As a non-resident of Canada, you may be required to pay taxes on income earned in Canada or on Canadian assets you own. Here’s a brief overview of non-resident tax in Canada.
Who is a non-resident for tax purposes?
For tax purposes, a non-resident of Canada is someone who either:
Doesn’t have significant residential ties in Canada (such as a home, spouse or dependents), or
Doesn’t stay in Canada for more than 183 days in a year.
If you’re a non-resident, you’re generally only taxed on Canadian-source income, such as employment income, rental income, or investment income earned in Canada. You may also be subject to withholding tax on payments made to you by Canadian businesses, such as dividends or royalties.
What are the tax rates for non-residents?
The tax rates for non-residents are generally higher than for Canadian residents. For example, non-residents pay a 25% withholding tax on dividends from Canadian corporations, while residents pay a lower rate based on their marginal tax bracket.
Non-residents are also subject to a flat rate of 25% on certain types of rental income, such as rent from real property in Canada, and on certain types of employment income, such as income from performing in Canada.
How do non-residents file their taxes?
Non-residents must file a Canadian income tax return if they earned Canadian-source income or disposed of taxable Canadian property during the year. The tax return is due on June 30 of the following year, but any tax owing is due on the date of filing.
Non-residents can use Form NR4 to report income that is subject to withholding tax, such as dividends, interest, or rental income. They can use Form T1159 to calculate their tax owing and report other types of income, such as employment income or capital gains.
It’s important for non-residents to ensure they comply with Canadian tax laws to avoid penalties and interest charges. Consider seeking the advice of a tax professional if you’re unsure about your tax obligations as a non-resident in Canada.
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