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    Taxation of Canadian Non-Residents

    EST. 1996

What are the Income Tax Filing Requirements For A Canadian Non-Resident?

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If you are a non-resident of Canada and are looking to know about your tax filing requirements as a non-resident, then this article is for you.

Despite what you may have heard, if you are a non-resident and your income originates in Canada you are still subject to annual tax reporting and will need to calculate your Canadian income tax.

If you are a Canadian living abroad here are a few things you may want to know about your income-tax filing requirements.

 Table of Contents:

income tax requirements canadians

Who Qualifies as a Non-Resident?

You are considered a Canadian tax resident if:

  • Normally, customarily, or routinely live in another country and are not considered a resident of Canada
  • You stay in Canada for less than 183 days in the tax year.
  • You are living in another country outside Canada throughout the tax year.

Your taxable income will also be calculated on the grounds of you having sold your property or encountered any capital loss or gain in Canada or if you ever owned a business in Canada. 

Obligations of a Canadian Non-Resident

Even if you live outside Canada you are still obliged to file your taxes for all income made within the country. Depending on your income and how it was generated will determine your requirements and tax obligations. Canada's Revenue Agency determines the status of the person on a case-by-case basis to determine the person's responsibilities. The status of a persons income tax reporting is usually determined by their:

  • ties with the country where they are required to file i.e. Canada
  • their ties with the country where they live
  • The level of permanency the individual has resided abroad

Your residency plays a crucial role in determining your income tax requirements. For example, you are required to file:

  • if you are a resident if Canada
  • if your spouse is a resident 
  • if you have a dependent that lives in Canada
  • if you have any property or personal items in the country

Other determining factors that may determine your residence depending upon your circumstances are:

  • if you have health insurance registered with any provinces or territories
  • if you lived in any part of the country for any period of time throughout the year

However, in general, if income is earned by a non-resident of Canada then the income is subject to tax under Part XIII or Part I.

Canada's Tax Codes Part I

tax requirements canadians

Part I involves the income tax that you are required to pay based on the income you received during the tax year. Non-residents earn income that falls under one of two categories.

  • If you conduct any business in Canada and earn income
  • If you sell or transfer or plan to sell and transfer any type of taxable Canadian property

To find out your total gross income, you would need to file tax returns in order to fully understand your obligations.

You may need to include any earnings within your return and file on:  

  • any income from employment in Canada or from a business carried in Canada
  • any income from a job that you earned from abroad while still being a Canadian resident 
  • any scholarship, fellowship, bursary or research grant
  • any income generated from selling Canadian property

Canada's Tax Codes Part XIII 

Part XIII of Canada's tax code defines what may be possible deductions depending upon:

  • your residency determined by your legal definition
  • your country of residence

The types of income that this category deals with include:

  • dividends
  • annuity payments
  • retirement savings
  • old age security
  • pension plans
  • royalty income
  • retiring allowances 

What is Canada's Tax Obligations Filing Due Date For Non-Residents?

Your tax return has to be filed on or before June 1. However, if you or your spouse conduct any business in Canada then the date is extended to June 15. 

If you have more tax-related questions related to your offshore business go here.

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*Note for U.S. citizens: US citizens are limited in their tax reduction possibilities due to FATCA and CFC laws. Opening an offshore company can increase privacy and asset protection, but you can not eliminate your taxes without giving up your citizenship. If you are a US citizen you are obligated to pay taxes on all worldwide income. Read more here about FATCA and CFC laws.



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