Financial planning for newcomers to Canada

From the day you become a Canadian resident, Canada taxes your income from everywhere and treats everything you own as if you bought it at its fair market value that day. In your first year you can put C$7,000 into a TFSA (the 2026 limit), but you generally can’t deduct anything to an RRSP, because RRSP room comes from Canadian earned income in the year before. Getting the first year right, especially the records of what your property was worth when you arrived, saves money for decades.

Your first year: the tax basics

• Your residency date matters. Income you earned before it isn’t taxed in Canada. From that date on, you report income from inside and outside Canada, and a tax treaty may exempt some of it.
• Record what everything was worth. The CRA treats property you owned on arrival, such as shares, funds or a home abroad, as sold and bought back at fair market value on your residency date. That value becomes your cost, so only gains after you arrive are taxed here. Write it down now; it’s hard to prove later.
• Get a SIN. Service Canada issues the Social Insurance Number you need to work, file and open registered accounts. If you can’t get one, the CRA can issue a temporary tax number.
• Tell the CRA about income before you arrived. For benefits, the CRA asks for income you earned abroad for up to two years before you became a resident, through a statement of income. It isn’t taxed; it’s used to work out what you’re owed.

Benefits you have to apply for

Canada pays several benefits through the tax system, and newcomers have to apply rather than wait. With children under 18, apply for the Canada child benefit with Form RC66, which also covers the Canada Groceries and Essentials Benefit, the payment that replaced the GST/HST credit. Without children, apply for that benefit with Form RC151. Both are based on the income you report, so file a return every year, even a year with little income.

Which accounts you can use in year one

• TFSA. Room starts in the year you become a resident at 18 or older. You don’t get room for the years before you arrived, so a newcomer’s room is much smaller than that of someone who grew up here.
• FHSA. You must be a resident and a first-time home buyer. The CRA’s test counts a home you owned and lived in during this year or the previous four, and that includes a home abroad that would qualify if it were in Canada. If you sold a home overseas recently, you may have to wait.
• RRSP. Room is 18% of your previous year’s Canadian earned income, up to a yearly limit. In your first year you generally have none to deduct, but your first year of Canadian pay creates room for the next.
• RESP. If you have children, an RESP adds government grants to education savings.

The money you left behind

Many newcomers keep accounts, pensions or property in their home country. Canada now taxes the income on them each year, and you can usually claim a credit for tax the other country takes. Three things to know:

• Foreign property reporting. If the total cost of your foreign property is over C$100,000 at any time in a year, you file Form T1135 with the CRA. You don’t have to file for the year you arrive, and the value on your arrival date counts as the cost.
• Foreign retirement accounts. How Canada treats a pension or retirement account from abroad depends on the account and the tax treaty with that country. Don’t cash one in until someone has checked both sides.
• From the US? US citizens keep filing US returns after they move, and the US doesn’t recognize the TFSA or treat Canadian mutual funds kindly. Read cross-border financial advisors before you open any Canadian account.

Public pensions take time

OAS is based on years lived in Canada after 18. You need at least 10 years to get any OAS while living in Canada, and the amount is your years here divided by 40. Someone who arrives at 45 and stays has 20 years by 65, so half the full pension. Canada has social security agreements with many countries, which can help you qualify for benefits from both. CPP is different: it depends on what you earn and contribute while working here. For most newcomers, a smaller public pension means saving more on your own.

How advice works in Canada

Most Canadians get financial advice at a bank or from an advisor paid through the funds they sell. Those advisors are registered, and they have to collect know-your-client information, but their pay is often built into fund costs as a trailer fee. A fee-only or advice-only planner charges you directly and earns nothing from products. Before you hire anyone to recommend investments, look them up on the CSA’s National Registration Search. The CSA and CIRO glossary entries explain who regulates whom.

Common mistakes

• Not recording arrival values, then paying Canadian tax on gains made before you came.
• Over-contributing to a TFSA using room you assume you have. Room only starts the year you arrive.
• Opening an FHSA too soon after owning a home abroad.
• Forgetting Form T1135 in your second year, once foreign accounts pass C$100,000 in cost.
• Buying the first product a bank suggests before you know how the advisor is paid.

Questions to ask a planner

1. Have you worked with people moving from my country, and do you know our tax treaty?
2. What should I do with the accounts and pension I still have there?
3. In what order should I fund a TFSA, FHSA and RRSP given my plans?
4. Will you help me document my arrival values and file the right forms?
5. How are you paid, and do you or your firm earn anything from products you recommend?

When a fee-only planner is worth it, and what it costs

If you arrived with little more than a job offer, the CRA’s newcomer pages and a good tax preparer may be enough for the first year. If you arrived with savings, property or a pension abroad, a one-time plan in your first year is worth it: the decisions are made once, and mistakes compound.

Canadian fee-only planners who publish prices charge a median C$1,900 for a one-time plan (middle half C$950 to C$3,000, 46 firms), C$250 an hour (15 firms) or C$2,300 a year for ongoing planning (21 firms). Planners who handle two countries’ rules may charge more. Our guide to what fee-only advisors charge in Canada explains the samples.

Where to go next

Browse advisors who work with newcomers and cross-border families, or start from the cross-border specialty. To understand Canadian credentials, read QAFP vs CFP. Once you’re investing in a regular account, see the dividend tax credit.