I have issues with new immigrants world income reporting before they came to Canada. Although I reported it as Zero for most of these returns because it was Zero, but still CRA sends letters that thee can’t calculate their GST/HST payments and OTB because they do not have the world income. Is any one else having this issue? could it be in the software?
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Have not run into this, but it may be that if you entered a ‘placeholder’ of $1 this would avoid the problem…
Your client need to fill RC151 GST/HST credit application and mail it to CRA.
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I spoke to the CRA about this issue earlier.
Apparently, the information which we put into the tax return, does not transmit to the CRA. Or, if it transmits, one part of the CRA does not communicate that information to the other part of the CRA.
Your choice is to call it in or use the RC151. Calling it in is faster.
New Immigrant:-
Six questions for you to follow-up:-
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Are they temporary workers with a 900 SIN or landed immigrants?
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Have you completed a NR74 Determination of Residency Status (entering Canada)? This is required to establish the following:-
A - Date of Immigration
B - Canadian Tax Residency Status
C - Benefits Eligibility -
Do they have foreign assets > $100,000?
If so have you completed a T1135?
- Have you called or written to ITSO (International Tax Services Office) and/or asking for clarification regarding the requirement to report World Income?
- Have you called or written to either the CRA Benefits Line re GST Credit for Canadian Residents to ask for clarification?
CRA Phone Numbers
Scroll down to find telephone enquiries
https://www.canada.ca/en/revenue-agency/corporate/contact-information.html
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When you check via TaxCycle or via Rep a Client, is there a date of immigration listed on the Client Data Enquiry?
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Are they dual or multiple citizens? During the year did they earn income in another country? In that case, their country of emigration may need to receive a declaration of Canadian Tax Residency Status and Date of Immigration to Canada. You may also need to research the Tax Treaty between Canada and their home country for more information. The first year of immigration can be tricky and nuanced.
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/tax-treaties.html
Small correction - The T1135 is not required for the year of immigration. It is required for all subsequent years, all other items remaining equal.
Other issues to be aware of:
- You may have problems with access to Represent a Client until the immigration tax return is filed. The taxpayer’s record has not been completely set up.
- You may have to create a name change record with the first return as immigration typically does not transmit the spaces between name parts to the CRA.
@ TimParris
Thank you for your correction re T1135 in year of immigration.
So, if I understand you correctly. You are clarifying that T1135 does not have to reported for income and holdings prior to the date of immigration.
I have three questions:
Q1 - What happens to reporting requirements to holdings in excess of $100,000 from the date of immigration the end of the tax year in Canada?
Q2 - Do you have reference for this?
Q3 - This is slight extension of this topic. What is the Country of Tax Residency in the year of immigration, home, Canada, or both?
CRA website references
Reporting responsibility
30. Does a non-resident who has employment income earned in Canada have to file Form T1135?
Only taxpayers resident in Canada have to file Form T1135, although a non-resident still may be taxable on employment income earned in Canada.
Who has to report?
Form T1135, Foreign Income Verification Statement, must be filed by:
- Canadian resident individuals, corporations, and certain trusts that, at any time during the year, own specified foreign property costing more than $100,000
- certain partnerships that hold more than $100,000 of specified foreign property
What property has to be reported?
Specified foreign property is defined in subsection 233.3(1) of the Income Tax Act and includes:
- funds or intangible property (patents, copyrights, etc.) situated, deposited or held outside Canada
- tangible property situated outside Canada
- a share of the capital stock of a non-resident corporation
- shares of corporations resident in Canada held outside Canada
- an interest in a non-resident trust that was acquired for consideration
- an interest in a partnership that holds a specified foreign property unless the partnership is required to file Form T1135
- a property that is convertible into, exchangeable for, or confers a right to acquire a property that is specified foreign property
- a debt owed by a non-resident, including government and corporate bonds, debentures, mortgages, and notes receivable
- an interest in a foreign insurance policy
- precious metals, gold certificates, and futures contracts held outside Canada
Specified foreign property does not include:
- a property used or held exclusively in carrying on an active business
- a share of the capital stock or indebtedness of a foreign affiliate
- an interest in a trust described in paragraph (a) or (b) of the definition of exempt trust in subsection 233.2(1)
- a personal-use property as defined in section 54
- an interest in, or a right to acquire, any of the above-noted excluded foreign property
Great points re Rep a Client and correct name on the CRA file.
To add to those…
The names and dates of birth on Citizenship, Immigration, Service Canada, SIN application, and CRA Tax Files all have to match exactly.
If not, then this could cause problems for both Canadian services as well as travel services. The no fly list and passport restrictions are triggered by a mismatch between Citizen and Immigration and Canada Revenue Agency. This can result in a locked tax file and a discontinuation of benefits or passport documents unless and until adequate proof of correct identity is processed by all affected departments and by each relevant program or document.
If, when, and how this is applied seems to vary by political climate, border services, and security protocols especially those between the USA and Canada.
Q1 & Q2 - See “Do you have to file” second paragraph in the form instructions. This paragraph also nicely gives the reference to the act why you don’t need to file.
Q3 - Please remember that the (calendar) year of immigration is broken in Canadian Law into two Tax Years. Since country of tax residency is a question specific to tax year and not calendar year, the tax year before immigration would have the country of residency where the immigrant is coming from and the tax year following immigration would have the country of residency as Canada. However, there are modifiers for this and you will need to check both the Act and the applicable Treaty to be absolutely certain. For example, you may have the 90% rule also apply.
You must also be aware that, while Canada may split the year for taxation, social benefits generally work on calendar year. And, the other country may not recognize the same immigration date as Canada.
@TimParris
and others
Just a quick side bar re Immigration Year tax workflows outside of TaxCycle and workflow mapping.
These are for returning Canadians who have been away for multiple years - 3 to 5 years or more. Most of these are dual or triple citizens. Several of these have also spent long periods in other countries in which they have only temporary ties.
How would you high-level map out your flow chart?
(I am writing down all my tasks for each client type in a note taking app in a simple task checklist format. Once these task are outlined, I am charting them in flow app.)
Canadian Newcomer
- Resident
- Deemed Resident
- Non-Resident
- Non-Resident S.216
- Non-Resident S.216.1
- Non-Resident S.217
Days outside of Canada
- This year
- Last year
- Two years ago
- Three years ago
- Four years ago
Days in USA
- This year
- Last year
- Two years ago
- Three years ago
- Four years ago
Days in Country A where citizen
- This year
- Last year
- Two years ago
- Three years ago
- Four years ago
Map out decision tree for tax filing requirements by country.
- Days in-country
- Income in-country
- Holdings in-country
- Citizenship
- Tax Residency
- Tax Treaty
etc…
This seems fairly complex. Can you think of any easier way to structure the onboarding and info gathering?
Right now I have clients who are dual and triple citizens as well as those who work or study in USA, UK, France, Germany, Switzerland, Hungary, Italy. I have those who receive private and/or government pension income, rental income, and/or investment income from USA, UK, France, Germany, Hungary.
I am using free notes apps (OneNote and Google Notes) and Draw.io
Others to consider include:- Lucid Chart and SmartDraw
More references:- https://zapier.com/blog/flowchart-diagramming-software/