Whether you are an American moving to Canada, or a Canadian business expanding overseas, this guide is for you.

Doing Business in Canada?

Foreign companies that plan on doing business in Canada may have to pay Canadian income and sales tax. Also, they must file a Canadian tax return. These foreign companies are liable for Canadian income tax on the profits derived from Canada. Those that sell to Canadian customers must collect and remit sales or value-added tax.

Canadian Corporation Expanding Outside of Canada

There are a number of tax structures Canadians can use to expand to the United States.

(1) Limited Liability Corporations

(2) Limited Liability Partnership

(3) US C-Corporation

Taxation for Non-Resident Real Estate Investors

If you are a non-resident that has sold real estate in Canada, you must file a Request for a Clearance Certificate with the Canada Revenue Agency (CRA). By doing so, the

If you are a Canadian working abroad, permanently or temporarily, you should read this article.

Permanently Working Abroad, Overseas, Outside of Canada?

A Canadian who is permanently working overseas must determine their residency status. The CRA looks at three primary factors when determining one’s residency:

(1) The location of your permanent home

(2) Where your spouse and/or common law partner and child live

(3) Where you live

Six Things to do Before You Leave Canada

Now that you’re aware of what factors determine residency status, what happens when you leave Canada? There are six things you need to do before you leave:

(1) File Departure Tax Return

(2) Submit Form NR73 (optional)

(3) Stop Receiving Tax Credits

(4) Disclose All Assets

(5) Pay Departure Tax

(6) Talk to Your Financial Advisor

If you are a Canadian working for the United Nations (UN), you may be exempted from taxation on any income earned from the UN. The tax filing obligations will differ depending on if you are a resident or non-resident of Canada.

Generally speaking, any income that is earned from the UN can be received on a tax-free or a tax reduced basis in Canada. This depends on the specific convention between the UN and that specific country. There are different rules to follow depending on whether your employment is direct with the UN or with one of its affiliated bodies. You must have a clear written employment agreement to be considered an employee of the UN.

Deemed Non-Residents of Canada

If you are deemed to be a non-resident of Canada, then the United Nations tax convention with Canada will not apply to you. Thus, you will not be liable for Canadian income taxes on your UN earnings.

Deemed Residents of Canada

If you are deemed as a resident of Canada, then the income earned from the UN can be

Are you considering leaving Canada to work, live, or retire abroad? If so, you will have to become a non-resident. This means you have to break all of your primary and most of your secondary ties to Canada.

Examples of Primary Ties

> A personal residence in Canada, which can be either rented or owned by you

> A spouse or common-law partner living in Canada

> Dependents living in Canada

Note, if you have a single primary tie to Canada, then you are a factual resident.

Examples of Secondary Ties

> Driver’s License

> Health Card

> Bank Accounts

> Memberships in Clubs

> Pension Plans, RRSPs, TFSAs

For secondary ties, think of it as a weighing scale. The more secondary ties you have, the heavier the scale, and the more likely it is that you will be considered a factual resident of Canada.

Form NR73

If you are leaving Canada, you have the option of filling out the Determination of Residency Status form (Form NR73) with

Non-residents that have any connection with Canada should be aware of their Canadian tax reporting requirements and liabilities.

When Are Non-Residents Liable for Tax in Canada?

Non-residents of Canada are liable to pay Canadian taxes if they:

(1) Were employed in Canada

(2) Carried on a business in Canada

(3) Disposed of taxable Canadian property

If any of these three situations apply, you should consult an accountant experienced in Non-Resident Canadian Tax Return Preparation.

Non-Resident that is Employed?

If you have earned employment income in Canada you must pay Canadian income tax. Canadian employment income is subjected to a graduated tax - where the rate of tax increases as the employment income received increases.

Non-Resident with Business in Canada?

If you are carrying on a business in Canada, you must file a Canadian tax return. If your non-resident business also has a

If you are a non-resident investing in the Canadian real estate market, there are tax tips that can help you save tax, maximize your benefits and avoid trouble from the CRA.

Know Your Tax Obligations

As a non-resident earning rental income from a Canadian property, you are required by the CRA to remit a withholding tax equaling to 25% of the gross rental income. This must be remitted on, or before the 15th day of the month following the month rental income was received.

Elect to File A Section 216 Return

You should consider filing a Section 216 return to receive a refund of the tax paid for the year. A Section 216 return takes into account the gross income and expenses incurred for the year and allows you to be taxed on the net rental income earned.

Keep Proof of All Your Expenses

You can claim all the expenses incurred in respect of earning rental income. This would help you to reduce your net rental income while increasing your refund.

If you are a non-resident of Canada that is planning to sell or has sold Canadian real estate, you should be aware of the tax implications. Non-residents must pay a federal tax of 25% of the gross selling price on the sale of Canadian real estate to the CRA.

Selling Real Estate in Canada

Canadian real estate appears very unattractive and cost prohibitive. However, the federal tax of 25% on the gross selling price can be reduced to 25% of the capital gain earned on the sale of real estate in Canada. To have the reduced rate of tax apply, the seller must first apply for a Clearance Certificate, also known as Form T2062. It usually takes 4 to 6 months for the CRA to issue a Clearance Certificate. It will only be issued if payment of tax is made by the non-resident seller with the application for the certificate. This poses a practical problem because the seller may not have sufficent funds to remit to the CRA.

Liability for Tax

The Canadian purchaser is liable for the 25% tax on the gross selling price of Canadian real estate purchased from a non-resident of Canada. As such, the

If you are a non-resident of Canada who owns real estate, you should be aware of the imposed taxes. The first thing you need to know is how to obtain a tax account number. This is important because it is used to track your filings by the CRA. Your social insurance number (SIN) will serve as your tax account number. If you do not have a SIN, simply call the International Tax Services office.

Withholding Tax

This applies at a rate of 25% on the rent that has been collected in Canada. For instance, assume you are renting a condo and you are collecting $3,000 as rent towards it. The withholding tax will be 25%; or $750 for the month which must be remitted by the 15th of the following month.

The Waiver

In fact, 25% withholding rate is high. By filing a NR6 or The Waiver, you can reduce the withholding tax to a lower rate. On the Waiver, simply disclose the expected gross rent you plan on collecting as well as the expected expenses you plan on having in the next twelve months. You will then owe a monthly tax equal to 25% of the estimated net monthly profit.

Non-residents of Canada are subjected to a 15% withholding tax. This tax can be reduced or completely eliminated by filing a Regulation 105 Waiver. This waiver is intended for self-employed individuals as well as Corporations, LLCs, partnerships, and joint ventures. This waiver can be filed under two scenarios:

Scenario 1

The most common scenario is to file a Treaty-Based Waiver, requesting relief under Regulation 105. This is based on the absence of a fixed place or permanent establishment in Canada.Treaty-Based Waivers are granted if three specific requirements are met:

(1) The Length of the Contract

(2) The Income Earned

(3) Other Criteria

Scenario 2

A non-resident who does not qualify for Treaty-Based Waiver can still request a reduction of taxes under Regulation 105 by providing an estimated statement of income and expenses from the contract. A non-resident may claim expenses against Canadian sourced income with the

For non-residents, there are a few ways that taxes can be reduced on your RRSP and RIF withdrawals.

Withholding Tax Rate

Generally speaking, the withholding tax on RRSP and RIF payments made to non-residents of Canada is 25%. However, this rate can be reduced by virture of a treaty between Canada and your country of residence.

Section 217 Tax Return

The withholding tax paid is generally the tax payer’s final obligation to the CRA. However, you can elect to file a tax return with the CRA under Section 217 of the Income Tax Act with the goal of getting some of your withholding taxes back. If the tax calculated, as per the Section 217 return, is lower than the 25% withholding tax, then this return will be benefical as the excess will be refunded to you.

Filing Due Date & Address

The Section 217 tax return is due by June 30th of the following year. However, if there is a balance owing, it is recommended