Non-Resident Taxes
Non-Resident Taxes Canada:
Take a closer look below and learn about important tax considerations for non-residents owning property in Canada.
Who is a Non-resident for Tax Purposes?
It’s a common misconception to equate citizenship with tax status. The Canada Revenue Agency (CRA) provides clear guidelines to help individuals determine their tax status.
You are deemed a non-resident for tax purposes if you:
- You normally reside in another country and aren’t considered a resident of Canada.
- You don’t maintain significant residential ties to Canada.
- You live outside Canada throughout the tax years.
- Your stay in Canada totals less than 183 days in the tax year.
If you qualify as a resident of Canada for tax purposes, there’s no need to continue reading. However, if you’re uncertain or sure that you qualify as a non-resident for tax purposes (even if you’re a Canadian citizen or permanent resident), please see the critical information below.
Withholding Taxes
Non-residents must remit 25% of the gross rent by the 15th day of the month following the rent due date. For instance, the withholding tax for January’s rent must be paid by February 15th.
Once this 25% is paid, it is viewed as fulfilling your Canadian tax obligations related to your rental income (excluding any Capital Gains).
There are methods to reduce your withholding taxes, given you submit the correct documentation and appoint a Canadian agent to represent you before the CRA.
NR4
Canadians are familiar with the year-end T4, which outlines gross income and tax deductions. NR4 is analogous but should be submitted by your tax agent. It reports your gross income and the taxes withheld, and the filing deadline is March 31st of the subsequent year.
New Residential Rental Property Rebate
Condominium suite owners registered in the past two years who haven’t received an HST rebate should contact us immediately. You might be eligible for a rebate of up to $24,000.
This program has been in place for a while, yet we consistently encounter condo owners unfamiliar with it. Note that this rebate can only be claimed within the first two years.
Tax Return
In the concluding phase of non-resident tax submission, taxpayers detail their income and expenditures. Overpaid withholding taxes will result in a refund. However, underpayment implies you’ll owe the difference, as per your tax return calculations.
As a trusted tax agent serving both Canadian and international clients, we offer a comprehensive solution to Canadian tax obligations. Our client’s peace of mind is paramount. We’re also honoured to aid other legal and accounting firms with their non-resident clients’ returns – a specialized segment of the Income Tax Act.
Clearance Certificate and Capital Gain Return
If you are a non resident of Canada for tax purposes and planning to sell your property, it’s essential to be aware of certain tax reporting steps:
- Submit for a clearance certificate with CRA within ten days of property disposition.
- The lawyer will retain 25%-50% of your SALE price until the clearance certificate is approved.
- Once the request for clearance certicate is processed the CRA will contact your tax agent with request for payment prior to issuing the clearance certificate.
- File your Capital Gain return to potentially file for an additional refund.
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