Canadian Taxation Policy For Non Residents

All non residents of Canada who are liable to pay taxes must apply for a Canadian Individual Tax Number (ITN) if they have not yet obtained the Social Insurance number (SIN). If you a nonresident who is planning to settle in Canada, then you have to show a significant amount of social ties to Canada or you have to show the intention to settle long term in Canada. For non residents their income taxes at the source that exists within Canada and the nonresident has to file a Canadian tax return to claim a refund. The Canadian Residents will be taxed like Canadian citizens on their worldwide income.

Canadian Real Estate Taxes or Canadian Property Taxes

• Canadian real estate tax is that taxes are levied annually in the provinces and the rates at which the taxes are levied are different in each of the provinces.

• The Provinces have been given the authority to levy any rate that is deemed fair by them as long as the rates do not interfere with the laws of Canada.

• The real estate tax is calculated by using the value of the real estate that will be assessed by the provincial assessment authority and applying the rate of property tax that exists in the province to it.

• The real estate taxation amount can vary every year as the rate keeps differing. The general rate of property tax is between 0.5% and 2.5%.

Purchasing And Letting Out Property In Canada for Nonresidents

Most of the provinces in Canada do not have any restrictions against purchasing land or property in Canada. There are taxes that will have to pay to the government while buying property and the rate is between 3% to 5% of the value of the property. The rental income that is received for letting out property or real estate by nonresidents are taxable in Canada and the taxes have to be deducted at source by the tenant or property manager.

Income Tax On Rental Income In Canada

Rental income that is acquired from real estate property in Canada is taxed and it is the duty of the tenant or the property manager to withhold 25% of the gross rental income that will be paid to the owner who is a non-resident of Canada. As per section 216 of the Income Tax Act of Canada, the nonresident can file a separate tax return with the Income Tax Department to show their rental income and expenses and claim a refund if the tax collected is more than the tax due. If the returns for the rental income are files then the taxes will be levied only on the net rental income and not on the gross rental income. Expenses that are accepted to be genuine can be added in the return and after the returns are accepted and checked, any excess amount that has been deducted as tax will be refunded to the taxpayer. All returns under Section 216 have to be filed within 2 years from the end of the year during which the rental income was received.

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