What is Non-Resident Tax (Canada)?
Canadian tax obligations for non-residents receiving income from Canadian sources, typically collected through withholding.
Definition
Non-resident tax in Canada applies to individuals who are not Canadian tax residents but receive income from Canadian sources. Canada generally imposes a 25% withholding tax on passive income (interest, dividends, rents, royalties, pensions) paid to non-residents, which may be reduced under tax treaties. The US-Canada Tax Treaty reduces many of these rates to 15% or lower. Non-residents may also need to file a Canadian return for certain income types.
Who Needs to Know This?
Non-residents of Canada receiving Canadian-source income, including US residents with Canadian investments, rental properties, or pension income from Canada.
Key Deadline
Withholding applies at time of payment; Section 216 election returns due June 30
Potential Penalties
25% withholding applies by default if payer fails to withhold; late filing penalties apply to Section 216 returns
Related Forms
Common Mistakes to Avoid
- 1Not claiming reduced treaty withholding rates
- 2Failing to file NR6 form to reduce withholding on rental income
- 3Not filing a Section 216 return to claim expenses against rental income
- 4Assuming no Canadian filing is required for non-residents
Related Terms
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