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Filing Income Tax For A Non – Canadian

Filing Income Tax For A Non – Canadian is different. Your income tax obligations in Canada as an individual are based on your residency status. If you are a non-resident, the requirements for filing will be way different from those for residents.

Defining Non-Residents

The Canadian Revenue Agency uses non-residency which is an individual classification that is used for tax purposes. Individuals who normally, customarily, or routinely live in another country, and are not considered a resident of Canada, may be classified as non-residents by the CRA.

There are other factors that the CRA uses to determine residency status which include a lack of significant residential ties to Canada, living outside Canada throughout the tax year, and living in Canada for less than 183 days throughout the tax year.

Significant residential ties can include a home or permanent residence, a spouse or dependants, and various personal property in Canada. Furniture, a vehicle or other items that the CRA chooses to classify as personal property. Other ties can include social memberships, provincial medical cards, a driver’s licence and bank accounts based in Canada.

Only the CRA has the right to determine your residency status. There are no strict rules; just guidelines and interpretations by the agency regarding your residential status.

Tax Obligations for Non-Residents

If you are a non-resident of Canada, you are required to pay tax on income you receive from sources in Canada. This includes Part XIII tax or Part I tax in general.

Part XIII tax is usual applied to common sources of income such as rental and royalty payments, dividends, pension payments, Old Age Security pension, Canada Pension Plan and Quebec Pension Plan benefits, RRSP payments, retiring allowances, Registered Retirement Income Fund payments, annuity payments and management fees.

To ensure that the correct portion of tax is deducted by your Canadian payers — people, employers or other entities who pay you money — ensure you notify them that you are a non-resident of Canada for the purpose of tax, as well as your country of residence. This allows the payers to deduct the Part XIII tax when income is paid to you, usually at a rate of 25 percent unless there is a tax treaty between Canada and your country of residence. These are non-refundable amounts, and you do not have to file a Canadian tax return to report the income unless you choose to. Normally, individuals elect to file a return if they had Canadian rental income or certain types of pension income. If you believe an incorrect amount of Part XIII tax was deducted, you are allowed to contact the CRA directly to request further investigation.

Also, Part I tax is usually deducted by the payer for certain types of income. These include employment income and income from a business. If you stop being a resident during the year, you may also be required to file a Canadian income tax return to calculate your final tax obligations for the year that you ceased to be a resident.

You can also see the taxation system in Canada