International & Non-Resident Tax Services for Canadians

Yes, if you are a non-resident selling Canadian real estate, your lawyer will withhold 25% of the sales proceeds. You can reclaim this amount by applying for a Certificate of Compliance, which must be submitted to the CRA within 10 days of the closing date.

Departure tax is a significant tax implication for Canadians who leave the country permanently. When a Canadian changes their status to a non-resident, they are considered to have sold their assets at their fair market value on the date of emigration. Capital gains tax (departure tax) will apply to any assets that have appreciated in value.

Non-residents are required to file a tax return with the CRA only in specific situations: (a) if they conducted business in Canada, (b) if they worked in Canada, or (c) if they sold Canadian real estate. Additionally, non-residents may choose to file a tax return to potentially reduce the taxes owed on rental income (via a Section 216 Tax Return) or on pension income (via a Section 217 Tax Return).

Yes, residents of Canada are taxed on both their domestic and foreign income. To prevent double taxation, resident taxpayers can claim a foreign tax credit on their Canadian personal tax return by completing form T2209. This credit is the lesser of the foreign taxes paid or the Canadian income tax owed on the foreign income.

The CRA can take up to 18 weeks to issue a Certificate of Compliance, also known as a clearance certificate. Until the certificate is issued, your lawyer will retain the tax withheld from the sale in their trust account.

You are required to remit a non-resident tax of 25% on the rent collected each month from your rental property in Canada. If the CRA has not contacted you, you can file a voluntary disclosure under the CRA’s late filing policy for Section 216 returns. This involves submitting a Section 216 non-resident tax return for each year you rented the property and paying tax at a rate of 25% on the net rental profit (after deducting expenses). If you do not take this option and the CRA discovers your non-compliance, they will assess a non-resident tax equal to 25% of the rental income. Failure to pay this tax could result in the CRA issuing a lien on your property.

You have two options. First, you can file a Departure Tax Return to become compliant with the CRA if you have not submitted a tax return for the year you left Canada. Second, you can submit form NR73, which determines your residency status upon leaving Canada. This option is advisable if you incorrectly filed a full-year resident tax return without disclosing your departure date. If the CRA determines that you became a non-resident, you should then file a T1 Adjustment with the CRA, including the relevant departure schedules.

A factual resident of Canada maintains at least one primary tie (e.g., a house, spouse, or children) or multiple secondary ties (e.g., driver’s license, health card, Canadian phone number, or mailing address). In contrast, a deemed resident is classified as a resident based on the rules of a tax treaty Canada has with a foreign country. Most tax treaties follow the OECD model and designate a taxpayer as a resident if they have a permanent home or significant personal and economic ties to that country. Both factual and deemed residents must pay taxes to the CRA based on their global income.

Non-residents can collect CPP benefits if they are at least 60 years old and have previously contributed to the Canada Pension Plan. Additionally, non-residents can collect OAS benefits if they resided in Canada for at least 20 years after turning 18. You should inform Service Canada of your non-resident status so that the appropriate non-resident tax is withheld from your OAS and CPP benefits. If you reside in a country with a tax treaty with Canada that caps the non-resident tax rate, it may also be beneficial to complete form NR5 and submit it to the CRA.