An Overview of Canadian Taxation of Non-Residents

There is always a provision in the income tax law books of most countries that any person who is working and living in a country and is not a resident of that country will have to pay non resident taxes. This is also the case if you live and work in Canada. Any non-resident who is living or working in Canada and who is not a resident of any place in Canada will have to pay non-resident tax according to the regulations and the norms that are printed in the non-resident taxation policy derived from the Canadian Revenue Agency (CRA). If you are a person who is living in Canada and rendering your services for a Canadian company in Canada, then you should be aware of the rights, obligations and the entitlements that you need to face when you receive your work wages or income.

Generally, non-resident taxation is filed under Part I tax or Part XIII tax. If you receive income from dividends, rental payments, royalty payments, pension payments, management fee, retiring allowances, old age security pension, Canada Pension Plan, registered retirement savings or income plan payments or annuity payments then you will be taxed under Part XIII. If you are running a business in Canada or if you sell, transfer or plan to sell a Canadian property, then you will pay tax under Part I.

There are a lot of factors that are considered while determining the residency status of an individual in Canada. The most important factor is said to be the residential ties that the non-resident has in Canada or is in the process of establishing.

As per the Canadian law,

• One is deemed a non resident when he/she customarily or routinely live in another country and thus do not reside in Canada

• When you do not have residential ties with anyone in Canada and have stayed for less than 183 days in a tax year or lived outside the country for the major part of a tax year.

In such cases one usually becomes liable to pay non-resident taxes. It is important to find out all you can about the Canadian taxation of non-residents laws.

The nonresident taxation policy in Canada considered 15% tax deduction at the source to be a rough estimate of the nonresident tax liability of the person. If you are covered by treaty protection or can show that your expenses are bound to be more you can apply for a waiver or tax reduction request to the concerned department.

Non-resident taxation can be tough to deal and there are tax experts who will be aware of all the different tax laws that a country will have. This is why it is always better to opt for the services of a tax expert, especially if you are a non-resident and you are looking for non-resident tax planning. Find a reputed tax expert company and get their advice before you start any activity regarding nonresident tax planning.