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Non-Resident Workers in Canada
Employees in Canada who are not Canadian residents, and who are in regular and continuous employment in Canada, will be subject to the same tax deductions as Canadian residents. These deductions include federal and provincial income tax, employment insurance premiums, and Canada or Quebec Pension Plan contributions.
Temporary workers who are neither Canadian citizens nor permanent residents are issued Social Insurance Numbers (SINs) that begin with a "9". These SINs are valid only until the expiry date printed on the card.
TD1 Forms Determine Tax Withholdings
Employees complete federal TD1 forms so that the employer can determine which "claim code" to use when calculating payroll deductions. On page 2 of the federal TD1 there is a question for non-resident workers. If as a non-resident employee, your taxable income earned in Canada will be 90% or more of your world income for the year, you can answer "yes" and claim exemptions available to you on page 1 of the TD1. If the response to this question is "no", then no exemptions are allowed in calculating payroll deductions. If "yes" is answered, and the total exemptions are greater than the basic personal amount, then a provincial TD1 form should also be completed.
CRA Online Payroll Calculator
Employers can use the Canada Revenue Agency (CRA) online payroll deductions calculator, as can employees who want to see what their deductions will be. See our article on calculating payroll deductions.
Non-Resident Tax Return
You may recover some of the taxes paid as a non-resident employee, when filing your Canadian tax return. If reporting only income from employment in Canada from a business that had a permanent establishment (PE) in Canada, then the tax return for the province in which the income was earned would be used, not the non-resident return. If your taxable income earned in Canada is 90% or more of your world income for the year, then all available federal and provincial non-refundable tax credits can be claimed. If the percentage is less than 90%, then only certain non-refundable tax credits can be claimed on the tax return. See Part B - Federal non-refundable tax credits, in the non-resident tax return Guide 5013-G.
If your country of residence has a tax treaty with Canada, all or part of Canadian-source income may be exempt from Canadian tax. Under some treaties, employment income is exempt if:
Any exempt income can be deducted on line 25600 (additional deductions) of your Canadian tax return.
Non-Resident Service Providers
Income Tax Act s. 153(1)(g), Regulations s. 105
If a non-resident individual, partnership, or corporation is providing services rendered in Canada, and these services are not performed in the ordinary course of office or employment, any payment made for the services is subject to a 15% withholding tax, except for non-resident actors (see below) and individuals to whom the Canada-US Tax Convention applies. Article XVII (1) of the Canada-US Tax Convention limits the rate of withholding tax to 10% on the first $5,000 (in $Canadian) paid to an individual (not a corporation) by each payer in the calendar year, as remuneration for the performance of services.
Most businesses operating in Canada are required to register for a Business Number (BN).
Non-resident actors are subject to a withholding tax of 23% on their gross income earned from acting in a film or video production, including residuals and contingent compensation, with no deductions permitted.
Filing of a Canadian tax return is not necessary, but an actor can elect under s. 216.1 to file a return, and pay tax on their net income as calculated on the tax return, possibly recovering some or all of the 23% withholding tax.
See CRA's Electing under section 216.1.
Canada Revenue Agency (CRA) Resources
Income Tax and Benefit Package for non-residents and deemed residents of Canada (includes T5013 Guide)
Revised: November 29, 2022
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