Personal Income Tax — Montreal CPA Firm Near You: Who Must File a Tax Return, Residency Rules, Special Situations

Filing a personal income tax return in Canada depends not only on how much income you earned, but also on your residency status and personal circumstances. Many people believe they only need to file if they owe taxes. In reality, filing obligations extend far beyond simple income thresholds. Your requirements may vary if you are a newcomer, non-resident, emigrant, international student, government employee abroad, self-employed worker, or someone with rental or foreign income. Whether you live in Canada permanently, temporarily, or part-time, understanding your residency status is the key to knowing whether you must file.

The CRA uses specific criteria—not citizenship, not immigration status, and not passport information—to determine who must file a return. Residency for tax purposes is based on your ties to Canada, where you maintain a home, and where your closest social and financial connections exist. This guide explains every filing situation, from straightforward Canadian residents to more complex cases such as deemed residents, factual residents, and emigrants. It also covers tax obligations for Indigenous peoples, estates when someone dies, Quebec residency, small business owners, foreign reporting rules, and seasonal agricultural workers.

Understanding your filing obligations ensures compliance, protects you from penalties, and guarantees you receive benefits such as GST/HST credits, child benefits, and provincial tax payments. For newcomers and those leaving Canada, proper tax filing also prevents future border issues, CRA reassessments, double taxation, and unexpected tax debt.

Legal and Regulatory Framework

Canada’s Income Tax Act requires individuals to file a tax return if they owe taxes, want to claim benefits or credits, have certain types of foreign reporting obligations, or if the CRA requests a return. Residency status, as defined in tax law, determines what income must be reported. Canadian tax residents—full-year residents, factual residents, deemed residents—must report worldwide income, regardless of where it was earned. Non-residents report only certain Canadian-source income, such as employment, business, or rental income.

The CRA evaluates primary and secondary residential ties, including where you maintain a home, spouse, dependents, provincial health insurance coverage, driver’s licence, bank accounts, employment, and social ties. Revenu Québec applies similar rules but administers provincial taxes separately.

In addition, the law imposes specific filing requirements for executors of deceased individuals, Indigenous taxpayers with special tax exemptions, and individuals earning rent or investment income in Canada while living abroad. Foreign reporting requirements—T1135, foreign affiliate forms, and ownership disclosures—also apply when certain asset thresholds are met.

Key Court Decisions

Canadian courts have clarified how residency rules apply in complex cases. In Thomson v. MNR (1946), the Supreme Court established that residency depends on the degree to which a person “in mind and fact” settles into a place. Later rulings such as Reeder v. The Queen and Schujahn v. Canada reinforced that temporary travel does not automatically terminate residency and that residential ties carry substantial weight.

Courts have ruled consistently that taxpayers are responsible for proving their residency status. Failing to file the correct return type—resident vs non-resident vs emigrant—can result in reassessments, penalties, and double taxation. For Indigenous taxpayers, decisions have highlighted the importance of whether income is earned on a reserve.

These decisions reinforce the need for taxpayers to understand their factual circumstances and to seek professional advice when living abroad, working in multiple countries, or maintaining ties in more than one jurisdiction.

Why CRA Targets This Issue

The CRA pays close attention to residency because residency determines how much tax you owe and what income must be reported. Errors in residency classification frequently trigger audits, reviews, and reassessments. CRA targets issues such as:

• individuals who leave Canada but fail to file an emigrant return
• newcomers who file as non-residents and miss credits
• Canadians living part-time in the U.S.
• international students unsure whether they qualify as residents
• individuals reporting only Canadian income but having unreported foreign income
• taxpayers with homes or dependents in Canada
• individuals earning rental income while living abroad
• estates where executors do not understand final return rules

Because residency drives worldwide income taxation, CRA monitors border crossing data, T4 and T5 slips, bank activity, health card use, and Canadian housing ties. Filing the wrong return type can easily lead to a reassessment.

Mackisen Strategy

Mackisen provides comprehensive residency assessments to determine whether a client is a resident, non-resident, factual resident, deemed resident, or emigrant. We review your residential ties, travel patterns, employment arrangements, foreign assets, immigration status, and family situation to ensure your tax return matches your correct filing category.

For individuals living abroad, commuting to the U.S., or maintaining multiple homes, we analyze provincial residency rules to ensure proper filing with both CRA and Revenu Québec. We also prepare foreign reporting forms, including T1135, for clients with assets outside Canada.

For newcomers, we explain how arrival dates affect tax benefits, ensure government benefits begin on time, and help establish CRA accounts and provincial program eligibility. For emigrants, we calculate departure taxes, determine deemed dispositions, prepare final returns, and help ensure CRA recognizes your departure correctly.

We also assist Indigenous peoples with income earned on reserve versus off reserve, international students with residency classification, seasonal agricultural workers with withholding and refund claims, and government employees posted abroad who maintain provincial ties.

Executors of estates receive guidance on filing the final return, rights and things return, and estate returns.

Real Client Experience

A newcomer arrived in Canada mid-year and was unsure whether to file as a resident or non-resident. Mackisen reviewed their housing, family ties, and employment and filed a resident return, securing GST credits and provincial benefits they would have missed otherwise.

Another client spent part of each year in Florida but maintained a home, spouse, and bank accounts in Montreal. CRA questioned their residency. Mackisen gathered documentation, proved they were factual residents, and prevented a reassessment involving worldwide income taxation in the U.S.

A farm worker from Mexico worked in Quebec for six months. They were unsure how to file or recover tax withheld. Mackisen prepared a non-resident return, claiming the proper deductions and securing a refund.

A Canadian who left permanently for Europe filed incorrectly as a resident for two years. CRA reassessed them for foreign income. Mackisen filed amended emigrant returns, corrected residency status, and eliminated the assessed debt.

An international student was unsure whether they qualified for tuition credits and benefits. Mackisen clarified residency status and filed correctly to secure provincial and federal credits.

Common Questions

Do I have to file a return if I live in Canada permanently?
Yes, if you have income or want to claim benefits.

Do newcomers have to file the year they arrive?
Yes. Filing establishes residency and unlocks credits and benefits.

What is a factual resident?
Someone who temporarily leaves Canada but maintains residential ties.

What is a deemed resident?
A person in Canada for 183+ days without significant ties elsewhere.

What if I live part-time in the U.S.?
You are likely still a Canadian resident if you keep residential ties here.

Do non-residents file returns?
Yes, for certain types of income such as rentals, employment, or business income.

What if I leave Canada permanently?
You must file an emigrant return and report deemed dispositions.

Are Indigenous peoples exempt from tax?
Income earned on a reserve may be exempt, depending on circumstances.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency, and protection from audit risk.