Non-Resident Income Tax Services
Maroof HS CPA Professional Corporation provides full-scale income tax services for non-residents of Canada.
Be it income tax preparation, income tax planning, or GST/HST issues for non-residents of Canada, we are here to help you!
Income tax return preparation for nonresidents of Canada
Some of the common situations where non-residents of Canada need to file tax returns include:
- If the CRA has requested or demanded nonresident to file a tax return in Canada
- You own real estate in Canada and generating rental income.
- You are selling real estate or other Taxable Canadian Property (TCP) located in Canada
- You carry on a business in Canada
- You perform services in Canada
- You generate employment income from Canada
Withholding tax issues for payments to nonresidents
Canadian payors are required to withhold taxes from the payments to non-residents (NR) of Canada. Withholding rates vary for different countries depending on the kind of income nonresident is generating from Canada. In some cases, withholding satisfies the tax obligation of NR in full. However, certain cases require the filing of an income tax return in Canada.
Canadian payors are held responsible for not withholding and remitting taxes from payments to NR. They are also required to file the information returns at end of the calendar year. This makes it even more important for Canadian payors to seek proper tax advice.
Rental income and real estate sale
There is a buzzing estate market offering lucrative returns in Canada. Many non-resident individuals and corporations invest in real estate.
Any rent payment to a non-resident of Canada requires a withholding of 25% on the gross amount. However, the non-resident can elect to file a tax return under section 216 of the Income Tax Act and request the withholding to be done at a reduced rate. Once approved, the payor can withhold taxes at a lower rate. This comes with an important caveat. If the non-resident does not file a tax return, the withholding agent is liable to pay the taxes at the gross amount.
You need to file the election to file the tax return under section 216.
At the time of sale of real estate property, the purchaser is also required to withhold taxes from the gross amount of the sale. Further, a certificate of clearance is required as well.
Carrying on business in Canada
If you are an individual or a corporation carrying on business in Canada, you are subject to requirements under both Excise Tax Act (ETA) and Income Tax Act (ITA).
The requirements under ETA and ITA become complex depending on the corporate structures, transactions between non-residents and residents, and tax treaties between Canada and other countries.
Voluntary Disclosure Program for Non Residents of Canada
Sometimes, non-residents are in non-compliance with the tax laws of Canada, either intentionally or based on misguided advice. The Canada Revenue Agency runs a program Voluntary Disclosure Program (VDP) and gives an opportunity to taxpayers to come clean. The VDP offers protection from gross negligence and criminal prosecution. There is a possibility to reduce interest and penalties as well.
Need help with income tax planning, preparation, resolving issues with Canada Revenue Agency, or formal tax advice, or a VDP application?
Get in touch with us today and experience the excellence in service other non-residents clients swear about.