Filing that first Canadian tax return after arriving here might be a little confusing. But it is a necessary part of becoming a resident. New immigrant returns are processed slightly differently than the average return. If you arrived in 2012, there are some exceptions that you should know before submitting your documents.
- No NETFILE: Unfortunately, new Canadians are not allowed to use NETFILE for their returns so, if you complete the forms yourself, you will need to mail them into the Canada Revenue Agency.
- Longer processing times: New Canadian tax returns are filed with the CRA’s International Tax Centre and can take significantly longer to process. Six to eight weeks is the common processing time but it could be longer depending on the complexity of the return.
- No RRSP room: You do not begin building contribution room for Registered Retirement Savings Plans (RRSPs) until you file a tax return with earned income. Since this is the first Canadian tax return filed, no RRSP contribution room will be available. If your employer has automatically made contributions for you, you will be subject to a 1 percent per month penalty on overcontributions in excess of $2,000. However, the over-contribution will likely be reduced to zero beginning in 2013 as new deduction room is created.
- Claiming a non-resident spouse: If your spouse has not yet joined you in Canada and is dependent on you for support, you can claim the spouse or common-law amount. However, you will be asked to provide supporting documentation to prove support. You will also be unable to make this claim if your spouse already had enough income or assistance for a reasonable standard of living in the country where they are living.If you have non-resident dependants, you may also be able to claim them. Check out our post at https://www.hrbtaxtalk.ca/blog/not-a-resident-you-may-still-be-able-to-claim-dependants/ for more information.
Once you have filed your first Canadian tax return, you should be able to NETFILE your 2013 return next year and avoid the longer waits at the International Tax Centre. The important thing is to file, to ensure you receive the benefits you are entitled to receive.