A recent study conducted by Statistics Canada reveals that contrary to expectations, skilled workers are less likely to submit tax returns in their first year after landing than refugees arriving in Canada.
The study provides an overview of tax-filing patterns among newly arrived working-age immigrants (25-64) who landed between 1993 and 2019.
While filing rates showed improvement during the 1990s and remained steady, it identified variations in filing rates based on landing characteristics such as immigration class or education level.
Despite an overall positive trend, indicating that 90% of newcomers filed income tax returns within the first year or two of landing between 2017-2019, the study emphasizes the nuanced impact of specific landing attributes on filing rates.
Refugees have the highest filing rates.
Refugees exhibit the highest rates of tax filing among newcomers to Canada, regardless of whether they are private or government-sponsored. Up to 95% of refugees file income tax returns within the first two years of their arrival.
Conversely, economic immigrants entering through the Express Entry Federal Skilled Worker Program (FSWP) display the lowest filing rates. Between 2017-2019, only 77% of FSWP newcomers filed taxes.
Despite comprising approximately 16% of all newly arrived immigrants in the 25-64 age group between 2017-2019, FSWP participants ranked third in immigration class size, following provincial programs and family class.
In contrast, immigrants arriving through the Canadian Experience Class, provincial programs, and family class boasted 89% or higher filing rates.
The Statistics Canada study attributes the higher filing rates among refugees to increased access to settlement services upon arrival in Canada, contributing to greater awareness of the financial benefits of filing tax returns.
Regarding the Official Language
Newcomers who selected Quebec as their landing province exhibited a higher tax filing rate. This is attributed to Quebec’s distinct skilled worker program, which does not utilize the Federal Skilled Worker Program (FSWP).
Within the Quebec Skilled Workers category, 91% of newcomers filed taxes in the 2017-2019. The study also highlighted that individuals who exclusively speak French had the highest filing rates.
This is linked to the tendency of “French only” speakers to arrive in Quebec as participants in the Quebec Skilled Worker Program (QSWP) rather than the FSWP. Quebec’s exclusion from the FSWP is due to its separate provincial immigration agreement with Immigration Refugees and Citizenship Canada (IRCC).
In terms of Provincial Differences
Newly arrived immigrants in British Columbia during 2017-2019 exhibited a filing rate of 89%, while those in Ontario had a rate of 87%, the lowest among all provinces and territories.
Although the 2% difference may seem small, it is noteworthy, especially considering that 43% of new immigrants indicated Ontario as their province of landing. Proportionally, the gap is more significant than it appears.
Concerning Education
Among immigrants who landed between 2009-2012, 13% of those with graduate degrees did not file an income tax return for at least five years after landing. The study speculates that this may be attributed to highly skilled individuals finding opportunities outside Canada and potentially leaving the country, though verifying this remains challenging.
Advantages of Filing Taxes as a Newcomer to Canada
Filing an income tax return in Canada opens the door to various benefits the Government of Canada provides. For instance, families with children may qualify for the Canada Child Benefit, a tax-free monthly payment designed to assist with the expenses of raising children.
Eligibility extends to permanent and temporary residents who have been in Canada for at least 18 months, with permits not indicating “does not confer status” or “does not confer temporary resident status.”
Additional benefits encompass a quarterly GST (generalized sales tax) rebate tailored for low-income Canadian residents and provincial/territorial benefits, the specifics of which depend on the province of residence. Benefit amounts are contingent upon income, marital status, and family size.
Taxation in Canada
Every individual employed in Canada experiences an automatic deduction of a portion of their income, taken directly from their overall (gross) pay as income tax. This deducted money contributes to the Canadian government, assisting in covering the expenses of government-operated services such as healthcare, infrastructure, education, and publicly funded childcare.
Annually, individuals residing and working in Canada must submit their tax returns to the Canada Revenue Agency (CRA). The tax filing process gives the CRA a comprehensive overview of an individual’s income.
Subsequently, the CRA assesses whether excessive tax has been paid, leading to a potential refund, or if the filer has not met their tax obligation, necessitating a payment to reconcile the difference.
Contact us to know if you are eligible for Canadian Immigration!
