International & Non-resident Taxes
International and Non-Resident Taxes
Income tax for international and non-residents can be quite tricky to navigate without professional input. This article focuses on what non-residents and international Canadians can expect from the CRA in terms of income taxes.
There are many different tax obligations, each using specific tax packages, all with different benefit entitlements. To determine tax obligations, residency status must first be clearly defined. A non-resident for tax purposes, according to the CRA, is either someone who usually lives in another country and are not a resident of Canada, or they do not have ‘significant’ residential ties in Canada while living outside of Canada or stay in Canada less than 183 days in a tax year.
Tax obligations for non-residents, identified above, require paying tax on any income received in Canada; however the tax type and requirements for filing taxes depend on what type of income has been received in Canada. The standard cases are usually subjected to what are called Part XIII tax, and Part I tax. Part XIII tax is deducted from any dividends, rental income, royalties, pensions, RRSPs or RRIFs, Annuities, or other types of income such as management fees. On the other hand, Part I tax is deducted from any income received from carrying on a business in Canada, or through the selling/transferring of any Canadian property.
In the case that an international or non-resident is working in Canada and has taxes deducted from payroll, usually, the person still must also file a Canadian income tax return. Generally anyone who is receiving income in Canada, as well as Canadians outside of the country receiving income, need to file a Canadian income tax return.
Finally, we get many questions here concerning benefits for non-residents. It is important to note that non-residents are not eligible for benefits such as the Canada Child Tax Benefit, or the Universal Child Care Benefit; however there is an allowance for this benefit if their spouse is a deemed resident and meets the eligibility requirements.