Canadian Tax Returns & Certificates of Compliance for Non-Residents

What taxes to do non-residents pay?

Non-residents of Canada are required to pay tax on their income earned in Canada. The following sorts of income do not require a return to be filed. Income is deducted at source and remitted to CRA.

  • Interest and dividends
  • Rent and royalties
  • Retiring allowances
  • RRSP and RRIF payments
  • Annuity payments and management fees

The usual rate of tax is 25% unless a tax treaty with the person’s country of residence provides for a different rate.

Income Tax returns are required to be filed for the following types of income:

  • Business income earned in Canada, and
  • Proceeds of disposition of taxable Canadian Property such as real estate and business interests.
Non-residents selling Canadian Real Estate: Important information for you!

If the owner is a Non-Resident, a Clearance Certificate CRA – Canada Revenue Agency has to be obtained.

The process to get a Clearance Certificate can be outlined by your Lawyer or Notary Public.

It involves an accountant that the Lawyer or Notary selects to file an income tax return on behalf of the individual. The Clearance Certificate outlines to CRA that there are no outstanding tax issues with the property.

This is especially important when there is a profit or Capital Gain after the sale occurs. In the event the Clearance Certificate cannot be obtained by the closing date, the holdback by the Notary or Lawyer will be anywhere between 33% – 50% of the sale price. This holdback can cause a problem in the event there are not enough funds after paying off the mortgage. The normal time frame to process a Clearance Certificate is between 6-8 weeks.

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Saklas & Co., CPAs - Chartered Professional Accountants Firm serves clients across Surrey, Langley, White Rock, Delta, Vancouver, Richmond, Burnaby, Fort Langley,Cloverdale and South Surrey.

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