Question: I am planning to move to Canada next year. What do I need to know about my Canadian tax obligations when I enter?
Answer: If you are just entering Canada next year, there’s really nothing you need to do in terms of taxes here right away. However it’s best to familiarize yourself with the tax filing requirements going forward.
Note: the country you’re leaving may have some requirements as you leave, but you have no tax obligations in Canada until you become a tax resident and/or start earning income here.
After December 31 of the year in which you enter Canada, you’ll need to file your first Canadian tax return. This return will be due in April (if you and your spouse are not self-employed; in June if you or your spouse are self-employed) of the following year.
On your Canadian tax return every year you will report all your world income from all sources and be taxed according to Canadian tax law. Earnings might include:
- Salary from a job
- Profit from self-employment
- Rent from real estate
- Interest, dividends or capital gains on taxable assets
Bringing Assets to Canada
You will not be taxed on assets you bring into Canada, but once they are here you will be taxed on any additional income they earn.
Jamila moves to Canada in March and transfers her savings in the amount of $50,000 to a Canadian bank account. By December 31 of that year, those funds have earned $125 in interest. She will not pay any tax on the funds she transferred, but she will have to declare the $125 of interest earnings on her Canadian tax return and pay tax.
Foreign Assets in excess of CAD100,000
One thing to be aware of is that if you have assets (cash, real estate, investments, etc) in your home country or any country other than Canada, you may be required to make an annual reporting of those assets on form T1135 Foreign Income Verification Statement.
Owning foreign assets, rather than Canadian assets, doesn’t mean you’ll pay extra tax. There’s just a special form on which you have to report them. Some foreign assets are exempt from this reporting.