Who Has to Pay Tax in Canada
Resident vs. Non-Resident
Whether someone pays taxes in Canada, and on what income, depends on his or her residency and where they've earned the money. What are the obligations as a resident vs obligations as a non-resident? Here are three scenarios . . .
- A resident of Canada for any part of the year, is subject to Canadian income tax on worldwide income during the time that he or she is a resident. During the time that he or she is not a resident of Canada, Canadian income tax must only be paid on income earned from Canadian sources.
- A non-resident of Canada for any part of the year, but visit Canada for a total of 183 days or more in a year, may be deemed to be a resident of Canada, and subject to Canadian income tax on worldwide income for the entire year.
- A non-resident of Canada for any part of the year, and visit Canada for less than 183 days in a year, is subject to Canadian income tax only on income earned from Canadian sources.
Whether someone is considered a resident or a deemed resident of Canada depends on many factors, besides the time spent in the country, including maintaining or having any of the following in Canada:
- a residence
- a spouse or dependant(s)
- health insurance
- bank accounts
- other social and economic ties.
A person who is a resident of Canada, and moves to another country, could still be considered to be a Canadian resident for tax purposes. More information on residency can be found on the Canada Revenue Agency website.