Determining Your Residency Status

The taxation in Canada differs with your Residency status. If you are a Canadian Resident, then you are taxed on your worldwide income and filing of returns to the Canadian Revenue Agency is mandatory. If you are a non-resident, the taxation policy is different and you have to declare all Canadian income while filing the returns. But to know how to file your taxes, you first need to determine your residency status for tax purposes.

• You Are Considered As Non-Residents If

o You live normally and routinely outside Canada and are not a resident of Canada.

o You do not have any residential ties in Canada and

o You were living outside Canada during the entire tax year or

o You have lived for less than 183 days in Canada during the tax year

• You Are Considered a Deemed Resident If

o You have been staying in Canada for more than 183 days of the tax year

o You have no residential ties with Canada that are significant and

o You are not considered to be a resident of any other country as per the terms of the tax treaty Canada has signed with another country

• You Are a Deemed Non-Resident If

o You are considered to be a factual resident of Canada and also the resident of another country which has signed a tax treaty with Canada, and under the terms of that treaty, you are considered a resident of that other country rather than Canada

Non-Resident Tax Obligations

Any non-resident of Canada is obliged to pay non-resident tax tips on that income that he or she received from Canadian sources and the type of tax one has to pay or the requirement of filing the income tax return is decided by the type of income you receive. Generally, non-resident tax is filed under Part I tax or Part XIII tax. If you receive income from dividends, rental payments, royalty payments, pension payments, management fee, retiring allowances, old age security pension, Canada Pension Plan, registered retirement savings or income plan payments or annuity payments then you will be taxed under Part XIII. If you are running a business in Canada or if you sell, transfer or plan to sell a Canadian property, then you will pay tax under Part I.

Offshore Tax Planning

If you are planning on doing some offshore tax planning, by investing some money offshore, then you should be aware that almost all countries have signed tax treaties with Canada, and if you are a Canadian Resident, then income from these investments will also be calculated and considered as income and will have to be declared while filing the income tax returns. But if you are a non resident of Canada, there are options for you to do some offshore tax planning, but it is always better to avail the services of a tax expert to help you.

Is It Better To Hire Tax Experts For Offshore Tax Planning

Taxation can be tough to master and there are tax experts who will be aware of all the different tax laws that a country will have. This is why it is always better to opt for the services of a tax expert, especially if you are a non-resident and you are looking for offshore tax planning. Find a reputed tax expert company and get their advice before you start any activity off-shore.

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