Any nonresident that offers service in Canada and earns an income out of it is liable to pay nonresident tax as per the regulations that are cited in the nonresident taxation policy of the Canadian Revenue Agency. So if you are a nonresident who is offering services or plan to offer your services in Canada then you should be aware of the entitlements, the rights and the obligations that you face when receiving such income.

Nonresident Taxation

If you are a nonresident of Canada and you render services in the country then you are entitled to pay income tax on the income that is generated by you by providing the services in the country under the provisions of the nonresident taxation policy. There are regular continuous services that one might render and there are also some services that are rendered for a short span of time. If you are a consultant, or a lecturer providing your services then you will have to pay your taxes and will have to file your returns for the income earned in Canada. For people who are involved in the movie industry, they will have to refer to the Film Advisory Services to identify the tax credit that is available to them before filing the returns.

Withholding Requirements

• If you are employed in Canada on a regular and continuous basis then a certain percentage of your income will be withheld from the person paying you and will provide you with an information slip with regard to the deduction made from your income.

• In general the percentage that is deducted is about 15% of the gross payment that is paid to you and that amount will be remitted by the employer to the Receiver General of Canada as a type of nonresident tax.

• This is a form of non resident tax deduction at source and it is the duty of the employer whether he is a Canadian citizen or not to deduct the tax and duly pay it to the concerned department.

• Failing to deduct the required amount will result in penalty and the employer will have to pay 10% of the amount that has to be deducted as penalty.

• Employers will have to file T4A-NR return to the department and will have to issue T4A-NR slips to the recipient before the end of February of the following year.

• The employee can file tax returns to report the net taxable income and in situations where excess tax has been deducted, a refund is provided by the Tax authority.

Waiver Or Reduction of Withholding

The nonresident taxation policy in Canada considered 15% tax deduction at the source to be a rough estimate of the nonresident tax liability of the person. If you are covered by treaty protection or can show that your expenses are bound to be more you can apply for a waiver or tax reduction request to the concerned department. A waiver application will have to be filled and submitted to the tax services office that is responsible for tax related functions in the area that you provide services in. The application will have to be filed 30 days before receiving the first payment and no later than 30 days from the start of providing the services. If the required details are in order then the tax office will give you a waiver or deduction certificate that can be given to the employer.

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