Canada tax on GIC for Canadian non-resident

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mappiq
Posts: 17
Joined: Mon Jan 23, 2012 9:59 pm

Canada tax on GIC for Canadian non-resident

Post by mappiq »

I am a non-resident of Canada (and have been for many years).

If I earn interest via a GIC (could be a 1 year GIC, or a multi-year GIC) at a Canadian bank, is it exempt from tax in Canada?

Background:
I already know that I do NOT have to pay Canadian tax on Bank Interest from a normal savings account. I get an NR4 for income code 61 - Arm's length interest payments. Are GICs treated the same way?
mappiq
Posts: 17
Joined: Mon Jan 23, 2012 9:59 pm

Re: Canada tax on GIC for Canadian non-resident

Post by mappiq »

Also, does it matter what non-Canadian country I am a resident of?

The government's Canada Non-resident tax calculator (https://www.canada.ca/en/revenue-agency ... aimer.html) gives inconsistent results. If you say that you are a resident of the USA and earned interest, it will say you owe $0. But if you instead put some other countries (random example - Croatia) then it asks you whether you are taxed at 10% or 0%. I have no idea where the 10% option comes from. And if I knew the rate at which I was being taxed, I wouldn't need their calculator to begin with :P
nelsona
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Re: Canada tax on GIC for Canadian non-resident

Post by nelsona »

The reason there are different answers for different countries is because of tax treaties. US residents are not taxable by canada on interest earned in Canada because a treaty says so. Othe rtreaties do not say this.

Why would you be interested in what residents of countries other than where you reside pay to Canada?

GICs are merely high(er) interest savings accounts. Nothing more, nothing less.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
mappiq
Posts: 17
Joined: Mon Jan 23, 2012 9:59 pm

Re: Canada tax on GIC for Canadian non-resident

Post by mappiq »

Is it by tax treaty, though? The CRA often cites "paragraph 212(1)(b)" with no mention of it being tied to a particular country or tax treaty.

The CRA non-resident calculator itself even says "The new provision exempts from tax any interest payments that a payer resident in Canada makes to a non-resident recipient with whom the payer deals at arm's length" (regardless of country).


Thanks for the confirmation about GICs!
nelsona
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Re: Canada tax on GIC for Canadian non-resident

Post by nelsona »

Yes, the law (Tax Act) has been changed, making the calculator obsolete (so CRA likely haven't bothered to update it).

However, even if the law would change back, US residents are exempt from Cdn tax on Cdn interest, since the treaty would supersede CDn law.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Re: Canada tax on GIC for Canadian non-resident

Post by nelsona »

Besides, the calculator is for MANY types of income, and would also apply NR tax on non-arm's length interest, which is rarely zero.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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