In Canada, Canadian residents are normally allowed to pay taxes on earned incomes inside and outside the country. The tax is deducted from their salary cheques when they word under employers or at any outsourcing of their income. For example, income from the shares from foreign countries. In contrast to that, non-residents are not allowed to pay taxes on the income earned in Canada from working under an employer.

A Non-resident of Canada has income from their property such as rental income, income from securities, interest income is subjected to withholding tac according to Canadian law. According to the Canadian tax, the 25% withholding tax amount paid to non-resident either it is deducted from the personal property and investments or it is deducted from the salaried income.


When Does a Non-resident Should File Their Taxes?

The number of non-residents is increasing day by day in Canada. People throughout all the countries around the world are migrating to Canada. The tax section 150 describes the different categories of tax and taxpayers – which type of category is suitable for each resident, being permanent or non- permanent. The subsection 150 (1.1) will describe all exemptions for taxpayers. For example, people that did not file tax returns due to not covering under the part (1) of income tax act or the person remains non-residents throughout the financial year in which they earned and dispossess their income and losses.

The part (1) of the income tax includes:

1. Taxable part of the Canadian scholarships and research grants

2. Earned taxable income from capital gains by selling or disposing of Canadian property

3. Employment income or income form business in Canada

4. income earned by Canadian residents from the outer sources of the country

5. Earned income by providing services in Canada such as regular and continuous employment


Where to File Your Income Taxes Return?

There are different outlines on which a person can file the non-resident income tax return under the Canadian income tax act. The selected non-resident can file return in four different sections: Sec 216. 216.1, 2017 and 218.3. A short description of these four sections is given below.

1. Section 216

Section 216 of the income tax describes the income of non-resident form the personal property. Immovable property. Section 216 allows people to pay tax t the government on rental income or royalty when they cut the timber from their home. They can pay the royalty on the amount received after the sale of timber.

2. Section 216.1

Section 216.1 is the subsection of 216 and it considers non-resident actors, who rented acting and film services in Canada. Bu the 216.1 does not cover the person who works for the entertainment industry like material supplier and vanity van service provider.

3. Section 217 

Section 217 describes the different types of income sources from the Canadian property, such as rental and sale of sand.

4. Section 218.3

Section 218.3 describes the different loses on the disposal of investments like mutual funds, shares and stakeholders.

Why Is It Important to File Your Taxes if You’re Non-resident?

In the Canadian constitution, everyone needs to pay the tax whether they are residents or non-residents. Taxpaying is very important for non-residents. It helps to maintain good circulation of money in the economy. According to withholding law, non-resident can receive 25% of their total tax. Apart from that tax-paying also helps the non-resident in change their status in the country. Those people that are doing the tax evasion or not file their returns on time will be penalized by a heavy fine. 

If you have any other questions related to non-resident income tax returns, please contact AccNetInc. 

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