Should I file a tax return if I’m not a resident of Canada?

If you have income sources in Canada, but you’re a not a resident of Canada, you may still be obligated to file an income tax return in Canada. For tax purposes, you are a non-resident based on the following criteria:

  • If you normally, customarily, or routinely lived in another country and are not considered a Canadian citizen; or
  • You do not have significant ties in Canada, and live outside Canada; or
  • You do not have significant ties in Canada, and you stayed in Canada for less than 183 days in the tax year.

As a non-resident of Canada, you still pay tax on income you receive from sources in Canada through a withholding tax. This tax is withheld by the source entity prior to payment of the income. Although there is tax on the income from Canadian sources, the non-resident is still not required to file a Canadian tax return.

If you spent more than 183 days living in Canada, or if you have significant ties in Canada, you are then deemed to be resident of Canada, and must pay tax on income you received from Canada sources.

Determining Residency Ties

There are certain things the Canada Revenue Agency (CRA) will look for in order to determine if an individual is to be deemed a resident of Canada. These things may include:

  • A home in Canada;
  • A spouse or common-law-partner in Canada and dependents in Canada;
  • Personal property in Canada (a car or furniture);
  • Social ties in Canada (memberships with Canadian recreational or religious organizations);

Furthermore, there are other relevant ties which can be considered. If an individual holds a Canadian driver’s license, has Canadian bank accounts or credits, or if a person has health insurance with a Canadian province or territory; they may be deemed a resident of Canada. If you are deemed a resident of Canada then you are obligated to file a Canadian tax return.

At JMH, our tax specialists can help you in determining whether you should file a Canadian tax return, and we can help guide you through the process if you’re unfamiliar with it, even if you’re not currently residing in Canada.  We can help prepare the proper returns with accurate information to avoid any falsifying statements or late filing penalties.