---
title: "Do Permanent Residents Pay Taxes in Canada? Everything You Need to Know"
id: "14826"
type: "post"
slug: "do-permanent-residents-pay-taxes-in-canada"
published_at: "2026-05-12T14:06:11+00:00"
modified_at: "2026-05-12T14:06:13+00:00"
url: "https://taxccount.com/blog/do-permanent-residents-pay-taxes-in-canada/"
markdown_url: "https://taxccount.com/blog/do-permanent-residents-pay-taxes-in-canada.md"
excerpt: "When you become a Permanent Resident (PR) in Canada, there are a lot of things to figure out — where to live, how to find work, how to settle in. But one question that comes up very quickly is this:..."
taxonomy_category:
  - "Taxccount"
---

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[May 12, 2026](https://taxccount.com/blog/2026/05/)

# Do Permanent Residents Pay Taxes in Canada? Everything You Need to Know

When you become a Permanent Resident (PR) in Canada, there are a lot of things to figure out — where to live, how to find work, how to settle in. But one question that comes up very quickly is this: **do permanent residents pay taxes in Canada?**

The short answer is yes. And the rules are pretty much the same as for Canadian citizens.

This guide explains everything you need to know about taxes as a permanent resident in Canada — what you pay, how to file, and what benefits you can get — all in plain, simple language.

Table of Contents

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## Do Permanent Residents Pay Taxes in Canada?

Yes, permanent residents are required to pay Canadian income taxes. Canada’s tax system is based on **where you live**, not where you were born or what passport you hold. So as soon as you establish a home and significant ties in Canada, you become a Canadian tax resident — and that applies to both citizens and permanent residents.

As a Canadian tax resident, you must:

- Report all your income from anywhere in the world to the Canada Revenue Agency (CRA)
- File a T1 personal income tax return every year
- Pay federal and provincial income taxes on your earnings
- Report any foreign assets or accounts if they exceed certain thresholds

This starts from the date you first arrived in Canada and established residential ties — not from the date you got your PR card.

## What Taxes Do Permanent Residents Have to Pay?

As a permanent resident in Canada, you will deal with the following types of taxes:

### Federal Income Tax

Canada has a graduated tax system, which means the more you earn, the higher the percentage you pay. The federal rates go from 15% on lower income up to 33% on the highest earnings. Everyone gets a Basic Personal Amount — a portion of their income that is completely tax-free.

### Provincial or Territorial Income Tax

On top of federal tax, each province and territory has its own income tax rates. So if you live in Ontario, you pay Ontario provincial tax. If you live in Alberta, you pay Alberta provincial tax. These are filed together on the same T1 return.

### Canada Pension Plan (CPP) Contributions

If you work in Canada as an employee, your employer deducts CPP contributions from your paycheque. These contributions go toward your future retirement pension. Self-employed individuals pay both the employee and employer portion.

### Employment Insurance (EI) Premiums

Employed workers also pay EI premiums, which fund benefits like maternity leave, sick leave, and regular employment insurance if you lose your job.

### GST/HST

When you buy goods and services in Canada, you pay the Goods and Services Tax (GST) or Harmonized Sales Tax (HST), depending on your province. This is not something you file — it is collected at the point of purchase.

### Capital Gains Tax

If you sell investments or property at a profit, you pay tax on capital gains. In Canada, only a portion of your capital gain is included in your taxable income (this is called the inclusion rate).

## File PR Taxes Correctly

[☎️ Get Help](https://taxccount.com/book-a-consultation/)

## How Does Canada Tax You as a Permanent Resident?

Canada uses what is called a **residency-based tax system**. This means you are taxed based on where you live, not where you were born or what your citizenship is.

You are considered a Canadian tax resident if you have significant residential ties to Canada, which include:

- A home in Canada that is available for your use
- A spouse or common-law partner living in Canada
- Dependants (children) living in Canada
- A Canadian driver’s licence, health card, or bank account
- Social or family connections in Canada

Once these ties are established, you are a tax resident and you must file a Canadian tax return every year, just like a citizen.

The key thing to understand is that being a tax resident means you pay tax on your **worldwide income** — not just what you earn in Canada.

## Do Permanent Residents Pay Tax on Foreign Income?

This is one of the most common questions from new permanent residents, and the answer is yes — you must report income you earned anywhere in the world.

If you worked in another country before becoming a Canadian resident, that income is generally not taxable in Canada. But once you are a Canadian tax resident, any foreign income you continue to earn must be reported on your Canadian return.

This includes:

- Employment income from a job in another country
- Freelance or business income from outside Canada
- Rental income from a property in another country
- Foreign pension payments
- Investment income from foreign accounts
- Income from a foreign trust or company

### Will You Be Taxed Twice?

This is a very fair concern. Many countries have tax treaties with Canada that help prevent double taxation. Canada has tax treaties with over 90 countries including the United States, the United Kingdom, India, the Philippines, China, and many others.

If you already paid tax on foreign income in another country, you can usually claim a **Foreign Tax Credit** on your Canadian return. This credit reduces your Canadian tax bill by the amount of foreign tax you paid. So in most cases, you will not end up paying the full tax twice.

You should also know: if you own foreign assets — like a bank account, property, or investment — that total more than $100,000 Canadian, you must file **Form T1135** (Foreign Income Verification Statement) with the CRA. This is a separate reporting requirement from your regular tax return. Not filing it can result in significant penalties.

## How to File Your First Tax Return as a PR

Filing your first tax return in Canada can feel overwhelming, but it follows a clear process. Here is how to do it:

### Step 1: Get Your Social Insurance Number (SIN)

You need a SIN to file taxes in Canada. If you do not have one yet, apply through Service Canada. It is free and you can usually get it quickly after arriving.

### Step 2: Gather Your Documents

- T4 slips from your employer (these are sent out by late February)
- T5 slips if you have investment income
- Records of any foreign income you earned while a Canadian resident
- RRSP contribution receipts
- Medical, child care, and charitable donation receipts
- Foreign tax paid receipts (for claiming the Foreign Tax Credit)
- Your SIN and date you became a Canadian resident

### Step 3: Determine Your Filing Period

For your first year, you only report Canadian-source income and worldwide income for the period during which you were a Canadian tax resident. If you arrived in June, you only report income from June onwards as a resident.

### Step 4: Choose How to File

You can file:

- Online using NETFILE-certified tax software (the easiest option)
- By mailing a paper T1 return to the CRA
- Through a tax professional, which is strongly recommended for your first return

### Step 5: File on Time

The general deadline for most individuals is **April 30**. If you or your spouse is self-employed, the filing deadline extends to June 15, but any tax owed must still be paid by April 30 to avoid interest charges.

### Step 6: Sign Up for Direct Deposit

When you file, give the CRA your Canadian bank account details so your refund goes directly to your account. It is the fastest way to get your money.

## What Deductions and Credits Can PRs Claim?

As a permanent resident, you have access to all the same deductions and credits as a Canadian citizen. Here are the most useful ones:

### Basic Personal Amount

Every Canadian tax resident can claim this. It is a set amount of income on which you pay zero federal income tax. This applies to both citizens and PRs.

### RRSP Contributions

If you have earned income in Canada, you can contribute to a Registered Retirement Savings Plan (RRSP). Every dollar you put in reduces your taxable income dollar for dollar, up to your annual contribution limit shown on your Notice of Assessment.

### Child Care Expenses

If you paid for daycare, a babysitter, or after-school programs for your children so you could work or study, you can deduct those costs. The lower-income spouse must usually claim this deduction.

### Moving Expenses

If you moved to Canada for work or to attend a school, and your new home is at least 40 km closer to your place of work or school, you can claim eligible moving costs as a deduction.

### Medical Expenses

Eligible medical expenses above a certain threshold can be claimed as a credit. This includes prescription drugs, dental work, glasses, and other qualifying health costs.

### Foreign Tax Credit

If you paid income tax to another government on foreign income you also reported in Canada, you can claim this as a credit to reduce your Canadian tax owing.

### Disability Tax Credit (DTC)

If you or a family member has a severe and prolonged disability, you may be eligible for this non-refundable tax credit. A doctor or nurse practitioner must certify the disability.

### Tuition Credit

If you attended a qualified Canadian post-secondary institution, you can claim the tuition you paid as a credit to reduce your tax.

## What Government Benefits Can Permanent Residents Receive?

One of the great advantages of paying taxes in Canada is that you become eligible for a range of government benefit programs. You do not need to be a citizen to receive most of these — you just need to file your tax return.

### GST/HST Credit

This is a quarterly cash payment from the federal government to help low- and modest-income Canadians offset the cost of GST/HST they pay on purchases. The amount is based on your family income from the previous year.

### Canada Child Benefit (CCB)

If you have children under 18, you can receive monthly, tax-free payments through the CCB. The amount depends on your family income and the number and ages of your children. This is one of the most important benefits for families with kids.

### Ontario Trillium Benefit (if you live in Ontario)

This combines three provincial credits — the Ontario Energy and Property Tax Credit, the Northern Ontario Energy Credit, and the Ontario Sales Tax Credit — into one monthly payment.

### Canada Workers Benefit (CWB)

This is a refundable tax credit for low-income workers. If you qualify, you get money back from the government even if you do not owe any tax.

### Old Age Security (OAS) and Guaranteed Income Supplement (GIS)

If you are 65 or older and have lived in Canada for a certain number of years, you may qualify for OAS and GIS payments. Permanent residents who become citizens or have sufficient years of residence can qualify.

**Important:** You must file your tax return every year to keep receiving these benefits. The CRA uses your tax return to determine how much you get. Missing a year of filing can result in payments being stopped.

## What Happens If a Permanent Resident Does Not File Taxes?

Not filing is a bad idea, for several reasons:

### Financial Penalties

If you owe taxes and do not file on time, the CRA charges a late-filing penalty of 5% of the amount you owe, plus 1% for each month your return is late, up to 12 months. On top of that, the CRA charges daily compound interest on any unpaid balance.

### Loss of Benefits

If you do not file, the CRA cannot calculate your eligibility for the GST/HST credit, Canada Child Benefit, or other payments. This means your benefit payments will stop until you file.

### CRA Audit Risk

Not filing or not reporting foreign income is a significant audit trigger. The CRA regularly exchanges information with tax authorities in other countries, and unreported income is frequently discovered.

### Immigration Consequences

While a missed tax return does not directly affect your PR status, being found guilty of tax evasion is a criminal offence in Canada. A criminal conviction can have very serious immigration consequences, including potential deportation.

The CRA does offer a **Voluntary Disclosures Program (VDP)** for people who want to come clean about unfiled returns or unreported income. Coming forward voluntarily generally results in reduced penalties.

## Does Leaving Canada Affect Your Tax Status?

Yes, it can. If you leave Canada and cut your residential ties — meaning you give up your home here, move your family abroad, and stop maintaining any significant connection to Canada — you may become a non-resident for tax purposes.

As a non-resident, you would only pay Canadian tax on income earned in Canada, not on your worldwide income.

However, this does not happen automatically. You need to formally sever your residential ties. And if you leave but keep a home in Canada or your family stays here, the CRA may still consider you a Canadian tax resident.

If you are considering leaving Canada temporarily or permanently, speak with a cross-border or international tax professional before you go. The rules can be complex and getting this wrong can be expensive.

Also keep in mind: giving up your tax residency does not affect your PR immigration status, but those are two separate legal matters. You can be a PR who is not a Canadian tax resident if you have genuinely moved away.

## Frequently Asked Questions

### Do permanent residents pay more tax than citizens in Canada?

No. Tax rates are identical for permanent residents and citizens. The difference is in citizenship rights like voting and holding a Canadian passport — not in taxes.

### Can I use RRSP as a permanent resident?

Yes. As long as you have earned income in Canada, you accumulate RRSP contribution room and can contribute to reduce your taxable income.

### Do I need a Canadian accountant to file my taxes as a PR?

For a simple return with only T4 employment income, free tax software may be sufficient. But if you have foreign income, foreign assets, or multiple income sources, working with a qualified Canadian tax accountant is highly recommended.

### What if I still pay taxes in my home country?

You may be able to claim a Foreign Tax Credit in Canada to avoid being taxed twice. Whether this applies depends on whether Canada has a tax treaty with your home country.

### Can I file my taxes online as a PR?

Yes. As long as you have a SIN, you can file online using NETFILE-certified software or work with a tax professional who files on your behalf.

### What is Form T1135 and do I need to file it?

Form T1135 is the Foreign Income Verification Statement. You must file it if you own foreign assets (bank accounts, investments, property) with a total cost of more than $100,000 Canadian. Failing to file it results in significant penalties.

### When did my tax obligations start?

Your Canadian tax obligations started on the date you arrived in Canada and established residential ties — not on the date you received your PR card.

## Conclusion

Being a permanent resident in Canada means you have the same tax responsibilities as a citizen — and the same benefits too. You pay federal and provincial income tax, you can claim the same credits and deductions, and you qualify for the same government benefit programs.

The most important thing is to file your return every year, on time. Even if your income is low or your situation is complicated by foreign income or assets, filing is always the right move.

If you are not sure where to start or your situation is complex, Taxccount is here to help. Our team works with permanent residents and newcomers to Canada every day, making sure they file correctly, claim everything they are entitled to, and avoid costly mistakes.

## Stay CRA Compliant Today

[☎️ Get Help](https://taxccount.com/book-a-consultation/)

This is general information only and not professional advice. Consult a professional before acting.

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