05= Scholarship Revised January 2009 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” Revised January 2009 32 Other Income (line 130) Scholarship Bursaries Fellowship Artist Project Grant Prize for Achievement in field of study Revised January 2009 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. Revised January 2009 34 Deductions You may be entitled to deductions which may reduce your taxable income, for example: Moving expenses Child Care expenses Other expenses Revised January 2009 35 Net and Taxable Income Revised January 2009 Revised January 2009 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. Revised January 2009 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. Revised January 2009 38 Tax Credits Revised January 2009 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 Revised January 2009 40 Credits Non-Refundable Tax Credits Refundable Tax Credits Personal amounts Provincial property tax credit Tuition fees Education amount Sales tax credit Medical expenses Revised January 2009 41 Schedule 1 Revised January 2009 Revised January 2009 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. Revised January 2009 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. Revised January 2009 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. Revised January 2009 45 Tuition, education, and textbook amount Use Schedule 11 Take the information from T2202A Revised January 2009 46 T2202A Months full-time Months part-time Tuition Fees 47 Revised January 2009 Schedule 11 Revised January 2009 Revised January 2009 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. Revised January 2009 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. Revised January 2009 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. Revised January 2009 51 Refund or Balance Owing? Revised January 2009 Revised January 2009 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. Revised January 2009 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. Revised January 2009 54 Filing Date On or before April 30th On or before June 15th for self-employed individual In all cases, any outstanding balance is due on or before April 30th Revised January 2009 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 Revised January 2009 56 Thank you Revised January 2009