Our office has done quite a few immigrant returns over the past 2 years and we commonly have clients asking for help when they receive a notice stating certain benefits cannot be calculate until world income information is provided. World income information is entered on the tax return so it’s as if that information is not being received - or maybe CRA is simply wanting to confirm the details. Has anyone else noticed this?
Why CRA Requests Two Years of Global Income Before Landing
When a new immigrant arrives in Canada, the Canada Revenue Agency (CRA) uses global income information to determine eligibility for income-tested benefits like the Goods and Services Tax (GST)/HST Credit and the Ontario Trillium Benefit (OTB).
Even though the individual was not a Canadian resident during the previous years, the CRA still requires global income information for the two calendar years prior to the date of landing to calculate an average annual income. This helps them determine whether the person qualifies for certain benefits.
The Confusion
CRA often sends a letter requesting additional information, such as the Statement of World Income, but they don’t always explain why this information is needed or what exactly they’re looking for. Since the tax system assumes residency-based taxation, new immigrants may not realize that the CRA needs income earned outside Canada before becoming a resident.
I’m preparing a large number of returns every year for newcomers with the same issue regarding world income in the year before coming to Canada. Last year I contacted the CRA and was told that although we include the world income, this information does not reach the CRA. The agent explained that the information is only used by the software to estimate the benefits. Since then, I tell the clients that they may receive these letters and guide them what to do ahead of time.
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It would he helpful if TaxCycle added either a warning or a note on the Immigrant/Emigrant worksheet to the effect that this information is NOT sent to the CRA when the return is transmitted and that the CRA may ask for that information. I was under the impression that this information was sent to CRA when efiling, making it very frustrating to have to either provide information that was already entered in the return or prepare adjustment requests to fix something that should not need to be fixed in the first place.