How do immigrants file tax returns?

Statistics Canada conducted a study and found that there has been an overall improvement in tax filing rates among immigrants since the mid-1990s. About 89% of immigrants from the 2017-2019 arrivals filed an income tax return in the year of arrival or the following year. This is notably higher than in 1993-1996 (83%) and slightly higher than in most subsequent years. However, there are significant differences in filing rates by immigration type.

Why even bother filing returns in the first place?

You can read more about the taxation system in Canada in a separate article. In short, everyone who officially works in Canada automatically gives part of their income to the government in the form of taxes. At the same time, all residents and non-residents who have income in Canada must file an annual declaration with the Canada Revenue Agency. Based on these data, the tax agency either assigns additional payments or refunds part of the money.

In addition, there are numerous benefits and payments available to filers from the Government of Canada. These include health benefits, quarterly tax credits, favorable credit terms, and many more.

Who is most likely to file returns?

Of all the groups examined in this study, refugees tended to have the highest filing rates after relocation. The percentage of refugees (whether privately or government sponsored) who filed income tax returns in the year of relocation or the following year is close to or above 95%. Thus, a large proportion of this group is well represented in the tax system and could potentially begin to benefit from the incentives introduced to support them.

Who files less frequently than others?

Immigrants who arrived under the federal skilled worker program are the least likely to file an income tax return after moving, regardless of the year of move. In the '90s, 82% to 85% of them filed paperwork with the Canada Revenue Agency; in the noughties, the rate dropped to 80%; and in 2017-2019, it was 77%. In those years, participants in the skilled worker program made up about 16% of all immigrants aged 25-64. This is the third largest immigration class after those selected under the provincial and family programs.

By comparison, in the same 2017-2019 timeframe, 90% of immigrants those who immigrated through provincial programs, 93% of immigrants with Canadian work experience, 97% of other economic migrants, 89% of those who moved through family reunification programs, and 96% of refugees filed tax returns.

Differences in rates may be related to differential access to settlement services aimed at integrating newly arrived immigrants into Canada. In this regard, it is noteworthy that refugees are the most likely to use settlement services, including the Resettlement Assistance Program, which is available exclusively to them.

Quebec

The federal program for skilled workers has nothing to do with one single province with a special position in Canada. Skilled professionals intending to live in Quebec are admitted through a special program implemented by the Quebec government. The tax filing rate among them was 91% from 2017 to 2019.

About 14% of immigrants aged 25 to 64 who arrived in the country between 2017 and 2019 listed Quebec as a province or destination territory. This compares to 15% in British Columbia and 43% in Ontario. These numbers change dramatically for destination selection (by occupation): it is 90% for those who indicated Quebec, 89% for British Columbia and 87% for Ontario — and it is the lowest in the country.

Who doesn't file returns?

About 8 percent of immigrants who arrived in the country between 2009 and 2012 did not file an income tax return for at least five years after arrival or longer. This is down from 12% between 1993 and 1996.

Differences in long-term non-filing rates are most pronounced by education level and immigration type. About 13 percent of college-educated immigrants who moved between 2009 and 2012 did not file an income tax return for at least five years. The percentage is similar for skilled workers.

Statistics Canada believes that immigrants who did not file a tax return within five years of moving are unlikely to file after that. For example, among those who did not file an income tax return for at least five years in 2005-2008, about 95 percent did not file a return for the next five years either.

Trend

Tax filing rates for families are generally lower than for individuals because both spouses must file income tax returns to be considered a tax filing family. About 84% of immigrant married couples who arrived in the country between 2017 and 2019 filed income tax returns in the year of their move or the following year.

While statistics indicate an overall improvement in filing rates over time, these improvements are not uniform across all immigration classes.