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Canada: Personal Taxation

Residence and Liability for Taxation

An individual is resident for tax purposes if he or she is present in Canada for 183 days or more (referred to as “deemed” residence), or has close connections with Canada (such as a permanent home (or other personal property such as a car or furniture), bank accounts, a spouse or common-law partner, or family, economic and/or social ties).

A Canadian-resident individual is taxed on his or her worldwide income; a non-resident individual is generally taxed on his or her Canada-source income only. Interest that is paid by an “arm’s length” (i.e. unrelated) payer is exempt from withholding tax.

If an individual spends a part of the tax year in the United States for health reasons, on vacation or for other reasons, but maintains close connections with Canada, the person is considered to be a “factual resident” for tax purposes, and remains fully liable for taxation as if he or she had never left Canada.

 

 

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