Firstly, a disclaimer that applies to all of my posts. The information I post in this blog is correct to the best of my knowledge and belief at the time I post it. However, tax law is constantly changing. Also, personal circumstances can have a significant effect on taxes payable and planning strategies. Anything posted here should be considered general information and not advice that can be relied upon.
Income tax is payable by all people who are resident in Canada for tax purposes. Residency is a question of fact. The most persuasive evidence of residency is where your home is, and where your spouse and children live. If you arrive in Canada on a work permit or as a permanent resident, you normally will be considered a tax resident on the day you land. Similarly, to cease being a tax resident you must leave Canada, and relinquish all residential ties.
In the year you enter or leave Canada, you pay Canadian income tax only on the income you earn during the part of the year that you are in Canada. For more details see CRA residency information.
You should be aware that, if you are a tax resident of Canada and permanently leave the country, you may be liable to tax on the capital gain of certain property for the time you are tax resident here. RRSPs and principal residences are excluded from this tax.
If you are tax resident in Canada, you pay income tax on your worldwide income. If, after you move to Canada, you have residual income from another country, such as interest or rental income, then this is taxable in Canada. Income within a registered pension fund is exempt, however. You generally will be given credit for foreign income taxes. This credit is limited to the lower of the foreign tax paid or the Canadian tax otherwise due on the income. Canada has tax treaties with many countries which limits the possibility of double taxation on many types in income.
If you are not tax resident in Canada by the home and family definition, but nonetheless spend more than 183 days in the country in any tax year, you may be deemed to be a tax resident for that year. Exceptions are generally people who are deemed tax residents of their home country such as military and diplomatic personnel. A deemed resident of Canada is subject to Canadian income tax on their your worldwide earnings for the year.
The final group of people subject to Canadian income tax are non-residents who have income in Canada. Much of this income is subject to a withholding tax of 25%. However, interest income has a zero withholding rate and some tax treaties also specify lower withholding rates for certain types of income.
In the year you enter or leave Canada, you pay Canadian income tax only on the income you earn during the part of the year that you are in Canada. For more details see CRA residency information.
You should be aware that, if you are a tax resident of Canada and permanently leave the country, you may be liable to tax on the capital gain of certain property for the time you are tax resident here. RRSPs and principal residences are excluded from this tax.
If you are tax resident in Canada, you pay income tax on your worldwide income. If, after you move to Canada, you have residual income from another country, such as interest or rental income, then this is taxable in Canada. Income within a registered pension fund is exempt, however. You generally will be given credit for foreign income taxes. This credit is limited to the lower of the foreign tax paid or the Canadian tax otherwise due on the income. Canada has tax treaties with many countries which limits the possibility of double taxation on many types in income.
If you are not tax resident in Canada by the home and family definition, but nonetheless spend more than 183 days in the country in any tax year, you may be deemed to be a tax resident for that year. Exceptions are generally people who are deemed tax residents of their home country such as military and diplomatic personnel. A deemed resident of Canada is subject to Canadian income tax on their your worldwide earnings for the year.
The final group of people subject to Canadian income tax are non-residents who have income in Canada. Much of this income is subject to a withholding tax of 25%. However, interest income has a zero withholding rate and some tax treaties also specify lower withholding rates for certain types of income.
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