CRA & Revenu Québec

What are the Income Tax Filing Requirements in Canada for Nonresidents?

If you are a non-resident of Canada and have Canadian income, you may be subject to annual tax reporting.

“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,” notes Caroline Thompson of Thompson Accounting and Taxes in Fort Erie, Ontario. “This income may come from work you did here during the year or are currently doing here, dividends, pension income or from income you receive on Canadian property you own.”

You are also required to file if you sold property or had any capital losses or gains in Canada, or if you own, or owned, a business here.

Determining Residency

Your income tax obligations to Canada are based on your residency status.

Before you can file, you need to know what your status is. Canada Revenue Agency determines each person’s status on a case-by-case basis.

The criteria used by the agency are:

  • the ties you have in Canada
  • your ties in the country where you live
  • the reasons and permanence of your connections abroad

Residential ties play an important factor in this determination, including whether you:

  • maintain a residence in Canada
  • have a spouse, common-law partner
  • have a dependant who lives here
  • have property, personal items or memberships in the country

CRA also considers if you have health insurance with any of the provinces or territories and, if you lived here for a time, how long your stay was.

Part I

The type of income tax you are required to pay as a non-resident of Canada is based on the type of income you received during the taxation year. Most non-residents, according to CRA, earn income that falls under one of two categories, Part I or Part XIII.

Part I tax is normally paid by the person who pays you the income.

However, to determine your final income tax payable, you need to file a return. The types of income that a payer would deduct income tax from on your behalf include employment from a Canadian business, scholarships, bursaries, fellowships, research grants, capital gains from the sale of Canadian property and services provided by you in Canada.

Part XIII

Part XIII tax is also deducted from income earned in Canada.

To ensure that the proper amount is taken off, tell the payer that you are a non-resident for tax purposes and the country where you live.

The types of income that this category deals with include:

  • dividends
  • annuity payments
  • registered retirement savings and income fund payments
  • old age security
  • pension plans
  • rental and royalty income
  • retiring allowances and management fees

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

Other Considerations

Other considerations come into play when filing as a non-resident of Canada. If you don’t have a Social Insurance Number (SIN), you need an individual tax number from the CRA. The form you use to file your return is the Income Tax and Benefit Return for Non-Residents and Deemed Residents of Canada. Under certain circumstances, you may qualify for tax credits. If you dispose of a property that is tax exempt because of a tax treaty, you do not need to file. Neither do you file if the CRA issued you a clearance certificate for that property.

References & Resources