For tax purposes, the term “non-residency” refers to an individual classification that is used by the Canada Revenue Agency to refer to a person who does not reside in Canada. People who normally, customarily, or routinely reside in another country and are not considered to be residents of Canada may be classified as non-residents by the Canada Revenue Agency.
The taxation system in Canada is very similar to that of many other countries around the world. In most cases, employers and other payers deduct taxes from the wages and salaries they pay you, and people who make a living from their businesses are required to pay their taxes in instalments. In Canada, you have the authority and responsibility to determine your income tax status and to make sure that you pay the required amount of taxes for each year in accordance with the tax laws in effect at the time you file your tax returns. If you require any additional information on the Tax preparation and filing, please do not hesitate to contact Bomcas Canada Accounting and Tax Services.
The Canada Revenue Agency (CRA) will require you to calculate your final tax liability each year. Depending on your circumstances, you may also be required to file a tax return with the CRA. When you work with Bomcas Tax Accountants, we’ll make sure that your tax status is verified and, if necessary, that your personal income tax returns are prepared and filed on time.
Is it necessary for you to file a tax return?” Please contact us as soon as possible. In general, you can expect us to prepare your tax return, including listing your income and deductions, computing your federal and provincial or territorial tax, and determining whether you owe any additional tax for the year or whether you are entitled to a refund for some or all of the tax you deducted from your income during the year.
Foreigners are subject to a different taxation regime than Canadian citizens, and the taxation of non-citizens is more complicated than that of Canadian citizens. If you want to learn more about how non-residents are taxed in Canada, give us a call right away. We must ascertain your residency status in Canada before we can proceed with completing your Canadian tax return as a result of this circumstance.
Income derived from Canadian sources is subject to taxation.
Unless all or part of your income from Canadian sources is exempt under a tax treaty, you will be subject to Canadian income tax on most Canadian-source income that is paid or credited to you during the year if you are a non-resident. The following two methods are used by Canada’s income tax system to calculate the amount of tax that must be paid on income that has a Canadian source.
Method 1: Non-resident taxation
If you are a non-resident of Canada and receive certain types of Canadian-source income that is paid or credited to you, Canadian financial institutions and other payers are required to withhold tax from your payment or credit. Certain types of Canadian-sourced income are subject to a 25 percent withholding tax at the time of receipt. Non-residents’ earnings may be subject to withholding tax on the following types of income, which are the most frequently encountered:
■ interest;
■ dividends;
■ rental payments;
■ pension payments;
■ old age security pension;
■ Canada Pension Plan or Quebec Pension Plan benefits;
■ retiring allowances;
■ registered retirement savings plan payments;
■ pooled registered pension plan payments;
■ registered retirement income fund payments;
■ annuity payments; and
■ royalty payments.
If there is a tax treaty in place between Canada and your country of residence, the terms of that treaty may allow you to reduce the rate of non-resident tax that must be withheld from certain types of income if there is such a treaty. Please get in touch with us as soon as possible if you want to find out if Canada has a tax treaty with your country of residence. The members of our accounting team will be happy to assist you.
Method 2 – Taxation based on taxable income
In order to avoid penalties and interest, certain types of income earned in Canada must be reported on a Canadian tax return. The following are the most frequently encountered sources of income:
■ income from employment in Canada;
■ income from a business carried on in Canada;
■ the taxable part of Canadian scholarships, fellowships,
bursaries, and research grants; and
■ taxable capital gains from disposing of taxable Canadian
property.
In order to arrive at the taxable amount, you may be able to deduct certain expenses from your gross income in order to reduce your tax liability. Tax deducted at source or paid on this income can be claimed as a credit against your tax liability in addition to being deducted at source.
According to whether or not a tax treaty exists between Canada and your home country, the terms of the treaty may allow you to reduce or eliminate the amount of tax you owe on specific types of income.
The only way to find out whether you are entitled to a refund of some or all of the tax withheld is to file your return. If you have an outstanding tax balance for the year, you will only find out after you have completed your return. When the Canada Revenue Agency has finished reviewing your return, they will send you a notice of assessment informing you of the outcome.
Source of Information https://www.canada.ca/
