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Q & A: Taxation for Foreign Workers

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Provincial flags in a breeze

Q. Now that I am on a work visa (1 year work permit after graduation), I wonder if I have to pay the federal taxes they deduct from my paycheck? I am still not a resident of Canada.

Answer: It is first important to remember that the term “resident of Canada” for immigration purpose and for tax purposes may not have the same meaning. You may be considered a resident of Canada for tax purposes even though you are not yet a resident of Canada for immigration purposes. Whether you are resident in Canada or not for income tax purposes will depend on your particular facts.

In addition, if you spent 183 days or more in Canada in the year, you are deemed to be, for tax purposes, a resident of Canada and subject to tax in Canada on your worldwide income for the entire year even if you are not otherwise resident in Canada.

Even if you are considered as a non-resident for tax purposes, you will still be subject to tax in Canada on your employment income if it is earned in Canada. If the expected employment income to be earned in Canada exceeds your available income tax credits, you will be subject to withholding taxes on your pay check.

If you are also a resident of a country which has an income tax treaty with Canada, you may be exempt from Canadian taxation on your employment income earned in Canada if it is below a certain amount and if you meet other conditions. If this exemption is available to you, your employer should be notified.

The nature of this facility is to provide a general response to a general question. Under no circumstances should anyone act on this information without obtaining analysis and counsel from a qualified advisor with respect to the specific situation.

Phillip Nadler, CA
Richter Usher & Vineberg