Personal Tax

A personal income tax return involves more than entering the slips received during the year. Residency status, self-employment, rental property, investments, pension income, foreign income and family changes can all affect the income to report, the expenses that may be claimed and the credits available to you.

Impôts Ici prepares federal T1 returns and Quebec TP-1 returns entirely online. We can also review notices of assessment, instalment requirements, prior years, adjustments requested by the tax authorities and information that needs to be added when a situation cannot be captured by a standard questionnaire.

The proper tax treatment starts with complete facts: where you live, how you earn your income, which assets you hold and what changed during the year.

Residents of Canada

A person who is resident in Canada for income tax purposes generally reports worldwide income. For a Quebec resident, this usually means filing both a federal and a provincial return and including income earned in Canada as well as income from other countries.

Employment income is only part of the picture. Self-employment and business income, rental income, pensions, investments, capital gains, certain benefits and foreign income may also have to be reported. Deductions and credits then depend on the type of expense, the individual’s family circumstances and the supporting records available.

Newcomers and people leaving Canada

In the year of arrival or departure, the return must reflect the part of the year during which the person was resident in Canada. The relevant date does not necessarily match the date on a visa, airline ticket or health insurance registration. It depends on the residential ties created or severed and, in some cases, the terms of a tax treaty.

A newcomer generally reports worldwide income from the date Canadian tax residency begins. An emigrant reports worldwide income for the resident portion of the year and certain Canadian-source income after departure. Departure tax rules may also apply to some property.

These files often require a separate review of tax residency and international mobility before the return is prepared.

Deemed residents and tax treaty situations

The 183-day rule may apply when a person spends an extended period in Canada without establishing the ties that would make them a factual resident. It should not be used as a stand-alone test. A home, spouse or common-law partner, dependants and economic ties remain important.

A person who is resident under Canadian domestic rules may also be resident in another country. When a tax treaty applies, its tie-breaker rules may result in deemed non-resident status. The facts and the relevant treaty should therefore be reviewed before deciding which income must be reported in Canada.