Who Has to Pay Tax in Canada

Who Has to Pay Tax in Canada

A resident of Canada?
Submitted by OnPayroll.ca Canada on Fri, 2016-05-27 15:48

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.