Immigrant - How to Enable Benefits and Filing Rights

Evelyn Jacks

Last month CRA posted a news release that they are making it easier for newcomers to apply for benefit and credit payments online. Unfortunately, the process is anything but easy. This presents a great opportunity for tax and financial professionals to help and in the process, start a highly valued new relationship with new Canadians.

The Backdrop. Imagine for a moment you are a newcomer in a new country as diverse as Canada. Consider the overwhelming number of decisions to be made immediately. Aside from language barriers and cultural integration, financial illiteracy can soon present itself. Understanding the currency, its value related to acquiring food, clothing and shelter, and ultimately perhaps the most foreign issue of all, the integration of the Canadian tax system within financial fabric of society. 

But that’s required if newcomers are to apply for important financial supports through the tax system. Here are some examples of the tangled web they will enter:

Definition of “Newcomer”: This is a specific term CRA assigns to people in their first year of residency in Canada. But, residency is complex, and can change from year to year. In addition it is different from “immigration status”. 

Immigration Status: The newcomer can fall into one of three categories:

• Permanent resident status: This includes permanent resident card holders or those who have document IMM5292 or IMM5688 from Immigration, Refugees and Citizenship Canada (IRCC) confirming status will be granted.
• Protected persons (refugees): These are individuals who have been granted protected person status by IRCC or the Immigration and Refugee Board of Canada (IRB). Those in the process of applying for refugee status may be considered residents for tax purposes even if they do not hold a valid immigration status permit (see below)
• Temporary resident: These are people with permits to study, work, visit or reside here temporarily. They may apply to extend their permits as well.

Residency: For most people this starts the first day they live in Canada. Generally speaking residents have established residential ties in Canada which can include a home where the spouse and dependants also live. Form NR74, Determination of Residency Status (Entering Canada), is used to determine residency status.

Why is establishing residency important? CRA will use both the immigration and residency status in considering what government benefits and payments the individual/family qualifies for.  For example, temporary residents may start to receive the Canada Child Benefit in the 19th month they have lived in Canada. 

Others, like the GST/HST credit, can be received even before the first tax return is filed. However there are a series of forms to complete and proof of birth is required:

Social Insurance Number (SIN) or a TTN (Temporary Tax Number). To work in Canada, have access to tax benefits and open accounts in financial institutions in Canada, a Social Insurance Number is required and this can be applied for through Service Canada. If you do this electronically, you are applying for an e-SIN, and the clock to do so runs out in 45 minutes, so preparedness with all documentation beforehand is critical. 

Otherwise you must attend at a Service Canada office. The government promises to process the application within 5 business days and provide a response by mail within 10 business days from the date that the application is received.

For those who can’t qualify for a SIN or TTN, it is possible to receive and ITN – Individual Tax Number. This is generally the case for international students without a work permit, who can then file a Canadian income tax return, or apply for family benefits and credits. However, international students with a work permit must apply to get a SIN.

Regarding the E-SIN, note there are many terms and conditions in applying for these numbers and this can be a show-stopper for most Canadians, let alone newcomers. Here’s an example:

“PLEASE READ CAREFULLY these Terms and Conditions of Use for the Social Insurance Number (SIN) online application portal. . . These Terms and Conditions of Use should be read in conjunction with the Canada.ca Terms and Conditions. In case they are differing, the present Terms and Conditions of Use take precedence over Canada.ca Terms and Conditions. . . We encourage printing and keeping a copy of these Terms and Conditions of Use. . . For the purposes of these Terms and Conditions of Use, "ESDC" means His Majesty the King in right of Canada as represented by the Minister of Employment and Social Development, and "CEIC" means the Canada Employment Insurance Commission...Your access and use of the eSIN Application is subject to 1) your acceptance of these Terms and Conditions of Use and 2) your compliance with these terms. . .  These Terms will terminate automatically if you fail to comply with any of their provisions. . .”

The Bottom Line: Help from a qualified professional who can demystify this “Step 1” in the process will likely immediately earn the right to serve clients with their tax affairs and receive their referrals, too. But even this is difficult.

Next Time: Representing a Client who is a Newcomer to the CRA

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