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Partner at Manning Elliott Vancouver
April 24, 2023

Tax advice for newcomers and returning residents from China

Long a source of immigration to Canada, the pace of newcomers from China is increasing again as pandemic restrictions subside and Ottawa targets skilled immigrants from cities such as Hong Kong.

Those newcomers are typically older and wealthier than previous generations of Chinese immigrants and arrive with more complicated tax reporting obligations.

“For the last year we have started to see a lot more of what we call returning residents,” says Matthew Ko, a chartered professional accountant, and partner with Manning Elliott LLP of Vancouver.

This is a group that previously came to Canada with their parents, then moved back to China and established careers and families.

“They are well-established, they have their wealth, and maybe decided to move back here with their own kids,” he explains, adding that they are often in their thirties or forties.

Though this is a cohort of newcomers that may know Canada well through friends and family, they often face a financial “culture shock” when encountering the breadth of Canada’s personal income tax regime for the first time as adults, the Vancouver accountant says.

“All the documentation required, the tax rates here and what is taxable, it is totally different. For example, in Hong Kong, trading and capital gains is not taxable, and interest income is not taxable at all.”

His advice to Chinese newcomers with significant assets is to seek professional advice before preparing their initial tax filing as Canadian residents.

Fortunately, there are many free or low-cost resources available to new residents preparing for their first tax season in Canada. A great starting point is the Canada.ca website, which outlines important steps such as obtaining a social insurance number, financial benefits that may be available by making a tax filing, as well as the process of completing an annual tax return.

Affordable tax preparation software such as TurboTax has proved popular with newcomers and long-time Canadians alike for its ease of use and step-by-step guidance to ensure tax filers fulfill their tax obligations correctly while ensuring they take advantage of all deductions and credits available to them.

For newcomers, TurboTax offers TurboTax Live Full-Service to make it easy to meet with a real expert while they do your taxes for you, so you can get your taxes done right, in as little as a day.

Natalija Andronikova, a senior tax expert with TurboTax Canada, advises newcomers to get their social insurance number (SIN) before filing their first return in order to be eligible for the GST/HST tax credit and child benefits, which are calculated based upon income and number of dependent children.

All new Canadian residents and returning residents from any country around the world need to file the RC151 GST/HST Credit Application form that, for those who are eligible, will provide them with payments every three months. As well, those with children under 18 may be eligible for the Canada Child Benefit, a tax-free monthly payment. The CCB might include a child disability benefit and related provincial and territorial programs.

New residents are required to apply for these benefits and both spouses must file tax returns on time each year in order for these payments to continue.

Source: The Globe And Mail | Advice for newcomers filing their taxes in Canada for the first time