You are a non-resident for tax purposes if you:
- normally, customarily, or routinely live in another country and are not considered a resident of Canada; or
- do not have significant residential ties in Canada; and
- you live outside Canada throughout the tax year; or
- you stay in Canada for less than 183 days in the tax year.
Residential Ties – use province where you resided on December 31
- Home (Owned or Leased)
- Personal Property (Car, land, building)
- Spouse or common-law partner or dependent reside
- Other ties-social ties, driver’s licence, bank accounts or credit cards, health card
A. If you did not maintain significant residential ties with Canada, and on December 31, you resided outside Canada and were a government employee, a member of the Canadian Forces or their overseas school staff, or working under a Canadian International Development Agency program, you may be considered a deemed resident of Canada (this also applies to your dependent children and other family members).
B. If you stayed in Canada for 183 days or more in the year, you did not establish significant residential ties with Canada, and under tax treaty, you were not considered a resident of another country, you will be considered a deemed resident of Canada. Otherwise, considered a Non-resident of Canada.
Your tax obligations
As a non-resident of Canada, you pay tax on income you receive from sources in Canada. The type of tax you pay and the requirement to file an income tax return depends on the type of income you receive.
Generally, Canadian income received by a non-resident is subject to Part XIII tax or Part I tax.
Filing your income tax return
You must file a Canadian income tax return if you:
- have to pay tax; or
- want to claim a refund.
Filing due date
Generally, your tax return has to 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 has to be filed on or before June 15 of the year after the tax year
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.
One client, ABC, immigrated to Canada in 2008 and a few months later, she went back home and did not set up any residential ties in Canada, and did not have any Canadian sources income from Canada. So accountant recommended that she did not need to file tax return because she was a non-resident for the time. When she came back Canada in 2013, the financial advisor suggested she open a TFSA account and contribute the total amount of $25,500 from 2009 to 2013 to complete the TFSA contribution room. A CRA audit charged around $2,000 in penalties because she was non-resident from 2009 to 2012 and had not qualified for contribution TFSA contribution room amounts.
One client, XYZ, rented a house in Toronto and paid monthly rent by postdate cheques to the owner . The owner of the house is a non-resident and did not have any representative agent who could handle every month rental income withholding 25% tax and remittance to CRA. The owner failed to comply as a non-resident who received rental income in Canada and have to withhold 25% tax to remit to the CRA and did not file election amount. CRA charged tenant penalties and interest as the owner did not have any representative agent to do it.