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taxes

What are non resident taxes?



Tax that is payable on taxable income earned in Canada by non residents during a taxation year is called non resident tax.

Who is a non resident in Canada for the purpose of Income tax?



People from another country living in Canada are not recognized as residents and are called non residents if they do not have residential ties or if they stay in Canada for barely 183 days through the tax year or if they earn but live outside Canada in the tax year.

You are also considered a deemed non resident in Canada for tax purposes If you are a factual resident of Canada and a resident of another country with which Canada has a tax treaty.

What is a residential tie?



Residential ties range over the ownership of land and/or houses in Canada, owning property like furniture or cars, having a common-law partner or spouse, social ties, insurance policies, bank accounts, a Canadian driverís license and other similar ties.

What is the tax structure applicable to non-residents?



A non-resident tax includes tax that is deductible from every income you earn from sources in Canada. This tax depends on the income you get. Such a non-resident taxes can be of two types- the Part XIII tax and the Part I tax. Part XIII tax is deduced on various types of income including pensions, securities, retiring allowances, rental and royalty payments, management fees, Canada Pension Plan and Quebec Pension Plan benefits, registered retirement savings plan payments, etc. In such cases you are not required to file a tax return. The tax is automatically deducted when the income is paid to you and is non refundable. A new legislation was enacted in Canada on the first of January 2008 according to which interests that you receive is exempted from being tax deductible if the payer is not related to you.

You can find the website of the Agency at cra-arc.gc.ca

If your income includes Part I tax, you are expected to file returns. This non-resident tax is deductible from various incomes such as an employment in Canada that pays you, any business that you run in Canada, income from sources outside Canada that you worked for while a resident of Canada, if you dispose off property in Canada with taxable capital gains, working in another country where your income is exempted from tax due to the tax treaty, Canadian scholarships, research grants, etc.

If you are a non resident with services within Canada such as entertainers, lecturers, athletes, artists, etc. then 15% of your gross income will be withheld from you by the payer for non-resident tax purposes. If this is the case you might be required to file for returns and report both your net income and gross income. The gross income is the total amount you get paid while the net income is your gross income minus your total expenditure.

References



cra-arc.gc.ca
canlii.ca
wikipedia.org

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