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.

All You Need to Know About Canadian Non-Resident Taxation Policies

As in many other countries, non-residents in Canada are also subjected to taxation and they will have to pay taxes for the income that they generate from sources that are within Canada. Canadian non-resident taxation rules apply to you if you are living and working in Canada and you are not a Canadian resident. It is ideal that if you are living or working in Canada as a nonresident, you should be aware of such taxation rules. Through the internet and online discussion forums, you will be able to gather a lot of information about the taxation laws in Canada on nonresidents. You can as well contact some of the experienced and reputed tax accountants in the area you live in Canada in order to get full information on the nonresident taxation laws. 

He or she will help you in computing the tax figures that you need to pay a tax to the Government of Canada.

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. Canada also asks for tax to non-residents on certain source of income such as withholding tax on interest, dividends, royalties, etc. People who visit and stay in Canada longer than 6 months in the same year are considered to be a resident in Canada and subject for a tax fee base on their worldwide income.

The Canadian non-resident taxation policy 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. A waiver application will have to be filled and submitted to the tax services office that is responsible for tax related functions in the area that you provide services in. The application will have to be filed 30 days before receiving the first payment and no later than 30 days from the start of providing the services. If the required details are in order then the tax office will give you a waiver or deduction certificate that can be given to the employer.

It is very important to not take things for granted while filing the nonresident tax in Canada and if there is any ambiguity in the various clauses of the tax treaty that has been signed with your resident country, contact the International Tax Services Office for clarification. It will also be a good option to avail the services of tax experts to help you with your nonresident taxation procedures as they will have the knowledge of the exemptions that can be availed by you. It will also make the process a lot simpler with you not having to run around to get your income tax return filed properly.

Nonresident Taxation for Non-Residents Rendering Services In Canada

Any nonresident that offers service in Canada and earns an income out of it is liable to pay nonresident tax as per the regulations that are cited in the nonresident taxation policy of the Canadian Revenue Agency. So if you are a nonresident who is offering services or plan to offer your services in Canada then you should be aware of the entitlements, the rights and the obligations that you face when receiving such income.

Nonresident Taxation

If you are a nonresident of Canada and you render services in the country then you are entitled to pay income tax on the income that is generated by you by providing the services in the country under the provisions of the nonresident taxation policy. There are regular continuous services that one might render and there are also some services that are rendered for a short span of time. If you are a consultant, or a lecturer providing your services then you will have to pay your taxes and will have to file your returns for the income earned in Canada. For people who are involved in the movie industry, they will have to refer to the Film Advisory Services to identify the tax credit that is available to them before filing the returns.

Withholding Requirements

• If you are employed in Canada on a regular and continuous basis then a certain percentage of your income will be withheld from the person paying you and will provide you with an information slip with regard to the deduction made from your income.

• In general the percentage that is deducted is about 15% of the gross payment that is paid to you and that amount will be remitted by the employer to the Receiver General of Canada as a type of nonresident tax.

• This is a form of non resident tax deduction at source and it is the duty of the employer whether he is a Canadian citizen or not to deduct the tax and duly pay it to the concerned department.

• Failing to deduct the required amount will result in penalty and the employer will have to pay 10% of the amount that has to be deducted as penalty.

• Employers will have to file T4A-NR return to the department and will have to issue T4A-NR slips to the recipient before the end of February of the following year.

• The employee can file tax returns to report the net taxable income and in situations where excess tax has been deducted, a refund is provided by the Tax authority.

Waiver Or Reduction of Withholding

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. A waiver application will have to be filled and submitted to the tax services office that is responsible for tax related functions in the area that you provide services in. The application will have to be filed 30 days before receiving the first payment and no later than 30 days from the start of providing the services. If the required details are in order then the tax office will give you a waiver or deduction certificate that can be given to the employer.