Answers Archive

Non Resident Tax and bilateral treaty

According to the Canada-Germany tax treaty, lump-sum withdrawals / payments from a RRSP to a non-residents of Canada are subject to a non-resident withholding tax of 25%. It could be that she was receiving periodic payments, which are subject to a lower withholding rate of 15%.

Mutual fund investment on the balance sheet: book value or market value?

For tax purposes, the balance sheet should reflect the book value as of the date the investments were purchased. Purchases and sales made in the tax year will affect the book value.

Child Tax Benefit for international minor children?

That’s a very good question. I believe the answer depends on whether the kids are your children. A child is from birth or legal adoption. If you have legally adopted the children, then you can certainly claim the Canada Child Benefit because the children live with you and you are their primary caregiver. However, I … Continue reading

Establishing Residency in Canada

Sell the property before you come back to Canada permanently in order to avoid Canadian capital gains tax, or transfer the property to a family member that has no connection with Canada prior to coming to Canada. If you sell the property after you come back to Canada, then there could be a taxable capital … Continue reading

Husband wants to file non-resident so he does not pay tax?

Your husband will continue to be a factual resident of Canada, because his spouse and children are living in Canada. As such, he will have to report his worldwide income to the CRA and pay Canadian taxes on his worldwide income. He can claim a foreign tax credit on his Canadian tax return for the … Continue reading

interest free loan

A corporate employer can make a loan to an employee to purchase a vehicle to be used by the employee for business purposes. The prescribed rate of interest (2%) should be charged on the loan. As such, you must be an employee of your corporation to qualify. Otherwise, you must include the shareholder loan in … Continue reading

Treatment of Non resident taxpayers in Canada

The answer depends on the type of income being earned in Canada by the non-resident of Canada. See below the tax deductions available to a non-resident for 3 different sources of income from Canada: 1. Rental income. Deductions include: property taxes, utilities, repairs, insurance, mortgage interest. 2. Business income: Deductions include: advertising, banking fees, cell … Continue reading

Income splitting as a non resident returning to canada

Good question. If the funds are gifted by you to your wife prior to becoming a resident of Canada, then I suspect that the CRA would not be able to impose the attribution rules for income-splitting. This is because the funds legally belonged to her prior to coming to Canada and the gift did not … Continue reading

Does purchasing a property with a corporation still qualify for principal residence exemption

In this case, the corporation (that owns the property) does not qualify for the principal residence exemption and so when the property is sold in the future for a profit, the profit will be treated as a capital gain subject to taxation.

US tax return filing as ‘Married,filing jointly’

Hello, You can file a US Return – 1040 – married filing separately. This may be a better option, because if you elect to file jointly with your spouse, then your spouse must report his income to the IRS, and you could be pushed into a higher tax bracket. As of the 2018 tax year, … Continue reading

Do i Need to fill T1135

If the cost amount (i.e. amount paid upon purchase) of the ETF units in the US that you own is more than $100,000 Canadian dollars, then you need to complete and file form T1135 with your Canadian personal tax return. To determine the cost amount in Canadian dollars, apply the foreign exchange rate between the … Continue reading

As a Non Resident on TN-1 Visa, do i claim freelance income from canadian clients?

Report the business income earned from freelance work for Canadian customers on your US tax return (1040). This is because, pursuant to the US-Canada tax treaty, business income is sourced to the country where your fixed place of business is situated, which in your case is the US.

Factual Resident For Tax Filing

As a factual resident of Canada, you are required to report your worldwide income to the CRA and pay Canadian income taxes. You should have a tax balance owing because Canadian taxes were not deducted from the income payments made to you. You should hire a professional accountant to prepare you return and I would … Continue reading

Do I have to show all the US balances in accounts while filing canada tax returns?

Form T1135 must be filed by Canadian residents if the total cost amount of their foreign assets is $100,000 or more at any time in the tax year. Foreign assets include foreign bank and foreign financial accounts. Form T1135 must be filed with your tax return by the due date (normally April 30, unless you … Continue reading

Non Resident Taxable income

Hi there, Withholding tax should have been deducted from the CPP payments made to you since you are a non-resident of Canada. In some cases, a double-taxation treaty between Canada and your host country can reduce the rate of withholding tax to be deducted. You do not have to file a Canadian income tax return … Continue reading

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