Filing Non resident Canadian tax

[mountainview]

I appreciate any help you can give me. I am a U.S. citizen working as a part-time consultant in Ontario. I earn more than $10,000 CAD. I work for a Canadian company. 15% of my income was withheld. I have received a T4A-NR

The CRA website states:

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 the following non-refundable tax credits can be claimed on the tax return, as per Schedule B.

I called the International tax question line to confirm that I would only need to file the ON428 form and was told that:

Canadian payers have to withhold non-resident tax on income they paid or credited to you as a non-resident of Canada. The tax withheld is usually your final tax obligation to Canada on this income and you do not have to file a Canadian income tax and benefit return to report it.

Other websites reference needing to file a T-1 General for Non-residents and Deemed Residents of Canada.

Could someone please tell me what forms I need to file, if any. Do I need to file an Ontario Provincial form?

Thank you for all your assistance.

[nelsona]

Hold on.

Are you a contractor? If so, how much time (days) did you spend in Canada?
If it was less than 1/2 the time, you are exempt from Cdn taxes altogether (including provincial tax), under the treaty. YOU do not have a permanent establishment, by the treaty.

If you were an employee, then yes, you do need to file a Cdn return (for the province in which you worked) and pay federal and provincial tax. There is no such thing as flat Cdn tax on Cdn employment income (which makes me wonder why you were being withheld at a flat rate. And you would also have paid EI and CPP (again, making me wonder if you were a contractor).

The info you got was -- not surprisingly -- wrong, which ever case it is. I've never heard of anyone only filing the provincial 428 form. Filing the return for Ontario, doesn't mean filing JUST the ON428, it means filing the federal return, ALONG WITH ON428. and whether you were an employee or a contractor, it would not be a flat tax. Their withholding is an estimate at best.


You will still be non-resident, following the instructions in T4058, to calculate credits etc.

But, again, of you are a contractor, have not spent more than 1/2 your time in Canada, you do not owe any tax. A T4A-NR is not to be given to employees. A regular T4 would have been issued.

[mountainview]

Thank you for your quick response. I am a contractor, and I spent 21 days in Canada. I appreciate the information. I will not file a return.

[nelsona]

You SHOULD file a return -- TO GET THE 15% BACK.
Ufile.ca can handle this, likely for free. You report the income, and then remove it on line 256.

Otherwise you need to claim the 15% tax as a credit on your US return (you still have to report the income in US) using form 1116. you might not get full credit.

[mountainview]

Thank you, again! I will look into that. I was just going to take the foreign tax credit on my 1040 for the amount withheld.

[nelsona]

You could try that. Your tax credit would be limited to your effective taxrate, which may or may not be 15%. If you manage to get all of the money back thru 1116, then I agree why bother with CRA.