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I am a citizen and became a non-resident living in Japan in 2020. All income received in Japan but I will be closing on an investment property in Canada this year. Mortgage brokers have requested a T1 as part of one of my applications as a requirement for proof of income. Is there any benefit or requirement to do this for me from an income reporting perspective? I am paid and taxes locally so unsure as to what would be shown on the T1
Hi SJ,
Thank you for your question regarding the Canadian T1 return and your current situation as a non-resident living in Japan since 2020.
As a non-resident of Canada, you are only required to file a T1 return if you have Canadian-source income that is subject to Canadian tax—such as rental income, employment income earned in Canada, or capital gains from the sale of certain Canadian properties. Since your income is earned and taxed in Japan, and you're not receiving Canadian-source income, you are generally not required to file a T1 return for income reporting purposes.
However, in your case, it seems that the mortgage brokers are requesting a T1 return to verify your income. This is not a CRA requirement but rather a lender-specific condition. Filing a T1 return in Canada that reports foreign income might satisfy the broker, but it may not provide the clarity they’re seeking since:
- As a non-resident, your foreign income is not taxable in Canada and typically not reported on a T1 unless electively disclosed.
- The T1 would likely show zero taxable Canadian income, which may not help prove income for mortgage qualification.
Alternative suggestions:
- Consider asking the broker if income proof via your Japanese tax returns, employment contracts, or bank statements would suffice.
- If the lender insists on a T1, you can file a non-resident T1 return voluntarily, disclosing your foreign income in the “Information” section without any tax owing, but this is mostly for documentary purposes.
Note on the investment property: If and when you sell your Canadian investment property, you will be required to report the sale to the CRA and may need to file a T1 return in that year to report any capital gains. You may also need a Section 116 certificate in advance of the sale.
If you would like assistance preparing a T1 for mortgage or sale purposes, we’d be happy to help.