Can non-residents claim Canadian tax credits? Learn everything you need to know for 2025.

As Canada’s tax landscape evolves, many individuals working, studying, or temporarily living in Canada face a common question:

“As a non-resident of Canada, can I claim federal and provincial tax credits if I earned income both inside and outside Canada?”

The Canada Revenue Agency (CRA) applies a crucial standard known as the 90% Rule, which determines whether a non-resident can receive non-refundable tax credits—including the Basic Personal Amount—when filing a Canadian tax return.

In this comprehensive guide created by BOMCAS Canada – Top Accounting Firm for Canadian Personal & Corporate Tax, we break down everything you need to know to stay compliant, avoid penalties, and maximize your tax benefits.

What Is the CRA 90% Rule?

The 90% Rule is a CRA requirement that applies to non-residents and deemed non-residents who earn income in Canada.

✔ Definition

You may claim Canadian non-refundable tax credits only if:

90% or more of your worldwide income for the year is taxable in Canada.

If you meet the rule → You qualify for tax credits.
If you do not → You cannot claim most federal and provincial credits.

Who Does the 90% Rule Apply To?

The rule affects:

• Seasonal workers
• Foreign employees on temporary contracts
• International students earning income in Canada
• Individuals working remotely from Canada
• Non-resident landlords
• Snowbirds with Canadian income
• Persons with dual tax residence

If you earned income both inside and outside Canada during 2025, this rule directly affects your tax return and the way your employer fills out your TD1 forms.

Understanding “World Income” for CRA Purposes

World income includes your gross income from all sources globally, including:

• Canadian wages or self-employment
• Foreign wages
• Foreign business income
• Rental income outside Canada
• Dividends, interest, or capital gains
• Pensions or RRSP/RRIF withdrawals
• Scholarships, grants, or stipends

CRA evaluates your total combined income, then checks how much of it is taxable in Canada.

Examples to Understand the 90% Rule

Example 1 – You Qualify for Credits (YES Answer)

• Canadian income: $85,000
• Foreign income (2025): $3,000
• Total world income: $88,000
• Foreign % = 3%

✔ More than 90% of the income is Canadian → You can claim the Basic Personal Amount and other credits.

Example 2 – You Do NOT Qualify (NO Answer)

• Canadian income: $15,000
• Foreign income: $40,000
• Total world income: $55,000
• Foreign % = 73%

✘ Less than 90% of the income is Canadian → You cannot claim non-refundable tax credits.

Why the CRA Needs to Know This

CRA uses the 90% rule to prevent non-residents from claiming tax credits while earning most of their income in another country.

Canada does not want to subsidize:

• income earned elsewhere
• tax systems outside Canada
• individuals not primarily dependent on Canadian income

This is why the TD1 form asks new workers:
“Will 90% or more of your world income be included in your Canadian taxable income?”

How the 90% Rule Affects Your Tax Return

✔ If you answer YES

You may claim:

• Basic Personal Amount
• Spousal/Common-law amount
• Disability amount
• Age amount
• Tuition credits
• Other non-refundable credits

✔ If you answer NO

You may NOT claim most credits and will be taxed at the full non-resident rate without deductions.

Employers will:

• Withhold MORE taxes from your pay
• Treat you as a non-resident with reduced credits

When filing taxes, your credits will also be denied if you don’t meet the 90% threshold.

What Happens If You Answer the Question Incorrectly?

Giving the wrong answer on TD1 or your tax return can result in:

❗ Reassessment by CRA

❗ Tax balance owing

❗ Loss of credits

❗ Interest and potential penalties

❗ Delays in processing

BOMCAS Canada assists many clients each year who incorrectly answered the question and need a correction.

How to Determine Your Answer: YES or NO

Use this formula:

Canadian Income  ÷  Total Worldwide Income × 100

✔ If the result is 90% or more → Answer YES

✘ If below 90% → Answer NO

If you need help calculating your ratio for 2025, BOMCAS Canada can do it for you.

Filing Taxes as a Non-Resident in Canada (2025)

Non-residents must file a Canadian tax return if they:

• Earned employment income in Canada
• Carried on business in Canada
• Received rental income from Canadian property
• Disposed of taxable Canadian property
• Received RRSP or RRIF withdrawals
• Need to claim a refund

BOMCAS Canada specializes in:
✔ Non-resident tax filing
✔ Section 216 rental returns
✔ Departure tax
✔ Foreign income reporting
✔ Compliance with dual residency rules

When Does the 90% Rule NOT Apply?

The rule does not apply if:

• You are a full resident of Canada
• You immigrate to Canada during the year (different credits apply)
• You have no foreign income
• All your foreign income is exempt due to a tax treaty

BOMCAS Canada – Your Trusted Authority for Non-Resident Taxes

At BOMCAS Canada, we help individuals across Canada and worldwide understand:

✔ Non-resident tax rules
✔ CRA residency classification
✔ Dual residency issues
✔ Foreign income reporting
✔ The 90% world income test
✔ Proper completion of TD1 and provincial forms
✔ Filing Canadian taxes correctly the first time

Whether you are an employee, student, contractor, landlord, or newcomer, our accounting team ensures full CRA compliance and maximum tax savings.

Need Help Determining Your 90% Rule Answer?

Avoid CRA mistakes.
Get professional help.

📞 Call BOMCAS Canada: 780-667-5250
🌐 www.bomcas.ca
📧 info@bomcas.ca