Residency - Individuals
Under Canada's tax system, your liability for income tax in Canada is
based on your status as a resident or non-resident of Canada.
Residency must be established before your tax liability to Canada can
be determined.
A determination of residency can only be made after all the factors
have been considered. Your circumstances have to be reviewed in their
entirety to get an accurate picture of your residency.
The residential ties you have or establish in Canada are a major
factor in determining residency. Residential ties to Canada include;
* a home in Canada
* a spouse or common-law partner and dependants who stay in
Canada, while you are living abroad
* personal property in Canada, such as a car or furniture
* social ties in Canada
* economic ties in Canada
Other ties that may be relevant include:
* a Canadian driver's licence
* health insurance with a Canadian province or territory
Residential ties that you maintain or establish in another country may
also be relevant to residency.
Special rules may apply in the following circumstances:
* If you do not have residential ties in Canada, you may be a
deemed resident if you stayed in Canada for 183 days or more.
* You are a government employee outside Canada, or you are a
member of the Canadian Forces serving outside of Canada.
The above information is of a general nature only. For more
information on residency, please see Interpretation Bulletin IT221R3,
Determination of an Individual's Residence Status.
We at the Canada Revenue Agency can give you an opinion on your
status. To get this, please complete Form NR74, Determination of
Residency Status (Entering Canada) or Form NR73, Determination of
Residency Status (Leaving Canada). Send your completed form to the
International Tax Services Office.
After your residency has been determined, you can get information on
your Canadian tax liability and filing requirements on our
International and non-resident Web pages.
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his publication is archived and kept for historical purposes. Use
caution when you refer to it, since it reflects the law in force at
the time it was released.
IT-161R3 Non-Residents - Exemption from Tax Deductions at Source on
Employment Income
NO: IT-161R3
DATE: October 8, 1982
SUBJECT: INCOME TAX ACT
Non-Residents - Exemption from Tax Deductions at Source on Employment Income
REFERENCE: Paragraph 115(2)(e) (also Regulation 104(2))
This bulletin replaces and cancels Interpretation Bulletin IT-161R2
dated December 27, 1978. Current revisions are designated by vertical
lines.
1. Subparagraph 115(2)(e)(i) excludes from the income of a
non-resident person who had ceased to be resident in Canada in a
previous year any remuneration attributable to the duties of an office
or employment performed by him anywhere outside Canada that was paid
to him directly or indirectly by a person resident in Canada, provided
that the remuneration is either
(a) subject to an income or profits tax imposed by the government of a
country other than Canada, or
(b) paid to an employee in connection with the selling of property,
the negotiating of contracts or the rendering of services for his
employer or a foreign affiliate of his employer or any other person
with whom his employer does not deal at arm's length, in the ordinary
course of a business carried on by his employer or by that foreign
affiliate or that other person.
That phrase "anywhere outside Canada" contemplates a person employed
not only in a country other than Canada, but also employed in
international waters.
2. A person will be considered to have ceased to be resident in Canada
where he leaves Canada after May 26, 1980 and is absent from Canada
for 2 years or longer, provided that the other requirements for
achieving non-resident status, described in paragraphs 6 to 12
inclusive of IT-221R2, are satisfied.
3. For purposes of the exclusion in 1(a) above, a non-resident
person's remuneration is considered to be "subject to an income or
profits tax" pursuant to subparagraph 115(2)(e)(i) if it falls within
the taxing jurisdiction of a country other than Canada. The
non-resident will qualify for the exclusion under clause
115(2)(3)(i)(A), even when he pays no foreign income or profits tax by
virtue of claiming personal allowances and any similar deductions to
which a resident of that foreign country would normally be entitled.
On the other hand, he will not qualify if he is not taxable in that
other country because of an exempting provision contained in a treaty
between that country and Canada. Similarly, a taxpayer will not
qualify under that clause if he is exempted from taxation in that
foreign jurisdiction under an agreement between foreign government
authorities and the non-resident of his employer.
4. As mentioned in 1(b) above, the remuneration received by a
non-resident must be earned in connection with certain types of work
performed in the ordinary course of a business carried on by the
employer, its foreign affiliate, or a person with whom the employer
does not deal at arm's length. In this connection, the phrase
"rendering of services" is to be given its ordinary meaning and would
include the performance of work or duties in respect of an office or
employment. In determining whether an employer is carrying on business
in a foreign country, the objects of the employer's business and the
nature of the activities that the employer is carrying on in the
foreign country will be the major factors to be taken into
consideration. For instance, where the nature of an employer's
activities is akin to commercial activities, he will be considered,
for the purposes of clause 115(2)(e)(i)(B), to be "carrying on
business" in the foreign country in which he is carrying out these
activities. Similarly, those employees of Crown corporations and
Canadian agencies who are not classified as government employees as
well as (for example) members of the internal accounting department or
secretarial staff of a private employer will come under clause
115(2)(e)(i)(B) provided the activities carried on outside Canada by
the Crown corporation, the agency, or the private employer can be
considered to be akin to commercial activities. However, any Canadian
organization whose activities are all of a charitable or educational
nature, is not normally "carrying on business" within the meaning of
that term as used in clause 115(2)(e)(i)(B).
5. Paragraph 115(2)(e) will also extend to locally engaged
non-residents who were former residents of Canada and who are not
deemed residents of Canada under section 250. They will be subject to
Canadian tax on the remuneration they receive directly or indirectly
from a person resident in Canada unless the amount is excluded from
their income subject to Canadian tax by either clause (A) or clause
(B) of subparagraph 115(2)(e)(i). However, members of the Canadian
Forces, government employees employed abroad and, for 1980 and
subsequent taxation years, members of the overseas Canadian Forces
school staff who comply with the conditions set forth in paragraph
250(d.1) will be taxed as Canadian residents pursuant to the extended
meaning of resident in subsection 250(1) of the Act. Subsection 115(2)
will therefore not apply to them.
6. Regulation 104(2) exempts from withholding tax, payments made to an
employee who was neither employed nor resident in Canada at the time
of payment. This exemption does not extend to income described in
subparagraph 115(2)(e)(i) which is paid to a person described in 1
above. Nevertheless, where it is clearly evident that the particular
remuneration is excepted from Canadian tax by virtue of clause
115(2)(e)(i)(A) or (B) (see 1(a) or (b) above), the withholding
requirement will be waived in respect of such remuneration. While it
is no longer necessary for the employer to obtain a formal waiver from
the Department, the Source Deductions Sections at District Taxation
Offices may be consulted by any employer requiring advice on this
subject.
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IT-161R3SR Non-Residents - Exemption from Tax Deductions at Source on
Employment Income
NO: IT-161R3SR
DATE: February 21, 1985
SUBJECT: INCOME TAX ACT
Non-Residents - Exemption from Tax Deductions at Source on Employment Income
REFERENCE: Paragraph 115(2)(e) (Also Regulation 104(2))
Paragraph 4 of IT-161R3 dated October 8, 1982 is revised to read as follows:
"4. As mentioned in 1(b) above, the remuneration received by a
non-resident must be earned in connection with certain types of work
performed in the ordinary course of a business carried on by the
employer, its foreign affiliate, or a person with whom the employer
does not deal at arm's length. In this connection, the phrase
"rendering of services" is to be given its ordinary meaning and would
include the performance of work or duties in respect of an office or
employment. Employees of Crown corporations and Canadian agencies who
are not classified as government employees as well as (for example)
members of the internal accounting department or secretarial staff of
a private employer will come under clause 115(2)(e)(i)(B) provided the
activities carried on by the Crown corporation, the agency, or the
private employer can be considered to be akin to commercial
activities. However, any Canadian organization whose activities are
all of a charitable or educational nature, is not normally "carrying
on business" within the meaning of that term as used in clause
115(2)(e)(i)(B)."
*****
Much more is at http://www.cra-arc.gc.ca/tax/nonresidents/publi-e.html
Bottom line...you won't pay tax in Canada and once you prove your none
residence you provide that form to your employer to submit to CRA to
have no deductions.
You will be taxed in the UK at whatever their foreign income tax rates
are ... that I will leave to someone else or yourself.
Good Luck |
