People outside of Canada

This page presents comprehensive information concerning the regulations governing income tax for individuals who are not residents of Canada.

Topics

Residency status

Non-residents

You are classified as a non-resident for tax purposes in Canada if the following conditions are met:

• you habitually or consistently reside in another country and are not recognized as a resident of Canada
• you lack significant ties to a residence within Canada and meet one or more of the following criteria:
  • You spend the entire tax year outside of Canada
  • You spend less than 183 days in Canada during the tax year

Please note that if you resided outside of Canada during the tax year and are a government employee, a member of the Canadian Armed Forces or their staff overseas, or working under a program supported by Global Affairs Canada, you should refer to Government employees residing outside Canada for the relevant regulations. These rules also apply to your dependent children and other family members.

If you stayed in Canada for 183 days or more (as per the 183-day rule) during the tax year, do not have significant residential ties with Canada, and are not considered a resident of another country under the terms of a tax treaty between Canada and that country, please refer to Deemed residents of Canada for the applicable regulations.

Your tax obligations

As a non-resident of Canada, you are required to pay taxes on any income you receive from Canadian sources. The type of tax you pay and the obligation to file an income tax return depend on the nature of the income you earn.

In general, non-residents are subject to either Part XIII tax or Part I tax on Canadian income received.

Part XIII tax

Part XIII tax is withheld from various types of income listed below. To ensure the appropriate amount is deducted, it is vital to inform Canadian payers of the following details:

• that you are a non-resident of Canada for tax purposes
• your country of residence

The most common categories of Canadian income subject to Part XIII tax include:

• dividends
• rental and royalty payments
• pension payments
• old age security pension
• Canada Pension Plan and Quebec Pension Plan benefits
• retiring allowances
• registered retirement savings plan payments
• registered retirement income fund payments
• annuity payments
• management fees

Key Points

- Interest received by individuals from unrelated payers is typically exempt from Canadian withholding tax.

- The Canada Revenue Agency provides a Non-resident tax calculator and can be contacted for more information.

- If you receive old age security pension, you may need to file the Old Age Security Return of Income (OASRI) annually.

- Canadian income subject to Part XIII tax requires deductions by Canadian payers, with a usual tax rate of 25%.

- Part XIII tax is non-refundable, so a Canadian tax return is not necessary unless chosen to be filed.

- Contact the CRA if you believe an incorrect amount of Part XIII tax has been deducted.

- Part I tax is deducted by the payer for various types of income.

- You may still need to file a Canadian income tax return to calculate your final tax obligation to Canada.

In General:

Normally, the interest amount you receive or that is credited to you will not be subjected to Canadian withholding tax as long as the payer is not connected to you. If you require more details, kindly refer to the webpage of the Canada Revenue Agency's "Non-resident tax calculator" or get in touch with the "Canada Revenue Agency" directly.

In case you receive pension payments from the old age security scheme within the tax year, there may be a need for you to submit your annual "Old Age Security Return of Income (OASRI)".

If you obtain Canadian income that is subject to Part XIII tax:

- Canadian payers, which includes financial institutions, are obligated to deduct the Part XIII tax when the income is distributed or credited to you.

- The deducted Part XIII tax will serve as your final tax obligation to Canada for this specific income, provided that the correct amount was removed.

- The typical Part XIII tax rate is usually 25%, unless a tax treaty between Canada and your home country lowers the rate.

- Part XIII tax cannot be refunded. As a result, refrain from submitting a Canadian tax return to report the said income, unless you voluntarily elect to file a return due to receiving either:

For further details or if you suspect that an incorrect amount of Part XIII tax has been deducted from your income, make sure to reach out to the CRA.

Regarding Part I tax:

The payer typically takes out Part I tax from the following types of income. However, if you engage in a business or sell/transfers taxable Canadian property, it is possible that you may have to pay a certain amount as an advance tax:

Even if the payer has already deducted tax from your income or you have made tax payments throughout the year, there is still a possibility that you may have to file a Canadian income tax return to compute your ultimate tax obligation to Canada with regards to:

- Income received from employment in Canada or from conducting a business in Canada.

- Employment income received from a Canadian resident for work performed in another country, if the tax treaty between Canada and your country of residence exempts this income from tax in your country of residence.

- Specific income from employment outside of Canada, provided you were a Canadian resident during the performance of these duties.

- The taxable portion of Canadian scholarships, fellowships, bursaries, and research grants.

- Taxable capital gains from disposing of certain Canadian property.

- Income received from providing services in Canada, not including regular and continuous employment.

Example: You are a permanent resident of England. Throughout the year, you have earned interest income from your bank account in England and business income from a permanent establishment in Canada.

As a non-resident of Canada, you will need to file a Canadian tax return for the year to report only your business income from Canada. You do not need to report the interest income from your bank account in England on your Canadian tax return. 

Disposing of Specific Canadian Assets

If you are selling or transferring taxable Canadian assets (such as real estate, business assets, or unlisted shares of a Canadian corporation), refer to the guidelines provided in the article Disposing of or acquiring particular Canadian assets.

Opting to Submit a Return

You have the option to file a Canadian income tax return for income from which Part XIII tax was deducted in two situations:

• If you receive rental income from Canadian real estate, immovable properties, or timber royalties.
• If you receive specific Canadian pension income.

By choosing to file a Canadian income tax return, you may be eligible to claim a refund for part or all of the Part XIII tax that was deducted.

For more information:

Filing your income tax return

You are required to file a Canadian income tax return if:

• You have a tax liability.
• You wish to request a refund.

For further details, refer to the article Do you need to file a tax return?

When completing your tax return:

• You may be eligible to claim certain deductions or credits.
• Do not include income that has undergone Part XIII tax deduction, unless you decide to submit a return.

Note

If you receive rental income from Canadian real estate or timber royalties and choose to file a return, you should report this income on a separate tax return. However, you should not include any other type of Canadian income on this separate return. In this scenario, you might need to file multiple Canadian tax returns within a tax year:

• One for the rental income earned from real estate or timber royalties.
• One for any other type of Canadian income you receive.

Which tax package should you use?

The type of Canadian income you earn during the tax year determines the appropriate income tax package for you to use.

If you solely receive income from employment or business, utilize the income tax package designed for the province or territory where you earned the income, along with the Guide T4058, Non-Residents and Income Tax. However, if you also receive other types of income (capital gains and/or taxable scholarships, fellowships, bursaries, or research grants), you will also need the Form T2203, Provincial and Territorial Taxes for Multiple Jurisdictions.

In the event that you receive exclusively other kinds of taxable income sourced from Canada (such as scholarships, fellowships, bursaries, research grants, capital gains, or income from a business without a permanent establishment in Canada), please utilize the Income Tax Package for Non-Residents and Deemed Residents of Canada.

In light of mail delays on an international scale, the CRA is presently accepting non-resident income tax returns via facsimile. You have the option to transmit your return via fax to the tax center applicable to your country of residence.

Filing due date:

Your tax return must be filed by the following dates:

- April 30 of the subsequent year after the tax year.

- June 15 of the subsequent year after the tax year if you, your spouse, or your common-law partner conducted a business in Canada (excluding businesses whose expenses primarily pertain to a tax shelter).

Please note that any outstanding tax balance must be settled by April 30 of the subsequent year after the tax year, regardless of the tax return's due date.

Entitlements to benefits:

Canada child benefit (CCB):

As a non-resident, you are ineligible for the Canada child benefit (CCB) unless you happen to be the spouse or common-law partner of a deemed resident and meet the CCB eligibility criteria.

Forms and publications:

Should you encounter any issues or errors on this page, kindly report them.

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Date modified: 2023-01-24