Tax information for Non-residents of Canada

As a non-resident of Canada you have to pay tax on income received from within Canada. The type of tax you pay – Part XIII or Part I – depends on the type of income you received. We’ll take a closer look at both of these types of taxes in detail below.

Note: Non-residents of Canada cannot file a Canadian tax return using H&R Block’s tax software. If you are a non-resident of Canada, contact our Tax Experts at 1-800-HRBLOCK (1-800-472-5625) or click this link to find the retail office closest to you. Our Tax Experts will be happy to help you! 

 

Are you a non-resident?

You are considered to be a non-resident of Canada, for income tax purposes, if you normally or routinely live in another country, or if you don’t have significant residential ties in Canada and lived outside the country throughout the year or your stay in Canada was less than 183 days. 

Significant residential ties to Canada are considered to be:

  • A home in Canada;
  • A spouse or common-law partner in Canada; and
  • Dependants in Canada.

Other residential ties to Canada such as a car or furniture, social ties such as memberships in Canadian recreational or religious organizations, bank accounts or credit cards, a driver’s licence, a passport, and health insurance in Canada, are considered to be secondary and may also be relevant in determining your residency status.

If you are a government employee outside Canada, including a member of the Canadian Forces posted abroad or their overseas school staff, or working under the Canadian International Development Agency assistance program, you are usually considered a factual resident or a deemed resident of Canada; not a non-residentClick this link for more information on your tax obligations as a factual or a deemed resident.

 

What taxes do non-residents have to pay?

As a non-resident, you have to pay Part XIII tax if you received any of the following income from sources in Canada:

  • Dividends;
  • Rental and royalty payments;
  • Pension payments and CPP/QPP benefits;
  • Old age security;
  • Retiring allowances;
  • RRSP/RRIF/annuity payments; and
  • Management fees.

 

Note: Be sure to let your Canadian payer know that you are a non-resident of Canada and provide your country of residence so that they can deduct the applicable tax from your income.

If you received any of the following income, the payer usually deducts Part I tax:

  • Employment income in Canada or income from a business carried on in Canada;
  • Employment income from a Canadian resident for your employment in another country;
  • 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 from disposing of certain Canadian property; and
  • Income from providing services in Canada other than in the course of regular and continuous employment.

 

Do you have to file a tax return?

If you paid Part XIII tax on your Canadian income, your final tax obligation is met and you do not have to file an income tax return. Note that Part XIII tax is not refundable.

However, you can elect to file a Canadian tax return on income from which Part XIII was deducted if you received:

  • Canadian rental income real or immovable properties or timber royalties; and
  • Certain Canadian pension income.

If you elect to file a Canadian return, you may be able to claim a refund on a portion or all of Part XIII tax paid. If you received rental income or pension income, you won’t be filing a general T1 but will elect under section 216 and section 217 of the Income Tax Act, respectively.

If you paid Part I tax, you have to file a Canadian income tax return if:

  • You carry on a business in Canada; or
  • You sell or transfer, or plan to sell or transfer taxable Canadian property.

Even if your payer has deducted Part I tax from your other income, you may have to file a Canadian income tax return to determine your final tax obligation.

 

Where can I learn more?