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I am a non-resident of Canada and I just received a T5 from the condo developer for interest arisen from the pre-construction condominium deposit. My understanding is non-residents are exempt from interest as long as the other party is at arm’s length. Shall I report the interests received on this year’s tax return? or simply keep it to myself without raising it to CRA?
Dear So,
Thank you for reaching out.
As a non-resident of Canada, you are correct that interest paid by an arm’s length Canadian payer—such as a condo developer—is generally exempt from Canadian withholding tax under Section 212(1)(b) of the Income Tax Act.
In your case, the interest received on your pre-construction condo deposit should not be reported on a T5 slip. Instead, the developer should have issued an NR4 slip, which is the appropriate reporting form for interest paid to non-residents.
We recommend that you contact the developer and request the following:
Regardless of whether a T5 or NR4 was issued, you should not file a Canadian tax return to report this interest income, as it is exempt from Canadian tax and does not require reporting under Canadian non-resident filing requirements.
Please let me know if you would like assistance in communicating with the developer or have additional questions.
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