STAY ON THE SIDE OF THE CANADIAN TAX MAN
Ticking away the moments that make up a dull day
You fritter and waste the hours in an off hand way
Are you an emigrant?
Generally, you are an emigrant for income tax purposes if:
- you leave Canada to live in another country; and
- you sever your residential ties with Canada.
Severing your residential ties with Canada means that you do not keep your main ties with Canada. This could be your case if:
- you dispose of or give up your home in Canada and establish a permanent home in another country;
- your spouse or common-law partner or dependants leave Canada; and
- you dispose of personal property and break social ties in Canada, and acquire or establish them in another country.
If you leave Canada and keep residential ties in Canada, you are usually considered a factual resident, and not an emigrant. However, if you are also considered to be a resident of another country with which Canada has a tax treaty, you may be considered a deemed non-resident. Deemed non-residents are subject to the same rules as emigrants.
For more information on residential ties and residency status, go to Determining your residency status.
When do you become a non-resident?
When you leave Canada to settle in another country, you usually become a non-resident for income tax purposes on the latest of:
- the date you leave Canada;
- the date your spouse or common-law partner and dependants leave Canada; or
- the date you become a resident of the country you settle in.
If you lived in another country before living in Canada and you leave Canada to resettle in that country, you usually become a non-resident on the date you leave Canada. This applies even if your spouse or common-law partner temporarily stays in Canada to dispose of your home.
What tax return would I need to file when I am emigrating from Canada?
Personal tax returns should be filed up to the date you leave the country, your tax credits are prorated.
T1243 Deemed Disposition of Property by an Emigrant of Canada
Things that you can not dispose:
Your tax obligations:
As a non-resident of Canada, you pay tax on income you receive from sources in Canada. The type of tax you pay and the requirement to file an income tax return depend on the type of income you receive.
Generally, Canadian income received by a non-resident is subject to Part XIII tax or Part I tax.
Part XIII tax
Part XIII tax is deducted from the types of income listed below. To make sure the correct amount is deducted, it’s important to tell Canadian payers:
that you’re a non-resident of Canada for tax purposes; and
your country of residence.
The most common types of Canadian income subject to Part XIII tax are:
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.
Part I tax
The payer usually deducts Part I tax from the types of income listed below. However, if you carry on a business in Canada, or sell or transfer taxable Canadian property, you may have to pay an amount on account of tax:
If you carry on a business in Canada, see Guide T4002, Business and Professional Income, to find out if you must pay tax by instalments.
If you sell or transfer, or plan to sell or transfer taxable Canadian property, see Disposing of or acquiring certain Canadian property.
Even if the payer deducts tax from your income or you pay an amount of tax during the year, you may also have to filea Canadian income tax return to calculate your final tax obligation to Canada on:
income from employment in Canada or from a business carried on in Canada;
employment income from a Canadian resident for your employment in another country if, under the terms of a tax treaty between Canada and your country of residence, the income is exempt from tax in your country of residence;
certain income from employment outside Canada, if you were a resident of Canada when the duties were performed;
taxable part of Canadian scholarships, fellowships, bursaries, and research grants;
taxable capital gains from Disposing of certain Canadian property; and
income from providing services in Canada other than in the course of regular and continuous employment.
Electing under section 216 of the Income Tax Act:
What is a section 216 election?
As a non-resident of Canada, you can choose to send us a separate Canadian tax return to report your rental income from real or immovable property in Canada. Choosing to send us this return is called electing under section 216 of theIncome Tax Act.
The T1159, Income Tax Return for Electing Under Section 216 is separate from any other return you have to send us for the year.
Do you have more than one Canadian rental property?
If you have rental income from more than one rental property in Canada and you make an election under section 216, all of your Canadian rental income and expenses must be reported together on one section 216 return.
What is the benefit of electing under section 216?
Electing under section 216 allows you to pay tax on your net Canadian-source rental income instead of on the grossamount. If the non-resident tax withheld by the payer is more than the amount of tax payable calculated on your section 216 return, we will refund the excess to you.
When is your section 216 return due?
Generally, you have to send us your section 216 return within two years from the end of the year in which the rental income was paid or credited to you. For exceptions, see When is your 2014 section 216 return due?.