CVITP Newcomers 2005

1
Welcome to Canada International Students
2
Session objective

• To give you important information on how to file
  an income tax return as a newcomer to Canada.
• To tell you about Canada Revenue Agency (CRA)
  services that can help you and where you can get
  more information.
• Brief overview of residency and how it affects
  tax.

3
Canadas tax system

• Based on your residency not on your citizenship.
• Self-assessment system means you are responsible
  for reporting your income and paying the correct
  amount of income tax.

4
Residential Ties in Canada

• Dwelling place available
• Spouse and/or dependents
• Personal property
• Memberships
• Economic ties

5
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.

6
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.

7
Residency Status

• Resident
• Non-Resident
• Deemed Resident
• Deemed Non-Resident

8
Resident of Canada

• An individual who enters Canada and who has
  established significant residential ties with
  Canada.

9
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.

10
Non-Resident

• A non-resident is a resident of another country
  who has not established significant residential
  ties with Canada.

11
Deemed Non-Resident

• A deemed non-resident is an individual who under
  a tax treaty is considered a resident of another
  country.

12
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 Individuals Residence Status
• CRA Web site
• www.cra.gc.ca/internationalstudents

13
Do you have to file?

• You owe taxes
• We sent you a request to file

14
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)

15
Tax Package

• The Canadian tax return comes in two booklets
  one is a Guide and the other a Forms booklet.
  The Forms booklet should be for a province.
• Resident
• for the province where you normally resided on
  December 31st 2007

16
How to complete a return ?
17
Income tax return Identification area

• No social insurance number (SIN)?
• Contact a Social Development Canada (SDC) office
  for information about applying for a SIN.
• Can I use my expired 900 SIN to file my income
  tax return?
• Yesyou can use your expired 900 SIN to file
  your income tax return.

18
No Social Insurance Number (SIN)?

• Not allowed to get a SIN?
• File Form T1261,
• Application for a Canada Revenue Agency
• Individual Tax Number (ITN)

19
Information about your residence

• Date of entry
• Newcomersenter the date you arrived in Canada.
• We need this information to calculate any
  benefits that you may be entitled to.

20
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
  Web site at www.cra.gc.ca, or by calling
• 1-800-959-2221.

21
Be sure this is an address where you can be
reached between May and August
22
If you are a resident who entered Canada for the
first time in 2007, put in your date of entry
23
GST/HST Credit and Foreign Property Reporting
24
Total Income
25
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

26
Information Slips

• T2202A
• T4A Other Income
• T4 Employment Income
• T5 Statement of Investment Income

27
Teacher Research Assistants

• Report employment income at line 101
• See your T4 slip

28
T4 Information Slip
2007
L. 101
QC
29
2007
310
00
10,391
58
ON
116
00
30
You can always refer to the reverse side of a
slip for more information
31
T4A Other Income
Footnote Code
04 Research Grant
Scholarships and
05 Scholarship
research grants
32
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

33
Other Income (line 130)

• Scholarship
• Bursaries
• Fellowship
• Artist Project Grant
• Prize for Achievement in field of study

34
Scholarship Income2006 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.

35
Scholarship Income (line 130)2005 and previous
years

• Report the total amount of the scholarship income
  minus 3,000 if you are entitled to the education
  amount (see line 323)otherwise
• Report the total amount of the scholarship income
  minus 500.

36
Deductions

• Deductions (e.g., child-care expenses, union
  dues) are deducted from your total income.
• Some deductions may not apply to you for your
  first year in Canada. For example, a newcomer
  cannot deduct moving expenses to move into
  Canada.

37
Net and Taxable Income
38
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 non-taxable scholarship,
  fellowship, and bursary income.
• See Form T1-M for more information.

39
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.

40
Tax Credits
41
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

42
Credits

• Non-Refundable Tax Credits
• Personal amounts
• Tuition fees
• Education amount
• Medical expenses

• Refundable
• Tax Credits
• Provincial property tax credit
• Sales tax credit

43
Schedule 1
44
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.

45
Example

• Jane arrived in Canada from Australia on May 6,
  2007.
• 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 2007
• Jane will enter 6,312.33 on line 300 of her
  Schedule 1.

46
Claim full non-refundable tax credits?

• Yesif you have no income for the part of the
  year that you were not a resident of Canada.
• Yesif 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.

47
Tuition, education, and textbook amount

• Use Schedule 11
• Take the information from T2202A

48
T2202A
Months full-time
Months part-time
Tuition Fees
49
Schedule 11
50
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.

51
Public Transit Passes Amount

• For transit after June 30, 2006, you can claim
  the cost of monthly public transit passes.
• 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.

52
Canada Employment Amount

• All employees are eligible to claim an employment
  tax credit.
• Claim the lessor of
• 1,000 and
• the amount reported at line 101 of your return.

53
Refund or Balance Owing?
54
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.

55
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.

56
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

57
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 free
• 1-800-267-5177, or go to our Web site at
• www.cra.gc.ca

58
Thank you