Immigration Canada

What new Canadians should know about the tax system

By Mark Gollom, CBC News

New Canadians can take advantage of a number of ways to reduce taxes.

When Tahir Mazari arrived in Canada in 1999 from Afghanistan, filing his taxes for the first time was a challenging task.

"At the beginning it was difficult for me [knowing] what to do, but some of my friends helped me," he said. "We [didn’t have] that system in our country. It was very new to us."

Mazari now volunteers in Ottawa at ACORN Canada to help new Canadians with their taxes come tax time.

"Usually they come to file their taxes, but they are not familiar with the documents," he said.

Canadians who have lived in the country all their lives struggle every year to file their taxes, but new immigrants not familiar with the system may face even greater challenges.

"The whole concept can be quite foreign to somebody, no pun intended," said Brian Quinlan, an accountant with Toronto-based Campbell Lawless.

"Sometimes new people to Canada are afraid a little bit, depending where they're from and what their background is. They might be afraid of 'big government.'"

A number of community groups and chartered accountant organizations provide free tax clinics at various locations to lower income Canadians and and recent immigrants.

The Canadian government also hosts the Community Volunteer Income Tax Program – a partnership between the Canada Revenue Agency and community organizations who host tax clinics and arrange volunteers.

The CRA provides training, tax software, and a network of CVITP coordinators across the country to help the community organizations and volunteers deliver the program.

The CVITP says it helps more than half a million Canadians file their tax returns every year.

Filing tips

Quinlan offered a few tips for new Canadians when it comes to filing their taxes.

He said they may be eligible for credits like the GST credit,Canada Child Tax Benefit, Universal Child Care Benefit credits or credits for rent or property taxes.

"It’s good to file, because a lot of our credits are based on your tax return. So if the government doesn’t know your income, you won't get these credits sent to you."

Quinlan noted that moving expenses can be written off if you're coming to Canada to take a job or for self employment.

As well, new Canadians should be reminded that new homebuyers could be eligible for the First-Time Home Buyers $5,000 tax credit.

New Canadians also needn’t worry about being taxed on assets they bring in when they arrive, Quinlan said.

"There’s no real tax implication of bringing assets in. You’re not taxed on the amount coming in.

"When you become a resident it's just like you bought all of those assets the day you became a resident here. So if you sell it in a year at a gain, Canada's only going to tax that gain from the day you arrived," he said.

Immigrants who know they will be coming to Canada can also set up what's known as an immigrant trust before they arrive, which allows them to get a deferral of tax of five years on some of the income they’re generating outside of Canada. The disadvantage is that it only makes financial sense for people with major assets, since it generally costs tens of thousands in legal and financial fees to set up a trust.

Ottawa underestimates cost of immigration backlog wipeout, group warns

Elgin Street in downtown Ottawa, looking northwards towards the Parliament Buildings from Queen Street (Photo credit: Wikipedia)

Nicholas KeungImmigration Reporter

Ottawa’s plan to wipe out its immigration backlog will cost taxpayers at least $6.2 million more than the $130 million estimated by the federal government, says the immigration consulting industry.

When Ottawa announced in March that it would return files and processing fees to applicants waiting in the backlog, its estimate did not include administrative costs such as courier services to send the files back to 280,000 people, said the Canadian Association of Professional Immigration Consultants.

“The budgeted costs of a backlog wipeout are much higher than calculated and also do not include ... liabilities of lawsuits affecting the administration for years to come,” warned Gerd Damitz, the association’s co-founding and past president.

The industry’s own estimate of the processing fees amounts to $145 million. That’s because some applicants also paid landing fees — between $490 and $975 each — upfront.

A spokesperson for Immigration Minister Jason Kenney confirmed the estimate did not factor in administrative costs, which will come out of the department’s operational budget.

The spokesperson said the department won’t return “physical” application files to affected applicants. The documents will be disposed of, in accordance with government privacy and audit rules.

While the industry appreciates the government’s attempt to bring in a “just-in-time” immigration system to respond to labour market needs, Damitz said the breach of contracts with would-be migrants will damage Canada’s reputation.

On Monday, immigration applicants affected by the decision will stage simultaneous protests in London, Hong Kong, Chandigarh, Karachi and Lahore to raise awareness of their plight and to condemn Ottawa’s plan.

“We want to warn any prospective immigrant of the dubious and uncertain Canadian policies,” said Preet Deep Singh, an organizer based in London.

Toronto immigration consultant Alli Amlani said Ottawa’s wipeout plan will force many in the consulting industry out of business.

More than 250 of Amlani’s clients have been stuck in the queue, some since 2004, and they are asking him for refunds.

Despite a $1,000 non-refundable policy, Amlani must still fork out at least $72,000 to clients for “incomplete work” caused by the government’s sudden change in policy.

“It will push a lot of us out of business,” said Amlani, who has been a consultant for 22 years and expects to cut his staff from eight to four as a result. “You don’t get new referrals if your old cases don’t go through.”

According to an internal survey by the regulator of Canada’s 2,000 registered immigration consultants, the government plan affects 63 per cent of its members.

Some 95 per cent said they would consider leaving the industry, while 58 per cent are pondering class-action lawsuits against Ottawa to recover alleged damages.

According to the industry, the backlog consists of about 100,000 files, representing both principal applicants and their dependants. It said it would take less than five years to clear for the backlog.