Toronto Tax Services for Non-Residents

Generally speaking for tax purposes you are a non-resident if you permanently live outside of Canada and you do not have any residential ties with Canada. You may still have some tax obligations to attend to and to ensure that you are Non-resident tax compliant you really should seek out the services of a Toronto tax accountant that is very familiar with this area of Canadian tax accountability. The following are some of the tax issues that you may be faced with and I as a Toronto Chartered Accountant would be pleased to assist you with these.

Toronto Accountant Services for Non-Residents

Help determine residency status of an individual or corporation
Obtain an Individual Tax Number (ITN) or Non-Resident Tax Account Number (NR) or Business Number (BN) as required
Open a GST/HST account or Payroll Account if required and assist in filings
File an NR5 form to apply to have the amount of Non-Resident Tax Withheld Reduced
For Rental properties – File an NR6 Form to remit non-resident tax based on Net Income and not Gross Rents
Obtain Certificate of Clearance from Canada Revenue
Assist your Canadian Lawyer with non-residency matters
File a Non-Resident Tax Return Under Section 116, Section 216, Section 217 – Individual personal return or corporate as required

Tax Services for Individuals or Business Paying Non-Residents

Open an NR4 account
Assist in Non-Resident Tax Withholdings and remitting requirements
File the NR4 Slip and Summary Information Return with Canada Revenue Agency
Obtain Taxpayer relief for interest and penalties on omitted or late filed returns

Taxation of Non-Residents

Non-residents of Canada 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 depend on the type of income you receive.

Generally, Canadian income received by a non-resident is subject to Part I tax or Part XIII tax. The usual Part XIII tax rate is 25% unless a tax treaty between Canada and your home country reduces the rate.

Part I Tax

The most common type of Part I Tax if you sell or transfer (gift) taxable Canadian Property. Taxable Canadian property includes real estate.

Any person purchasing Canadian Real Estate from a non-resident has an obligation to withhold and remit to Canada Revenue Agency 25% of the Gross Sale proceeds with respect to the purchase. This liability increases to 50% where the real estate was depreciable property ie. a building used for rental or business purposes.

A purchaser who fails to withhold this tax liability is liable for it and Canada Revenue Agency can enforce this liability, unless they had no reason to believe that the non-resident was not a Canadian resident. It is standard practice for the purchaser’s solicitor to either require the vendor to certify in writing as to the Vendor’s Canadian residency status or require withholding of this tax.

Certificate of Clearance

The withholding tax requirement can be reduced or eliminated if the Vendor obtains a “Certificate of Clearance” from CRA on a timely basis. The process requires the filing of a form with Canada Revenue Agency in advance of the disposition or within 10 days thereafter. Penalties may apply in the event of late filings.

Part XIII Tax

Some of the most common types of Canadian income subject to Part XIII tax are:

Rental and Royalty payments
management fees
Dividends
Old age security pension
Canada Pension Plan and Quebec Pension Plan benefits

Canadian payers must deduct Part XIII tax when the income is paid or credited to you.

You can Elect to file a Canadian Income Tax Return for income for which Part XIII tax was deducted:

when you receive Canadian rental income or timber royalties; and
when you receive a certain Canadian pension income.

It may be beneficial to file a Canadian Income Tax Return so that you may get back all or some of the Part XIII taxes paid.

Payment to Non-Resident

If you are the Canadian Payer to a Non-Resident you are responsible for withholding and remitting Part XIII tax, and reporting the income and withholding tax on an NR4 information return.

The NR4 information return is due by the last day of March following the calendar year.

Failure to Deduct

You may be assessed a penalty of 10% of the required amount of Part XIII tax you failed to deduct and for repeat offenders, the penalty may be 20%.

Filing an Income Tax Return

You must file a Canadian income tax return if you owe tax for the year, previously filed a NR5 form to reduce your required taxes withheld, had a taxable capital gain or disposed of taxable Canadian Property or if you want to claim a refund.

I’m here to help

Meeting the tax obligations of a country that is not your permanent residency can be a little overwhelming and frightening. I have been helping non-resident individuals comply with Canadian tax laws for over 25 years. You may feel that with a matter as serious as taxes as a non-resident that you require an International tax accountant. In most cases, this isn’t necessary.

Let’s discuss your non-resident tax matters during a FREE consultation. Just fill in the form on the top right side here and I will contact you to set up a time that is convenient for you.

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