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Please let us know if my wife and I should file tax returns in Canada for 2024.
My name is Aiyaswami Natesa Prasad (age 75), and my spouse is Dr. Rama Lakshmi (age 69). We are both retired and receive income from investments in India, regularly filing tax returns there. Our children live in Canada. They sponsored us, and we obtained a Canada PR card under the Parents and Grandparents category in 2023. We spent six months in Canada in both 2023 and 2024. We do not have any income in Canada. We hold a Canada PR card, Ontario Health card, and SIN card, and we have also opened checking accounts. We have no income whatsoever in Canada.
During our 2023 visit, we stayed with our children. In 2024, We bought an apartment in Toronto, Canada, for our use. The apartment was financed by a mortgage loan taken out by my son, and he has been paying the EMI to repay the loan. My spouse and I hold 49.5% share each, and the remaining 1% is held by my son. The apartment is not rented out but used for our stay.
In the above circumstances, do my spouse and I need to file returns showing NIL income? We will be grateful for your advice and guidance
Natesa Prasad
Dear Mr. Prasad,
Thank you for reaching out. I appreciate the detailed background you’ve provided.
Since you and your spouse became Canadian permanent residents in 2023, the key factor in determining your tax filing obligations is your Canadian residency status for tax purposes. Generally, tax residency is based on significant residential ties to Canada, such as owning a home, having a health card, SIN, and maintaining a presence in Canada. Based on your description, it is likely that the Canada Revenue Agency (CRA) would consider you tax residents of Canada, even though you spend part of the year in India.
As Canadian tax residents, you are required to report your worldwide income on your Canadian tax return, including investment income from India. However, Canada has a tax treaty with India, which may allow you to claim foreign tax credits for taxes paid in India, helping to avoid double taxation.
Even if you have no Canadian-source income, filing a tax return may still be beneficial to:
- Establish and maintain your tax residency status with the CRA.
- Report foreign income properly to avoid potential tax compliance issues.
- Qualify for certain benefits or credits in the future.
Additionally, since you and your spouse own an apartment in Canada, there may be tax implications in the future, particularly regarding potential capital gains tax if you decide to sell the property.