Master prompt
First CRA tax filing for new PR (Canada)
First-year Canadian tax return: part-year residency determination (ITA s.2(1) + s.114), Canada Child Benefit (CCB) under ITA s.122.6, GST/HST credit under ETA s.122.5, foreign income, SIN, and the residence-start-date complications.
CanadaSettlementTaxCRAT1CCBGST/HST creditITA s.114Part-year residency
Build the first-year Canadian tax filing plan for [CLIENT_NAME] who became a Canadian tax resident on [LANDING_DATE]. The Canadian tax year is the calendar year — [TAX_YEAR] in this case. Most new PRs are "part-year residents" in their year of arrival: tax obligations begin on the day they establish significant residential ties (almost always the landing date).
CLIENT SNAPSHOT
- Resident-for-tax-purposes start date: [LANDING_DATE]
- Tax year: [TAX_YEAR]
- Spouse / partner: No spouse / common-law partner
- Children: No children
- Canadian income: CAD [CDN_INCOME_TAX_YEAR]
- Foreign income pre-landing: CAD 0
- Foreign income post-landing: CAD 0
- Foreign property cost amount: CAD 0
§1 — RESIDENCY DETERMINATION (Income Tax Act s.2(1), s.114, s.250; Folio S5-F1-C1)
The Canadian Income Tax Act taxes residents on worldwide income; non-residents only on Canadian-source income. The pivot is "residency for tax purposes" — distinct from immigration status.
Confirm part-year resident status for [TAX_YEAR]:
(a) Establishing date = [LANDING_DATE], assuming significant residential ties (spouse + children + housing + bank account) were created on landing
(b) For the period BEFORE [LANDING_DATE]: non-resident for tax purposes — Canada has no claim over Indian-source income
(c) For the period FROM [LANDING_DATE] to 31-Dec-[TAX_YEAR]: resident for tax purposes — worldwide income taxable in Canada (with foreign tax credit relief under the Canada-India Double Taxation Avoidance Agreement)
State this explicitly in the return: "Part-year resident. Date of entry: [LANDING_DATE]" — written on the front page of the T1 General.
§2 — INCOME TO REPORT ON [TAX_YEAR] T1
Section A — Canadian-source income (line 10100 employment, line 12100 interest, etc.):
- Employment income: CAD [CDN_INCOME_TAX_YEAR] from Canadian employers
- T4 slips: collect from each Canadian employer (issued by end of Feb of [TAX_YEAR]+1)
- Interest income from Canadian banks: T5 slips (or self-report if < CAD 50)
Section B — Foreign income earned BEFORE landing (0):
- NOT taxable in Canada (non-resident period)
- REPORTED on page 1 of T1 as "income earned in the part of the year you were NOT a resident of Canada" — this is informational, used to prorate non-refundable tax credits (basic personal amount, age amount, spousal amount)
- The full federal basic personal amount of ~CAD 15,705 (verify [TAX_YEAR] amount) is NOT pro-rated if Canadian-source income for the resident period > 90% of total worldwide income for the year — newcomer rule
Section C — Foreign income earned AFTER landing (0):
- Fully taxable in Canada — convert to CAD at the Bank of Canada annual average rate
- If India already taxed it: claim foreign tax credit (line 40500) under Canada-India DTAA Article 23
- Common items: Indian rental income, dividends from Indian shares, Indian mutual fund distributions, NRO account interest
Section D — Capital gains on assets held BEFORE landing:
- Deemed acquisition rule (ITA s.128.1(1)): foreign assets are deemed acquired at fair market value on [LANDING_DATE]
- Worked example: Indian property purchased in 2018 for INR 50L (CAD 80K then); FMV on [LANDING_DATE] = INR 1Cr (CAD 160K). If sold in [TAX_YEAR]+3 for INR 1.2Cr (CAD 192K), Canadian capital gain = CAD 32K (NOT CAD 112K). The pre-landing appreciation escapes Canadian tax.
- Document FMV at landing — get a valuation report from an Indian chartered valuer; archive permanently.
§3 — KEY FORMS
Form | Purpose
-------------|----------------------------------------------
T1 General | Annual personal return (resident OR part-year resident version)
Schedule 1 | Federal tax calculation
Schedule 9 | Charitable donations (Indian charity NOT eligible)
T4 / T4A / T5 | Income slips from Canadian payers (auto-uploaded to CRA via AFR)
T2125 | Self-employment / business income (gig work, Uber, freelance)
T776 | Rental income (Canadian or, if disclosed post-landing, foreign rental)
T1135 | Foreign Income Verification Statement — REQUIRED if cost amount of "specified foreign property" > CAD 100,000 at any time in the year. Penalty: CAD 25/day, min CAD 100, max CAD 2,500. NEW PRs are EXEMPT from T1135 in their FIRST tax year — but Year 2 onward, file.
T1132 | Information return regarding deemed disposition (rarely applicable to new arrivals)
RC66 | Canada Child Benefit application (file even if child is already in CRA's system; new PR triggers a fresh application)
RC151 | GST/HST credit + climate action incentive application for newcomers without prior CRA filing
T1213 | Request to reduce tax deductions at source (later years — useful if RRSP, child-care, alimony deductions exceed source-deducted income)
For [CLIENT_NAME]'s [TAX_YEAR] return, identify required forms based on the snapshot above.
§4 — CANADA CHILD BENEFIT (Income Tax Act s.122.6-122.63)
If No children indicates children under 18:
- Apply via RC66 (Canada Child Benefits Application) AS SOON AS LANDING IS COMPLETE — do NOT wait for the first tax return
- Effective date of CCB = [LANDING_DATE] (back-dated benefits accrue once CRA processes)
- Both parents need SINs and must have filed a tax return OR completed RC151 for the prior year if they had no Canadian income then
- Indian newcomer practicality: many spouses are stay-at-home in Year 1 — they STILL must file a "nil" T1 to establish residency for CCB purposes; CRA will NOT pay CCB if only one spouse has a tax-filing record
- Maximum CCB benefit ([TAX_YEAR] estimates, verify CRA):
- Under age 6: ~ CAD 7,800/year per child
- Age 6-17: ~ CAD 6,600/year per child
- Phase-out begins at family net income ~ CAD 35,000 and tapers to zero by ~ CAD 175,000+
- For No children under No spouse / common-law partner family configuration, project the approximate Year-1 CCB entitlement (full year if landed Jan 1; pro-rated if landed mid-year)
§5 — GST/HST CREDIT (Excise Tax Act s.122.5)
Quarterly tax-free payment to low-to-modest income individuals + families:
- Apply via RC151 (newcomer form) AT LANDING — do NOT wait for the first tax return
- For [TAX_YEAR]: approximately CAD 519/year per adult + CAD 171/year per child (verify CRA amounts; threshold + amount adjust annually)
- Phase-out at family net income ~ CAD 45,000-65,000 depending on family size
- Paid in Jul / Oct / Jan / Apr each year
- First-year newcomer is eligible from the quarter AFTER landing
§6 — CLIMATE ACTION INCENTIVE PAYMENT (CAIP)
Tax-free quarterly payment for residents of ON / AB / SK / MB / NS / NL / NB / PEI (provinces under the federal carbon-pricing backstop):
- Auto-paid based on filing a T1
- For [TAX_YEAR] (verify current amounts): rural / urban variation; family of four in Ontario receives ~ CAD 1,120/year
- Indian newcomers in Alberta / Ontario / Manitoba / Saskatchewan benefit most; BC and QC have their own provincial carbon tax regimes (different rules)
§7 — INDIAN BANK ACCOUNT CONVERSIONS POST-LANDING
This is a settlement-mechanic worth flagging in the tax narrative, even though it belongs to FEMA / RBI rules:
(a) Convert Indian resident savings / current accounts to NRO (Non-Resident Ordinary) within "reasonable time" after Canadian residency
(b) NRE (Non-Resident External) accounts can be opened — fully repatriable, interest tax-free in India
(c) FCNR (Foreign Currency Non-Resident) for foreign-currency deposits
(d) Indian TDS on NRO interest: 30% + surcharge + cess (effective ~31.2%) — claim DTAA relief by filing Form 10F + Tax Residency Certificate (from CRA) to reduce to 15%
(e) Report NRO / NRE / FCNR balances on T1135 starting Year 2 if aggregate cost amount > CAD 100K
§8 — SIN COMPLEXITIES FOR FIRST-YEAR FILING
- Working-age adults (with Canadian or foreign income): need SIN, file T1
- Non-working spouse: still needs SIN, files nil T1 to establish residency + unlock CCB / GST credit
- Children: under 18 do NOT file T1 unless they had income (rare for new arrivals); CCB application uses the parent's filing
- Apply for SIN before tax filing deadline; SIN turnaround is same-day at Service Canada
§9 — FILING METHODS
(a) Free CRA-certified software for newcomers: Wealthsimple Tax, TurboTax (free for simple returns), GenuTax, StudioTax
(b) Paid software / tax preparer: H&R Block (CAD 60-180), independent tax preparer (CAD 100-300)
(c) For [CLIENT_NAME] with part-year residency + foreign income + T1135 considerations: a tax preparer with newcomer expertise is recommended in Year 1
(d) NETFILE the T1 (electronic submission); part-year returns CAN be NETFILED but some software flags them for review
(e) Filing deadline for [TAX_YEAR]: 30-Apr-[TAX_YEAR]+1 (or June 15 if self-employed; tax owed still due 30 Apr)
§10 — TIMELINE SUMMARY
Day 1 of [TAX_YEAR]+1: T4 / T5 / T3 slips start arriving from Canadian payers
End of Feb [TAX_YEAR]+1: all slips should be in hand
Mar [TAX_YEAR]+1: gather Indian income docs (NOC from prior Indian employer, Form 16 for Indian salary, bank statements for NRO interest)
Apr 30 [TAX_YEAR]+1: filing deadline for non-self-employed
~ 4-6 weeks post-filing: Notice of Assessment (NOA) issued
~ 2-3 months post-filing: CCB / GST credit payments commence (if not started already)
§11 — INDIAN-NEWCOMER FIRST-FILING PITFALLS
(a) Reporting Indian pre-landing income as Canadian income — this overpays Canadian tax by 15-50%
(b) Forgetting to claim DTAA relief for Indian withholding tax on NRO interest
(c) Filing as full-year resident (instead of part-year) — overpays by inflating the worldwide-income base
(d) Missing the T1135 in Year 2 — penalties accumulate at CAD 25/day from filing deadline
(e) Filing only the working spouse's return; the non-working spouse's nil return is a Year-1 must
(f) Not getting a CRA "My Account" set up — this is the single biggest CRA self-service hack; sign up day 1
(g) Donating to an Indian temple / NGO and trying to claim it — not eligible; only registered Canadian charities qualify for the donation credit
(h) Selling Indian property within the first 6 months of landing without an FMV valuation — Canadian tax owed on the entire historical gain, not just the post-landing appreciation
End with: "DRAFT — for RCIC + tax-preparer review. Personal tax filing is outside the RCIC scope of practice (CICC By-Law s.2.1.1). Refer the client to a CPA-Canada-member tax preparer or to H&R Block / TurboTax Live Newcomer for Year-1 return. Verify against current CRA Income Tax Folios and the current Canada-India DTAA before advising."Unlock the vault to see the full prompt