How do I exclude us income from Canadian nonresident tax filing. T1 form says include Canadian or worldwide income whichever is more. Worldwide income is supposed to be noted for credits. But not taxed in Canada.
Avoiding double taxing between US and Canada.
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Hi Jeff,
Thank you for your question.
In general, if you are a non-resident of Canada, your U.S. income is not normally taxed in Canada just because it is shown on a Canadian non-resident return.
The confusion usually comes from Schedule A, Statement of World Income. CRA requires some non-residents to disclose their world income on Schedule A, but this is generally used to determine things such as the amount of federal non-refundable tax credits that may be available, rather than to tax your U.S. income in Canada. CRA’s current non-resident guide states that foreign-source income is reported only on Schedule A, and that net world income is used to calculate allowable federal non-refundable tax credits for non-residents.
So, the key point is this:
- Canadian-source income is generally what is actually taxed on the Canadian non-resident return
- Worldwide income shown on Schedule A is often used as an informational or credit-calculation figure
- It does not automatically mean your U.S. income is being taxed in Canada
CRA’s Schedule A instructions say that world income means income from all sources inside and outside Canada, and that non-residents use this schedule to declare world income.
If you are concerned that your software is actually taxing your U.S. income in Canada, then the issue may be with how the return is being prepared, or whether the wrong type of return or election is being used.
If you would like advice on your specific filing, please book a 30-minute consultation with Allan for $140 + HST through our website.
Suggested tags for the forum post:
- Non-resident tax
- U.S. income
- Canada U.S. tax treaty
- Worldwide income
- Schedule A
- Statement of World Income
- T1 non-resident return
- Double taxation
Thanks,
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