full federal non-refundable tax credits

[curiousJ]

Hello,

I returned to Canada and became a resident in December 2022. I only had US income prior to my return to Canada.

Now I am filing my Canadian tax, and the tax tool [WealthSimple] doesn't let me claim for full federal non-refundable tax credits as I don't pass the 90% test. My 2022 income as a non-resident of Canada is $0 Canadian source income and $XXXXXX Foreign source income. What got me confused is that on the CRA website, it says the following. My question is whether I am eligible to claim for full federal non-refundable tax credits. WealthSimple doesn't let me do it, but the statement on the CRA website seems okay with it? Thanks in advance.

From CRA:
"If you are claiming full federal non-refundable tax credits, attach a note to your return stating your net world income (in Canadian dollars) for the part of the year that you were not a resident of Canada. Show the net income you received from sources inside and outside Canada for that part of the year separately. The CRA cannot allow the full amount of these federal credits without this note.

If you are filing your return electronically, provide your net world income and follow the instructions for claiming these credits using NETFILE certified software or provide it to your EFILE service provider."

[nelsona]

You aren't eligible for the full credits because you are not reporting 90% of your world income for the year, which is correct. The software is handling it correctly.
The note you would provide, would show this, and not permit full credit.

[curiousJ]

Got it. Thank you for your response. I tried TurboTax afterwards with the same input and it gave me double of tax return compare to WealthSimple. That got me very confused about this full non-refundable federal tax credits.

[nelsona]

Remember, your Cdn return will only have income (Cdn or foreign) from December 2022. It should not include any income (Cdn or foreign) from prior to your return.

It is unlikely that you had any Cdn tax withheld, nor would you owe any tax, so these credits are of no use to you.

[curiousJ]

Thanks for your response, nelsona. Both WealthSimple and TurboTax ask me to provide my income (Canadian and foreign source income) prior to my return to Canada (December 2022). Once I input these numbers and it notified me that I failed to pass the 90% test and it changed my estimate dramatically.

[nelsona]

As it should. You are not entitled to full credits.

Remember, you don't report these as income on your return, the inclusion of these US incomes, is only for determining allowable credits/GST, etc.

How much income did you make in December 2022?

[curiousJ]

I made about 10k in December 2022. WS estimated $500 and TurboTax estimated double of that as my final return. hmmm.

[nelsona]

I don't do software problems. You will need to look at both returns and see where the differences are and then decide which is right, based on our discussion. You should be getting 1/12th of the annual personal amount (~$1200). Start with that.

[curiousJ]

Got it. Thank you very much!