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I left Canada and filed an EMIGRANT return with departure date etc.
Now I am officially a Non Resident of Canada for tax purposes.
I only have a Savings bank account in Canada. I have informed the bank also that I am a non resident and updated my foreign address. So instead of a T5 interest slip, they can issue me a NR4 slip.
I get bank interest on this Savings bank account.
I have no other accounts, investment, immovable property, TFSA, RRSP , stocks, Mutual funds etc in Canada besides this regular savings account.RRSP
I get about $ 8,000 a year Savings bank account interest on this. My only income in Canada.
I think since 2008, withholding tax has been eliminated on bank account interest in Canada.
So does that mean I have to keep on filing a tax return in Canada as a non resident, just because I get this $ 6,000 in bank interest and no withholding tax is held on it? (Due to 2008 year rule)
If so can I request them to hold a 25% withholding tax on it and that's my final tax obligation in Canada. So I don't have to file a return in Canada.
Or should I close down this Savings account and transfer money abroad, so I don't have to file a return in Canada.
What are my options as a Non Resident, so that I don't have to file a tax return in Canada and all my final tax obligations are over once and for. Should I get an official letter from CRA confirming my non residency and no need to file a return in Canada again.
I don't want the hassle of filing a return in Canada, just because I have a bank account there and get interest on it!
Hi Shahid,
Thank you for your message.
Since you have already filed a departure (emigrant) return and are now a confirmed non-resident of Canada for tax purposes, your filing obligations are quite limited.
As a non-resident, interest income from a Canadian regular savings account is generally exempt from Canadian withholding tax, provided it meets the following conditions:
- It is paid by a Canadian financial institution
- It is not contingent on the use of the funds in Canada
- It is not linked to a business carried on in Canada
This exemption has been in place since 2008, and in your case, it applies to the $6,000–$8,000 in annual interest earned. Because the interest is exempt from withholding tax, it is also not taxable in Canada, and you are not required to file a Canadian tax return solely because of this interest income.
You do not need to request the bank to withhold 25% tax, nor do you need to file a return to declare this interest. If the only Canadian-source income you earn is bank interest that qualifies for the exemption, no return is necessary.
Additionally, there is no need to obtain an official letter from the CRA confirming your non-residency status, as long as you have already filed a departure return and severed residential ties. CRA typically does not issue such letters unless you file Form NR73, which is optional and not recommended in most cases, as it can trigger unnecessary review.
In summary:
- You are not required to file a Canadian tax return for the interest income
- You do not need to request withholding tax on the bank interest
- You may keep your Canadian bank account, though for simplicity, some non-residents choose to close it
Let me know if you’d like to schedule a short consultation to confirm your status or review any other cross-border tax matters.