Canadian Non-resident Taxation Policies

By Author: Ken Donaldson
Total Articles: 48
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Under Canada’s tax system, you have the right and the responsibility to determine your income tax status and make sure you pay your required amount of taxes for each year according to the law.

Canada’s tax system uses different methods to tax non-residents than it does to tax residents of Canada. Therefore, before you can complete your Canadian tax return, you must first determine your residency status.

You were a non-resident of Canada for tax purposes if one of the following situations applies to you:
• You did not have significant residential ties in Canada and you lived outside Canada throughout the year, except if you were a deemed resident of Canada. For example, you could be a deemed resident of Canada if you were an employee of the Government of Canada posted abroad.

• You did not have significant residential ties in Canada and you stayed in Canada for less than 183 days in the year. Any day or part of a day spent in Canada counts as a day. If you lived in the United States and commuted to work in Canada, do not include commuting days in the calculation; or

• You were deemed ...
... not to be resident in Canada under the Income Tax Act because of the provisions of a tax treaty Canada has with another country.

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

Also non-resident corporations who have business interests in Canada and generate revenue from a business that is located in Canada will have to pay corporate tax to the Canadian Government. The clauses that govern the corporate tax in Canada are a bit complicated and the complications will only increase if you are a nonresident. If you are ‘carrying on business' in Canada either directly or indirectly then the profit that is earned out of the business will be subject to taxation. Like in income tax, the residency status of the corporation will have to be determined and the corporate tax that is levied will be based on the residency status of the corporation.

About Author:-
Ken Donaldson is a Toronto tax specialist, who practices as an independent tax consultant. He is providing lots of information about how to manage tax. In this article you can find details information about nonresident tax. For more information visit taxca.com.