Newcomers case study webinar
Transcript
ITAVP - Newcomers case study webinar
Slide 1
Hello and welcome to the webinar on newcomers. Today, we’re focusing on a case study for the Income tax assistance – volunteer program.
This webinar will show volunteers how to file a tax return for a newcomer couple with refugee status.
Slide 2
By the end of this workshop, you’ll have a better understanding of how to prepare a newcomer’s tax returns and how to enter the information into the UFile CVITP software.
Let’s review our case study.
Slide 3
Here's the background information for Jeet Mann and his wife, Mia Mann, including their social insurance numbers and dates of birth.
Slide 4
They moved to Quebec, Canada from Indonesia on November 1, 2023.
They both have refugee status and work permits.
They have been living with an acquaintance. In 2023, Jeet’s net income from all sources outside of Canada was equivalent to 3,000 Canadian dollars. He earned this income as a teacher in Indonesia.
Jeet also earned employment income from two employers after his arrival in Canada, Marché soleil and Tutorat pro. He therefore provided two T4 tax slips and two relevé 1 tax slips.
Mia’s net income from all sources earned outside of Canada was equivalent to 1,600 Canadian dollars. She worked at the same school as Jeet in Indonesia. Mia did not earn any income in Canada.
Jeet will claim the solidarity tax credit for the family.
To avoid repetition in the identification section, we will begin the case study at the “Canada Revenue Agency questions” page.
For more information, we recommend you visit the ITAVP Learning Guide and review the topic Installing the tax software and its functions and Tax considerations for specific situations.
Slide 5
In the “Information about you” section, enter Jeet Mann's language of choice. This will determine the language that will be used to prepare and submit the tax returns to the CRA and Revenu Québec. This will also allow Jeet to receive communications from the CRA in the language of his choice.
Next, answer yes to the question “Are you filing an income tax return with the CRA for the very first time?” and no to the three questions that follow and the Canadian citizenship question for Elections Canada.
Finally, as this is Jeet's first federal tax return, we have selected not to receive CRA e-mail notifications. Newcomers typically don’t have My Account because it's their first time filing.
Next, let’s go to the Revenu Québec questions section for Jeet.
Slide 6
Answer yes to the question “Is this the first year that you are filing a Quebec tax return?”.
Answer no to the question “Are you eligible for the Quebec amount for a person living alone?”, because Jeet lives with his spouse, Mia.
Answer no to the question “Do you wish to request an accelerated refund on your Quebec return?”.
Answer no to the question “Did you receive or dispose of virtual currency?”
Answer yes to the question “Do you wish to apply for the Quebec Solidarity tax credit?”, since Jeet will be making the claim.
For the Quebec tax shield, we recommend you always answer “Yes – Family head to claim”, to the question “If eligible, do you wish to claim the Quebec tax shield?” and, we recommend you always select “Let Revenu Québec calculate” as the desired method of calculation.
For more information on the eligibility requirements for this credit, refer to the ITAVP Learning Guide and review the “Tax shield topic” in the Tax guide for volunteers.
For this case study, select “Notifications by text message and email” and answer no to the last question in this section, since Jeet does not wish to receive his notices online.
Click Next to continue.
Slide 7
We are now in the section for Quebec prescription drug insurance information. UFile asks to specify the situation that applies to the individual for the purpose of the Quebec prescription drug insurance premium.
Newcomers are generally covered by the Quebec prescription drug insurance plan three months after settling in Québec. They do not have to pay a premium for the months they were not covered.
Since Jeet arrived in Canada on November 1, 2023, his three-month period did not end in 2023, he is therefore exempt for the whole year.
Select option “4 - Exceptions, Québec prescription drug insurance plan, all year” from the drop-down menu and answer no to the question, “Do you wish to file a joint Schedule K?”
Note that it is important to ask individuals if they want to file a joint Schedule K. It is their choice to make.
Then, specify the reason why Jeet is exempt from paying the premium in 2023. Select the last exception, “Other – Immigrant / Emigrant”.
Click Next.
Slide 8
We will now complete Schedule D – Quebec solidarity tax credit.
Let’s start by answering the questions in “Part A - Information about you.”
Answer no to the question, “Throughout the year 2023, did you live in a dwelling, either alone or only with one or more people under 18?” because Jeet lived with his partner.
Answer yes to the question, “Is the address of your principal residence on December 31, 2023, the same as the one in your tax return?”
Answer no to the question, “Is your principal residence located in a northern village?”
Next, since the couple was staying with an acquaintance, select the option “Neither tenant nor owner” for the question, “Were you or your spouse tenants or owners on December 31, 2023?” Now, let's answer the questions in Part B - Information about your spouse.
Slide 9
Since Jeet had a spouse and was living with her on December 31, answer yes to the first and second questions.
Then, answer no to the last question about residences located in a northern village.
For more information, refer to the “Tax guide for volunteers” section of the ITAVP Learning Guide.
Click Next.
Slide 10
We are now at the Electronic filing - EFILE page.
The answers to the first three questions are, in order: no, yes (if eligible), and no. For the last question, newcomers generally cannot submit their first Quebec income tax return electronically. Therefore, answer no I will mail it .
For more information, refer to the page “What to consider for newcomers” in the ITAVP Learning Guide.
We won't be looking at how to use CRA's Auto-fill my return and Revenu Québec's Tax Data Download services. You'll find more information on these in the CRA and Revenu Québec electronic services section of the learning guide.
Click Next twice to continue.
Slide 11
We are now at the Interview Setup.
This is where we select the most common types of income, deductions, and tax credits that may apply to a client’s tax situation.
To make it easier to navigate the software, untick the preselected topics on the interview page that you don’t need.
First, in the “Specific situations” section, tick the box next to “Immigrant, emigrant, non-resident”. Next, specify the type of income.
In this case, Jeet received two employment slips: one issued by Marché soleil and the other issued by Tutorat pro.
To reflect this income, tick the “Employment income and employment insurance benefits” box in the “Employment and other benefits” section.
Click Next.
Slide 12
In the “Immigrant, emigrant, non-resident or factual resident” section, click the plus sign next to “You immigrated to Canada in 2023”.The page “Immigration to Canada” will appear.
Slide 13
Enter November 1, 2023 as Jeet’s date of entry. It is difficult to determine the amount of net income earned at this moment so leave the second field blank. UFile will automatically fill in the necessary fields once we enter the relevant data, unless the newcomer earned no income in Canada.
Choose the option “New resident of Canada” to specify the reason for the arrival.
Answer the mandatory questions marked by a red asterisk.
Select the option “Income from employment in Canada” to specify the Canadian sourced income (excluding part XIII income) earned when Jeet was not a resident of Canada. Enter $0 as the amount.
Then, we need to enter information about foreign sourced income earned while Jeet was not a resident of Canada.
Enter Indonesia as the name of country and select the option “Net employment income” from the drop-down menu.
Then, enter $3,000 as the income earned by Jeet prior to his arrival in Canada.
Click Next.
Slide 14
We are now in the “T4 and employment income” section.
In the T4 and T4E box, click the plus sign next to “T4 and relevé 1 income earned in Quebec with QPP contributions”.
Slide 15
Enter the information from the first T4 slip into the corresponding fields.
For example, the amounts in box 14 of the T4 slip and box A of the relevé 1, 5,987 dollars, are entered in matching fields of the software.
To find out more about how to enter the information from the slips, refer to the ITAVP Learning Guide and review the sections “Installing the tax software and its functions” and “Tax guide for volunteers”.
Once we have entered the information from the first slips, enter information from the second T4 and relevé 1 slips by selecting “T4 and employment income” from the left side menu.
Slide 16
To add the tax slips from the second employer, click the plus sign next to the “T4 and relevé 1 income earned in Quebec with QPP contributions” box.
Slide 17
As with the first employer, enter the information for the second T4 and Relevé 1 slips.
Repeat these steps as necessary.
Once done, Jeet’s interview is complete.
We are now ready to add Mia’s information.
Click the plus sign next to “Add spouse.”
Slide 18
For demonstration purposes, we have already completed the identification sections and CRA questions, as we did for Jeet.
In the Revenu Québec questions section, answer yes to the question “Is it the first year that you are filing a Québec tax return?”
Answer no to the question about the accelerated refund.
Answer no to the question “Did you receive or dispose of virtual currency?”
Answer no to the question about the solidarity tax credit. Only one person can claim it per couple.
For this case study, select “Notifications by text message and email” and no to the second question since Mia does not wish to receive her notices online.
Click Next.
Slide 19
We are now in the “Québec prescription drug insurance information” section. Since Mia’s situation is similar to Jeet’s, answer the questions the way we did for him.
Click Next.
Slide 20
We are now at the EFILE section.
The answers for the first three questions are the same as before: no, yes (if eligible), and no.
Click Next twice.
Slide 21
We are now at the Interview setup.
Repeat the same steps to enter information about Mia's arrival in Canada.
First, untick all boxes since Mia did not earn Canadian income. Then, in the “Specific situations” section, tick the option next to “Immigrant, emigrant, non resident taxpayer”.
Click Next.
Slide 22
In the “Immigrant, emigrant, non-resident” section, click the plus sign next to “You immigrated to Canada in 2023”.
The “Immigration to Canada” page will display automatically.
Slide 23
Enter November 1st, 2023 as Mia’s date of entry. She didn’t earn any income since her arrival.
Then select the option “New resident of Canada”.
Answer the two other mandatory questions.
For the first question, choose “Income earned from employment in Canada” and enter $0.
For the second, UFile asks for income that Mia might have earned while not living in Canada under part XIII Canadian income plus foreign sourced income. For the country, enter Indonesia. Then, select “net employment income” and enter $1,600.
Mia’s interview is now complete.
We are ready to review the results.
Click tab “3 – Review”.
Slide 24
A summary shows Jeet will receive refunds. Mia will not receive a refund nor have amounts owing.
Make sure to read the messages at the bottom of the screen and note any errors, warnings, or tips.
Now let’s click tab “4 - Tax Return”.
Slide 25
Here, you can view the detailed summaries of the federal income tax return, the Québec income tax return, the schedules, and the worksheets that UFile has completed for each person.
Select Jeet’s profile to see the tax summaries and schedules..
In the left-side menu, click on “T1 and TP1 returns summary page 1”.
Slide 26
In the summary, Jeet's federal tax return results are in purple on the left, and his provincial tax return is in pink on the right.
We can see the income, deductions, and credits that UFile has entered on the corresponding lines.
We can also see that the income earned before immigrating is not taxable, but it will be used to calculate certain credit and benefit payments.
It shows Jeet can also deduct part of his contributions to the QPP from the employment income he earned in Québec.
The amounts on line 30000 of the federal tax return and line 350 of the provincial tax return show that they were modified. UFile calculated the amounts and prorated the credits using Jeet’s foreign income that he earned while he was a non-resident and the number of days he lived in Canada.
To see the rest of the summary, click “T1 and TP1 returns summary page 2” in the left-side menu.
Slide 27
Newcomers are generally covered by the Québec prescription drug insurance plan three months after settling in Québec. Line 447 is zero because they do not have to pay a premium for the months they were not covered.
Jeet is not entitled to the Canada Workers Benefit line 45300 on the federal tax return because he didn’t live in Canada for the entire year. However, he’s entitled to the work premium, line 456 on the provincial income tax return.
Let’s review “T1 – Federal- page 1”.
Slide 28
We can see that Jeet’s date of arrival in Canada was entered as 11-01.
If we go to “TP1 Quebec page 1”, we see the same date in box 18 of the Quebec income tax return.
Slide 29
Scroll down in the left-side menu to choose “World income”.
This is where we see Jeet’s income earned in Indonesia, which we entered in the Interview Setup section.
Now, let’s have a look at Mia’s T1 and TP-1 returns.
Click on Mia’s profile.
Slide 30
There is not much information since Mia has not earned any income in Canada.
Let's review the “T1 federal page 1”.
Slide 31
Mia’s date of entry in Canada is included. The same date is in box 18 of the Quebec income tax return, on the “TP1 Quebec page 1.”
We also see Jeet’s net income. In the “Immigration” section, we left a field empty because we did not have Jeet’s Canadian income. UFile has updated this information automatically using information from the tax slips we entered.
Click “TP1 Québec p1” on the left-side menu. We see the same date entered in box 18 of the Quebec income tax return, and we also see Jeet’s Canadian income.
Once you finish reviewing the tax returns and confirm that the information was entered accurately, you can move to tab “5 – EFILE”.
Slide 32
Since this is a case study, we can’t access the steps and screens used to electronically submit the tax returns to the CRA and Revenu Québec.
Details on how to electronically submit the tax returns and an overview of the tax software used by ITAVP volunteers are available in the CVITP learning guide under “Installing the tax software and its functions.”
A three-part overview on the UFile CVITP software is also available.
Slide 33
This is the end of the webinar. Thank you for joining us today! We hope you gained a better understanding of how to file tax returns for a newcomer.
If you need a refresher, today’s workshop and other videos are available on the ITAVP learning guide’s video gallery.
To access the learning guide, go to the personalized space for volunteers at revenuquebec.ca/volunteers
ITAVP learning resources are for program participants. Please do not share them.