Who is a non-resident for tax purposes?
Many confuse their citizenship status with their tax status when it comes to decide whether they are deemed a non-resident for tax purposes.
Canada Revenue Agency, (called “CRA”), has a set of tests assisting you to decide what you tax status is.
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.
If you are resident of Canada for tax purposes then you do not need to read further!
However, if you are not sure or if you are certain that you apply as a nonresident for tax purposes (You can still be a Canadian citizen or permanent resident, but be non resident for tax purposes) you should read the important information below.
Non residents have to pay 25% from the gross rent no later than the 15th day of the following month rent is due. For example, January withholding tax must be paid by February 15th
Once paid 25% from gross rent it is deemed as if you fulfilled your tax liability to Canada when it comes to your rental income (Not including any Capital Gains).
There is a way to minimize your withholding taxes should you file the proper documents and find a Canadian agent to represent you in front of the CRA.
For Canadians, you surely are aware of the year end T4 you receive, which is your gross income and tax deductions summary. NR4 is a similar form, but needs to be filed by your tax agent reporting your gross income and withholding taxes paid for the tax year no later than March 31 of the following year.
This is the last stage in the non resident tax filing where the tax payer reports his actual income and expenses. In the event you have over paid withholding taxes you will be eligible for a refund however, should you have underpaid withholding taxes then you will be owing the balance as per your tax return calculations. Please note if you owe taxes you will have to remit the payment by April 30th.
As we act on behalf of hundreds of Canadian and Foreign clients as their tax agent, we offer a full and comprehensive solution that allows clients piece of mind when it comes to fulfilling their Canadian tax obligations. We are proudly assisting other law firms and accounting firms by doing their non resident clients’ returns as well, as this is a very niche and specialized segment in the Income Tax Act.
If you are an owner of a condominium suite that was registered in the last 2 years and did not receive HST rebate, we URGE you to contact us and find out whether you are eligible for up to $30,000 in rebate! This program exists for long time, but we repeatedly find many condo owners that are not aware of it, while this rebate is eligible to be claimed in the first 2 years only!
Clearance Certificate and Capital Gain Return:
When you decide to sell your property you should be aware of some additional tax reporting requirements.
- File for clearance certificate within 10 days from disposition with CRA
- 25% of your SALE price will be held by the lawyer until you receive your clearance certificate approval
- 25% of your GROSS profit will be paid to CRA
- File your Capital Gain return to receive an additional refund