I am a Canadian non-resident and my Canadian bank has issued a T5 for bank interest instead of an NR4. Am I responsible for filing taxes with the CRA and paying taxes on this amount?
T5 issued by bank instead of NR4 for savings account
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Hi Matt,
Generally, if you are a non-resident of Canada, interest paid by a Canadian bank on a regular savings account is usually exempt from Canadian withholding tax, provided you are dealing with the bank at arm’s length. In that case, you would normally not have to file a Canadian tax return or pay Canadian tax on that interest just because you received it.
That said, the bank’s slip reporting appears incorrect. CRA’s T5 guide says that investment income paid to non-residents should not be reported on a T5 slip and should instead be reported under the NR4 system where applicable.
So, in most cases:
- No CRA tax filing is required solely because of the bank interest
- No Canadian tax is payable on that arm’s-length bank interest
- But you should consider asking the bank to correct its records to show you as a non-resident and issue the proper reporting slip going forward
One caution: if the amount is not ordinary bank deposit interest, or if there are other Canadian-source amounts involved, the answer could change.
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