Many newcomers make mistakes in their first few tax filings and do not even realize that they have done so. This is often because, despite the abundance of information available, there is still very little that clearly points out the specific areas newcomers need to be wary of.

As an immigrant tax professional who handles the taxes of several other immigrants, I have first-hand experience with these issues.

Below are some of the most common areas where this gap shows up.

1. Assuming Filing Taxes Is Optional If Income Is Low

Many newcomers believe that if they earned little or no income, filing a tax return is optional. In some cases, where no income was earned, filing may not be legally required. However, choosing not to file often has consequences.

In Canada, filing a tax return is how eligibility for income-tested benefits is determined. Without a return on file, benefits such as the GST/HST credit and other federal and provincial programs cannot be assessed or paid.

This is one of the most common reasons newcomers miss out on benefits in their early years.

2. Not Understanding Tax Residency Rules

Tax residency in Canada is not based solely on citizenship or immigration status. It is determined by the strength of your residential ties to Canada.

Some of the factors that may be considered include:

• where you have a home or place of residence

• whether your spouse or dependants live in Canada

• where you work or carry on employment

• where you maintain personal property, bank accounts, or provincial health coverage

• how long and how consistently you are physically present in Canada

Many newcomers assume they are not tax residents if they arrived late in the year or stayed only briefly. In reality, even a short period of residency, combined with sufficient ties, can result in tax residency for part of the year.

For example, a person who spends only a few months in Canada (less than 183 days), but has a residential home in Canada, a spouse or dependants who are tax residents, or maintains bank accounts or property in Canada, may still be considered a resident for tax purposes, despite not meeting the 183-day rule.

As a matter of fact, determining tax residency is one of the most complex areas in Canadian tax, and one that has seen several cases taken to the tax courts.

Misunderstanding these rules can lead to missed filings, delayed benefits, or incorrect reporting, and the consequences can be significant. It is therefore very important for newcomers to be properly informed on this matter.

3. Contributing to an RRSP Without Having RRSP Room

This is a very common and costly mistake.

RRSP contribution room is not automatic. Contribution room is earned only based on income assessed on a previous year’s Canadian tax return. As a result, a newcomer to Canada who has not previously been a tax resident generally does not have RRSP contribution room in their first year.

Contributing to an RRSP without available room results in an overcontribution. When an 1overcontribution occurs, it must be corrected by withdrawing the excess amount and submitting a completed Form T1-OVP to the CRA.

If the issue is not corrected promptly, a penalty of 1% per month applies to the excess contribution until the situation is resolved. The administrative process can take time, during which penalties may continue to accumulate.

4. Not Applying for GST/HST Credits and Canada Carbon Rebates (CCR) Using Form RC151

For newcomers who arrive in Canada during the year, the GST/HST credit and CCR is not automatically paid unless eligibility is established through filing a tax return. Since an income tax return is not due until April 30 of the following year, newcomers often face the challenge of not receiving any benefits during their year of arrival.

To address this, the CRA introduced Form RC151, which allows newcomers to apply for the GST/HST credit and the Canada Carbon Rebate before filing their first tax return.

Without submitting this form, eligible newcomers may not receive GST/HST credits during the year they arrive, even though they otherwise qualify. Instead, they may have to wait until their first tax return is filed and assessed before receiving the benefits retroactively.

5. Refusing to Consult Professionals

Many newcomers assume they can figure things out on their own, even when they find themselves in situations that require professional guidance.

Certain requests or correspondence from the CRA require the input of someone who understands the process, or who has dealt with similar situations before. Choosing not to seek help often proves costly and can significantly prolong the resolution of issues.

Closing Thought

Most tax issues newcomers face are not the result of errors on a tax return. They arise from assumptions made where clear explanations were missing, or from simple lack of awareness.

While the government, through the CRA and other agencies, provides resources to guide taxpayers, gaps still exist, and these gaps often prove costly for newcomers. Understanding where these gaps are, and how to navigate the system confidently, can be key to avoiding mistakes that were never intended in the first place.

Filing a tax return in a new country can feel like opening a door without knowing what’s on the other side. As a newcomer myself, I remember how unfamiliar everything felt, not because the rules were complicated or because I didn’t understand what I was doing, but because the entire process was so different from what I was used to.

In fact, growing up and living in Nigeria almost meant you had never filed a tax return. So arriving in Canada and suddenly being expected to interact with a structured, connected tax system was a major shift.

Looking back, here are the things that surprised me the most.

1. Filing Taxes Is Technically Optional, Until It Isn’t

Contrary to what you may have heard, the CRA does not mandate every Canadian to file a tax return every single year. What they do, however, is strongly advise you to, because not filing can mean missing out on benefits you are entitled to.

As a permanent resident of Canada, you may be eligible for benefits such as the GST/HST credit, Climate Action Incentive (carbon rebate), and the Canada Child Benefit, depending on your situation. However, access to these benefits depends on one thing: having an active file with the CRA.

Without filing, the CRA does not recognize your eligibility and will simply hold on to those benefits until you do.

That said, let me be very clear.

If you earn income in a year, filing your tax return is mandatory. Failing to do so can result in penalties, interest, and in more serious cases, fines or legal consequences. You will also almost certainly lose access to benefits like the GST/HST credit, Climate Action payments, and the Canada Child Benefit.

2. The Refund

If you were born and raised in Canada, you may be wondering why receiving a refund surprised me.

In simple terms, the concept of a tax refund was foreign to me, not because I didn’t understand what it meant (I am a tax professional, after all), but because my home country did not have a robust system where taxpayers could accurately file returns and receive benefits owed to them, at least at the time of writing. I suspect this experience is shared by many immigrants reading this.

Having worked for only two months in the year, I didn’t expect a refund, especially since my taxes had already been withheld by my employer. To my surprise, the refund I received was exactly equal to the tax that had been deducted from my pay.

I later understood why. My total income for the year was below the Basic Personal Amount for 2022, meaning I was effectively considered a low-income earner for tax purposes.

So yes, depending on your situation, you can receive a refund even if taxes were already deducted from your pay.

3. You Can Be a Tax Resident Even If You Arrived Late in the Year

Many newcomers assume they don’t need to file taxes because they arrived late in the year. This is wrong.

The CRA uses specific rules to determine tax residency, and in some cases, being in Canada for even a single day in a calendar year can put you in that position.

As mentioned earlier, not filing when required can lead to temporary or permanent loss of benefits. That is why it is important to understand these rules, or at the very least, seek advice from a tax professional.

4. You Can Do It Yourself

Yes, you can absolutely file your taxes yourself.

Through a system called NETFILE, the CRA authorizes various tax software providers that allow individuals to prepare and file their returns by answering a series of guided questions. This can often be done at little or no cost.

That said, I always tell people this. If your tax situation is even slightly complicated, or if you are unsure of what you are doing, consulting a tax professional is worth it.

It is far better to spend a few dollars getting it right than to spend much more later correcting mistakes caused by confusion or misinformation.

5. Filing Taxes Means Access to the Canadian System

This might have been the biggest surprise of all.

Filing tax returns is not just about compliance. It is your entry point into Canada’s financial and benefits system. It establishes your income, your residency, your eligibility for government programs, and your household status.

In fact, without a history of tax compliance, you may find it difficult to rent a home, access certain banking services, or qualify for credit facilities.

In many ways, filing taxes is a core part of building your life in Canada.

A Simple Lesson

Filing my first tax return didn’t just teach me about taxes. It taught me how the system works and gave me a sense of responsibility and belonging.

And that made every tax season after that feel a little less intimidating.