federal surtax

[bwafusion]

Background: Dual CDN/US citizen residing permanently in the US as of Sept 2022. This is the first year filing a CDN Non-resident return (5013). The only sources of income from Canada for 2023 are: 1) life insurance disposition, and 2) company registered pension monthly benefits. For 1) the life insurer withheld 15% tax + 48% federal surtax and remitted same to CRA. This is correct as it is general income. Certificate of Compliance received. For 2) the company withheld only 15% tax. This would be correct according to the CRA non-resident tax calculator as it is pension income.

According to the Guide for From 5013, Federal Surtax should be calculated as 48% of line 130 (Basic Federal Tax) and entered on line 131. If I include the income for the pension from my NR4 in Taxable income then I end up paying extra tax when the Surtax is applied and the tax amounts withheld from 1) and 2) do not match the balance owing. If I leave the NR4 out of the tax return completely then the amounts withheld match the balance owing (zero).

My question is: (A) should the Federal Surtax apply to the pension payments (NR4)?? I think not, since the tax withheld on the NR4 is Part XIII tax and should represent the "FINAL TAX OBLIGATION TO CANADA" (emphasis from CRA website).

And, (B) what is the best way to solve the above described tax owing mismatch on the 5013. Either I need to leave the NR4 off the filing entirely or, if I include the NR4 income, then I need to "fudge" the Federal Surtax on line 131 (which will be probably raise a red flag with CRA once the 5013 is scanned/reviewed.

thanks

[nelsona]

Unless you are filing an elective return (217), you do not include pension income on the return, as it is not subject to graduated tax. It is flat taxed.

[bwafusion]

Great. That's how I did the return - I left the pension income off. Thanks for confirming.

[bwafusion]

Great. That's how I did the return - I left the pension income off. Thanks for confirming.

[bwafusion]

Great. That's how I did the return - I left the pension income off. Thanks for confirming.