Useful Information About Canadian Non-Resident Taxation
If you work in Canada, you will likely have to pay Canadian income tax. Starting at 15% of your
gross pay, this constitutes the largest deduction from your income. Those earning higher annual
incomes (i.e. over $30,000) will be taxed at a higher rate.
Most participants of International Experience Canada are considered “non-residents” for
Canadian income tax purposes. However, if you lived in Canada for more than six months during
the taxation year, you may file your income tax return as a resident.
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
As per the Canadian non-resident taxation policies, if you file as a non-resident, you don’t
need to declare income you earned outside of Canada. If you are filing as a resident, you must
claim your total world income.
If you are a factual resident of Canada and a resident of another country with which Canada has a
tax treaty, you may be considered a deemed non-resident of Canada for tax purposes.
You become a deemed non-resident of Canada when your ties with the other country become
such that, under the tax treaty with which Canada has with the other country, you would be
considered a resident of that other country. As a deemed non-resident, the same rules apply to
you as a non-resident of Canada and you have to file nonresident tax.
If you file as a resident, you are entitled to the basic persona l exemption, which is the amount of
income you can earn tax-free, as detailed in Schedule 1. Non-residents are also entitled to this
amount if they earned 90% of their total annual income in Canada. In this case, however, the
basic personal amount must be adjusted to reflect the amount of time you spent in Canada (for
example, if you worked in Canada for 6 months, your basic personal exemption would be
adjusted by half).
If you earned less than the threshold amount (set by the Canada Revenue Agency), you ma y
qualify the following year for a refund of a portion of the nonresident tax paid. Alternatively,
you may owe more tax if an insufficient amount was deducted from your pay.
The Canadian non-resident taxation policies can be a bit confusing for people as there are a lot of
different rules in the taxation laws and if you are not aware of the terms that are used typically in
taxation, then you may find it even more difficult to understand. Some of the nonresidents are
exempted from tax as per the tax treaties that are signed between the respective countries and
some of the income have to be taxed like it is done for Canadian residents.