Income Tax for Non-Residents

As a non-resident of Canada, you still may be required to pay income tax if you receive income from Canadian sources or you are deemed a resident.

You are a non-resident for tax purpose if:

• You normally, or routinely live in another country or you are not considered a Canadian resident
• You do not have residential ties in Canada and you live outside Canada throughout the tax year or you stay in Canada for less than 183 days.

You are a deemed resident for tax purposes if for the entire year if:

• Stayed in Canada for 183 days or more in that tax year.
• You do not have residential ties with Canada
• You are not considered a resident of another country under the terms of a tax treaty.

You are a deemed non-resident for tax purpose if:

• You are a factual or deemed resident of Canada for tax purposes and a resident of another country according to a tax treaty Canada has signed. You are considered a resident there.

The type of tax you may have to pay and the requirements to file an income tax return depend on the income you received. There are two types of income that a non-resident can receive that is subject to taxes.

Part XIII Tax – you do not file a Canadian return, except in two situations…

This type of tax is deducted from the types of income listed below. You want to make sure the correct amount is deducted so it is vital that you inform the Canadian payer if you are a non-resident and the country of your residence.

The most common types of Part XIII tax

• interest and dividends;
• rental and royalty payments;
• pension payments;
• Old Age Security (OAS) pension;
• Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) benefits;
• retiring allowances;
• registered retirement savings plan (RRSP) payments;
• registered retirement income fund (RRIF) payments;
• annuity payments;
• management fees.

Interest received from Canada savings bonds and treasury bill are not subject to Part XIII tax.

If you receive income that is subject to Part XIII tax, the Canadian payer must deduct Part XIII tax when the income is paid. Part XIII tax is deducted from your final tax obliagtion to Canada. Part XIII tax is non refundable, so do not file a Canadian tax return unless you elect to file.