Key takeaways
- Only income from your residency date to December 31 is taxed in Canada
- The basic personal amount is prorated: days resident ÷ 365
- CPP, EI and the Canada employment amount are not prorated
- Uses 2026 federal and provincial brackets from the CRA; Quebec is not included
How Canada taxes your arrival year
You are a part-year resident in the year you arrive. The CRA splits the year at your residency date:
- Before: you report your world income only so the CRA can work out benefits. It is not taxed in Canada (unless it was Canadian income, such as a job here).
- After: all your world income is taxed, at the normal 2026 rates.
The catch is your credits. The CRA says the basic personal amount, age amount, spouse amount and most other personal credits are prorated with this formula: days in Canada ÷ 365 × full amount. Credits that depend on what you paid while resident are claimed in full: CPP and EI contributions, the Canada employment amount, tuition, medical expenses, donations and student loan interest.
How this estimator counts
- Counts the days from your residency date to December 31, 2026, including both days.
- Works out CPP (5.95% of employment income between $3,500 and $74,600) and EI (1.63% up to $68,900), the 2026 rates.
- Applies the 2026 federal brackets (14%, 20.5%, 26%, 29%, 33%) and your province’s brackets.
- Subtracts credits: the prorated federal basic personal amount ($16,452 in full) and your province’s prorated amount, plus the full CPP, EI and Canada employment amount ($1,501) credits.
- In Ontario, adds the Ontario surtax and the Ontario Health Premium.
It does not include low-income tax reductions, other credits, RRSP deductions, the foreign tax credit, or CPP2 (the second CPP contribution on income over $74,600). Your real tax may be lower. Quebec residents file a separate provincial return and are not covered.
Worked example
You become a resident of Ontario on May 6, 2026 and earn $50,000 at a job by December 31.
- Days resident: 240. Prorated federal basic personal amount: 240 ÷ 365 × $16,452 = $10,818.
- CPP: $2,767. EI: $815.
- Federal tax: about $4,774. Ontario tax, surtax and health premium: about $2,513.
- Total income tax: about $7,287, an average rate of 14.6%.
If your employer deducted $6,000 of income tax, you would owe about $1,287. Payroll often under-deducts in the arrival year because your employer assumes you get the full basic personal amount.
Why payroll tax is often off in your arrival year
When you start a job, you fill in TD1 forms that tell your employer which credits to use. Most people claim the full basic personal amount, even though only a prorated amount applies in their arrival year. If you claim the full amount, your employer deducts a little too little tax, and you may owe a balance in April.
The opposite also happens. If you started work late in the year, payroll may deduct tax as if your pay continued all year at that rate. Then you get a refund. This estimator shows which way you are likely to go. You can also give your employer a new TD1 at any time.
Province rules differ: Ontario adds a surtax and health premium, and several provinces have low-income reductions that this estimator leaves out.
Next steps
- File your return by April 30, 2027: see how to file your first return.
- Paid foreign tax after arrival? Use the foreign tax credit calculator.
- Want your marginal rate on extra income? Try the marginal tax rate calculator.
- Check benefits with the benefit estimator.