Income Tax Filing Requirements For Nonresidents In Canada

If you are a non-resident of Canada but have Canadian income, you may still be subject to annual tax reporting. You are required to pay tax on income, investments and capital gains earned from Canadian sources.

According to Caroline Thompson of Thompson Accounting and Taxes in Fort Erie, Ontario “If your residence is outside of the country, and you are earning income that is deemed taxable, you are subject to filing an income tax return,”.

And while you consider yourself nonresidents, the CRA has generous residential ties provisions. Understanding Income Tax Filing requirements and how these affect you is the key to legally cutting down your tax obligation.

Defining Your Residency Status 

Often times the question is about residency status. Your income tax obligations to Canada are largely based on your residency status. Before you can carry out income tax filing, you need to find out what your status is. Canada Revenue Agency (CRA) determines each individual’s status on an individual basis.

The criteria used by the revenue agency is the ties or connection you have in Canada, your connections in the country where you are currently living and the reasons and permanence of your connections abroad.

Residential ties play a vital factor in this determination, including whether you maintain a residence in Canada, or you have a spouse, common-law partner or dependent living here in Canada, or if you have personal items, property, or memberships in the country.

Canada Revenue Agency also considers whether you have health insurance with any of the territories or provinces and, if you lived here and long the period stay was.

Part I

The type of income tax you are obligated to pay as a non-resident of Canada is determined by the type of income you got during the taxation year. According to CRA, many non-residents earn income that classified under one of two categories, Part I or Part XIII.

Part I tax is usually paid by the person who pays you the income. But, to find out your final income tax payable, you have to file a return. The types of income that a payer would remove income tax from on your behalf include employment from a Canadian business, bursaries, scholarships, research grants, fellowships, capital gains from the sale of property here and services provided by you in Canada.


Part XIII tax is also removed from income earned in Canada. To ensure that the right amount is taken off, inform the payer that you are a non-resident for tax purposes and as well as for the country where you live.

The kind of tax income that this category deals with include annuity payments, dividends, registered retirement savings, and income fund payments, pension plans, old age security, rental, and royalty income, retiring allowances and management fees.

As of publication, the tax rate on Part XIII tax is 25 percent and nonrefundable, therefore you may choose not to file a tax return.