Tax treaties are agreements that are signed between the two counties to ensure that the residents of the country are not double taxed. There are many residents of a country who work in other countries and will be liable to pay taxes in the country that they work and will also be required to file tax returns and pay taxes in the country that they are a citizen of. In such situations there are possibilities that the individual will be taxed twice for the same income by both the countries and to avoid that such tax treaties are signed between the countries. Another advantage of these treaties is that there can be sharing of information between the countries about the financial dealings of the residents so that tax avoiders can be identified. Most countries have nonresident tax that has to be paid by non residents who earn income from the country and when the person files the nonresident tax returns, it will be shared with the country that he is a resident of, provided there is a treaty that has been signed between the countries.

What Do Tax Treaties Cover

Most of the tax treaties that are signed will be in respect with the income and the investments by citizens of other countries and will generally cover the following

• Establish the taxes that are covered and who is eligible for tax benefits

• Will help to establish who can be considered as a resident of the country

• Will help to reduce the tax that is withheld from royalties, interest and dividends that are paid by a resident of one county to residents of other countries

• Will help to limit the tax that is levied on business income generated by a resident of another country

• Will help set the guidelines and the rules that will govern the nonresident tax of a country who would be residents of another country

• Help to provide exemptions to certain individuals and corporations

• Will help to provide the necessary procedural framework in cases where there is a dispute and for enforcement

Canada Tax Treaties

Canada has signed tax treaties with a lot of countries across the globe and the list of countries that have a tax treaty with Canada can be found on the official website of the Department of Finance Canada. There will be detailed reports about the tax treaties that have been signed, amendments to the treaty and all the information that one will need about any tax treaty. You can also contact the International Tax Services Office and they will be able to help you out with any information regarding the tax treaty signed with your country by Canada or on the doubts you might have regarding nonresident tax filing.

Precautions While Filing Nonresident Tax Return

It is very important to not take things for granted while filing the nonresident tax and if there is any ambiguity in the various clauses of the tax treaty that has been signed with your resident country, contact the International Tax Services Office for clarification. It will also be a good option to avail the services of tax experts to help you with your nonresident taxation procedures as they will have the knowledge of the exemptions that can be availed by you. It will also make the process a lot simpler with you not having to run around to get your income tax return filed properly.

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