Tax Questions regarding
Canadian Non-Residents
It is important to determine a Canadian emigrant's residency status,
because Canadian residents are taxed on their world income. If
a Canadian is intending to emigrate to a foreign country for an
indeterminate period of time, he or she may want to consider a
non-resident status for tax reasons. A Canadian is
deemed to be a resident unless he/she severs all ties in accordance
to the rules laid out by the Canadian Revenue Agency. It
is important to consult an Accountant to make sure that you
understand the applicable rules.
For Income Tax Forms and Tax Guides
for Canadian Non-residents, click
here.
Leaving Canada (emigrants)
You are considered to have
disposed of almost all your property at its fair market value on the
day you emigrate from Canada. For more information, see "Dispositions
of property".
Generally, you are an
emigrant of Canada for income tax purposes if you leave
Canada to settle in another country and you sever
your
residential ties
with Canada.
This Web page provides basic
information about the income tax rules that apply for the year you
leave Canada and helps you understand your tax obligations.
What
are residential ties?
Severing residential ties
includes:
- disposing of or giving up a
home in Canada and establishing a permanent home in another
country to which you move;
- having your spouse or
common-law partner (see the definition in the
General Income Tax and Benefit Guide)
and dependants leave Canada;
- disposing of personal
property and breaking social ties in Canada and acquiring or
establishing them in another country.
Other ties that will be taken into
account in determining your residency status include:
- a Canadian driver's license;
- Canadian bank accounts or
credit cards;
- health insurance with a
Canadian province or territory.
For more information, see
Residency - Individuals and IT-221,
Determination of an Individual Residence Status
If you want an opinion about your
residency status, complete and submit
Form NR73, Determination of Residency Status
(Leaving Canada).
When do
you become a non-resident?
When you leave Canada to settle in
another country, you usually become a non-resident of Canada for
income tax purposes on the latest of the following
dates:
- the date you leave Canada;
- the date your spouse or
common-law partner and dependents leave Canada;
- the date you become a
resident of the country to which you are immigrating.
If you lived in another country
before living in Canada and you are leaving Canada to
re-establish a residence in the other
country, you usually become a
non-resident
on the date you leave Canada. This applies even if your spouse or
common-law partner temporarily stays in Canada to dispose of your
home.
Note
Generally, you become a deemed non-resident at a
time when your residential ties in the other country are such that,
under the tax treaty between Canada and that country, you are
considered to be a resident of that country and not a resident of
Canada.
It's important that you
tell us the date you leave Canada because your residency
status affects your eligibility to receive:
If you receive such credits or
payments after you emigrate,
contact us
at once.
For the part of the tax year that
you are a resident of Canada for tax purposes, you must report
"world income" (income from all sources, both inside and outside
Canada) on your Canadian tax return.
After you leave Canada, you pay
tax to Canada only on income you receive from sources in Canada (see
"After
you leave Canada").
Notes
If you emigrate from Canada and hold a tax-free
savings account (TFSA), you can keep your TFSA and continue
to benefit from the exemption from Canadian tax on investment income
and withdrawals. However, no contribution will be allowed and no
contribution room will accrue while you are a non-resident of
Canada. For more information, see
Tax-Free Savings Account (TFSA)
or
Guide RC4466, Tax-Free Savings Account (TFSA).
If you emigrate from Canada and are participating in the
Home Buyers' Plan or the Lifelong Learning
Plan, see
Guide RC4135, Home Buyers' Plan (HBP)
or
Guide RC4112, Lifelong Learning Plan (LLP),
as required, for the special rules that apply.
If you live in Canada for only
part of a tax year, you must file a Canadian tax return if you:
- owe tax; or
- want to receive a refund
because you paid too much tax in the tax year.
For more information, see "Do you
have to file a return?" in the
General Income Tax and Benefit Guide.
Which
tax package?
For the tax year that you leave
Canada and are an emigrant for tax purposes:
If you emigrated from
Quebec in the tax year, you may need to
file a separate provincial return. For information about your
provincial tax liability, contact
Revenu Québec.
Filing
due date
Your income tax return must be
filed on or before:
- April 30 of the year after
the tax year; or
- if you or your spouse or
common-law partner carried on a business in Canada (other than a
business whose expenditures are mainly in connection with a tax
shelter), the return must be filed on or before June 15 of the
year after the tax year.
Note
A balance of tax owing must be paid on or before April
30 of the year after the tax year, regardless of the due date of
the tax return.
After you leave Canada, you are a
non-resident for tax purposes provided you have severed
residential ties
with Canada. As a non-resident, you pay tax on income you receive
from sources in Canada.
- This applies in the year you
leave Canada and for each year afterwards, provided you remain a
non-resident for tax purposes.
- The type of tax you pay and
the requirement to file a Canadian tax return depend on the type
of Canadian income you receive.
Generally, Canadian income
received by a non-resident is subject to Part XIII tax
or Part I tax. If the income you receive is:
- subject to
Part XIII tax,
you do not file a Canadian tax return, except in two situations
when you can
elect to file
a tax return;
- subject to
Part I tax,
you may have to file an tax return.
Part
XIII tax
Part XIII tax is deducted from the
types of income
listed below. To make sure the correct amount is deducted,
it's important to tell Canadian payers:
- that you're a non-resident of
Canada for tax purposes;
- your country of residence.
The most common types of Canadian income subject to
Part XIII tax are:
- dividends;
- rental and royalty payments;
- pension payments;
- Old Age Security pension;
- Canada Pension Plan and
Quebec Pension Plan benefits;
- retiring allowances;
- registered retirement savings
plan payments;
- registered retirement income
fund payments;
- annuity payments;
- management fees.
Note
The interest that you receive or that is credited to you is exempt
from Canadian withholding tax if the payer is unrelated (arm’s
length) to you. For more information, see our
Non-resident tax calculator
or contact the
International Tax Services Office.
If you receive Canadian income
that is subject to Part XIII tax:
- Canadian payers, including
financial institutions, must deduct Part XIII tax when the
income is paid or credited to you.
- The Part XIII tax deducted is
your final tax obligation to Canada on this income (if the
correct amount is deducted).
- Part XIII tax is not
refundable. Therefore, do not file a tax return to report the
income, except in two situations when you can
elect to file
a Canadian tax return.
- The usual Part XIII tax rate
is 25% (unless a
tax treaty
between Canada and your home country reduces the rate).
If you think an incorrect
amount of Part XIII tax was deducted from your income,
contact the
International Tax Services Office.
For more information, see
IC77-16, Non-Resident Income Tax.
Part I
tax
The payer usually deducts Part I
tax from the
types of income
listed below. However, if you carry on a business in Canada, or sell
or dispose of taxable Canadian property, you may have to pay an
amount on account of tax.
Even
if the payer deducts tax from your income or you pay an amount of
tax during the year, you may have to file a
Canadian income tax return to calculate your final tax obligation to
Canada on:
- income from employment in
Canada or from a business carried on in Canada;
- employment income from a
Canadian resident for your employment in another country if,
under the terms of a
tax treaty
between Canada and your country of residence, the income is
exempt from tax in your country of residence;
- certain income from
employment outside Canada, if you were a resident of Canada when
the duties were performed;
- taxable part of Canadian
scholarships, fellowships, bursaries, and research grants;
- taxable capital gains arising
from the
disposition of taxable Canadian property;
- income from
providing services in Canada
other than in the course of regular and continuous employment.
Disposing of taxable Canadian property
For the procedures you must follow
if you sell, transfer, or plan to sell or transfer taxable Canadian
property (such as real estate, business property, or unlisted shares
of a Canadian corporation), see
Disposing of or acquiring certain Canadian
property, or
IC72-17, Procedures Concerning the Disposition
of Taxable Canadian Property by Non-Residents of Canada-Section 116.
Electing to file
There are two situations in which
you can elect to file a Canadian income tax return
for income from which Part XIII tax was deducted:
- when you receive Canadian
rental income or timber royalties;
- when you receive certain
Canadian pension income.
If you elect to file a Canadian
income tax return, you may be able to claim a refund
for part or all of the Part XIII tax deducted.
For more information:
Forms and Publications
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