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Tax Information For Non-Residents Of Canada

A Non-Resident Of Canada is Required to pay tax on income received from within Canada. The type of tax you pay – Part XIII or Part I – is based on the type of income you received. A non-residents of Canada cannot file a Canadian tax return using H&R Block’s tax software. Let’s take a closer look at both of these types of taxes below.

Are you a non-resident?

For tax purposes, you are considered a non-resident of Canada, if you normally or routinely live in another country, or if you don’t have significant residential ties in Canada and you reside outside the country throughout the year or you didn’t stay in Canada for up to 183 days.

Significant residential ties to Canada are considered to be:

  • A home in Canada;
  • A spouse or common-law partner in Canada; and
  • Dependants in Canada.

Other residential ties to Canada such as furniture or a car, as well as social ties such as memberships in Canadian recreational or religious organizations, bank accounts or credit cards, a driver’s licence, a passport, and health insurance in Canada, are considered to be secondary and is also relevant in determining your permanent residency status.

If you are a government employee outside Canada, including a member of the Canadian Forces posted abroad or their school staff in overseas working under the Canadian International Development Agency assistance program, you are usually considered a factual resident or a deemed resident of Canada and not a non-resident.

What taxes do non-residents have to pay?

For a non-resident person in Canada, you have to pay Part XIII tax if you received any of the following income from sources in Canada:

  • Dividends;
  • Rental and royalty payments;
  • Pension payments and CPP/QPP benefits;
  • Old age security;
  • Retiring allowances;
  • RRSP/RRIF/annuity payments; and
  • Management fees.

Make sure you let your Canadian payer know that you are a non-resident of Canada and provide your country of residence so that the applicable tax can be deducted from your income.
The payer usually deducts Part Itax if you receive the following income:

  • Income from a business carried out in Canada or employment income;
  • Employment income from a Canadian resident for your employment in another country;
  • Certain income from employment outside Canada, if you were a resident of Canada when the
  • duties were performed;
  • Taxable part of Canadian scholarships, fellowships, bursaries, and research grants;

Do I have to file a tax return As A Non-Residents Of Canada?

You have met your final tax obligation if you paid Part XIII tax on your Canadian income and you do not have to file an income tax return. Keep in mind that Part XIII tax is not refundable.

However, if you received the following, you can elect to file a Canadian tax return on income from which Part XIII was deducted:

  • Canadian rental income real or immovable properties or timber royalties; and
  • Certain Canadian pension income.

If you elect to file a Canadian return, you may be able to claim all of Part XIII tax paid or for just a portion. If you received pension or rental income, you won’t be filing a general T1 but will elect under section 216 and section 217 of the Income Tax Act, respectively.

If you paid Part I tax, you have to file a Canadian income tax return if:

  • You carried out a business in Canada; or
  • You sell or transfer, or plan to sell or transfer taxable Canadian property.

Even if your payer has deducted Part I tax from your other income, you may have to file a Canadian income tax return to determine your final tax obligation.

You can also see the tax return for new permanent residents in Canada.