Tax Refund for Non-Residents in Canada

Tax may not be the first thing on your mind after moving to Canada.

However, it’s important that all taxpayers understand their tax residency status to ensure they file the correct tax return and claim their tax refund.

So, who is considered a non-resident alien for tax purposes?

In this article we will explore the differences between a resident and non-resident for tax purposes, the tax you will pay in Canada, and claiming your tax refund.

What is the difference between a resident alien and a non-resident alien in Canada?

A resident alien for tax purposes refers to someone who has significant residential ties in Canada and resides there for more than 183 days in the tax year.

Significant residential ties include, a home in Canada, a spouse or common-law partner in Canada, or dependents in Canada.

Resident aliens are taxed the same as Canadian citizens and therefore pay tax in Canada on their worldwide income.

Whereas, non-resident aliens only pay tax in Canada on the income earned there, and they may be eligible for a tax refund based on their Canadian earnings.

Who is considered a non-resident and deemed non-resident in Canada?

A non-Canadian resident classifies as anyone without significant residential ties and who resides in Canada for less than 183 days of the year.

A deemed non-resident of Canada refers to someone that has established residential ties in both Canada and a country that Canada has a tax treaty with, and they are considered a resident of the other country and not Canada.

The same tax rules apply to both non-residents and deemed non-residents in Canada. They are both only taxed on their income sourced in Canada.

For income tax purposes, you are considered a non-resident of Canada if:

You normally or routinely live in another country and you are not considered a Canadian citizen
You stayed less than 183 days in Canada throughout the tax year
You do not have significant residential ties in Canada

As a Canadian non-resident, what tax will I pay on my income?

As a non-resident in Canada, you will only pay tax on Canadian sourced income.

In Canada, you will pay both federal and provincial taxes. The amount you pay will depend on what province you live in and the income tax bracket your earnings fall under.

Federal tax rates (2024)

Income Bracket	Federal Tax Rate
On the first $55,867 of taxable income	15%
From $55,867 up to $111,733	20.5%
From $111,733 up to $173,205	26%
From $173,205 up to $246,752	29%
Over $246,752	33%

All taxpayers that meet the 90% rule are entitled to a tax-free allowance of $15,705 (2024). This means that the first $15,705 you earn is not subject to federal income tax.

The 90% rule

The 90% rule applies to non-residents whose income is primarily sourced in Canada.

If 90% of your income throughout the tax year was sourced in Canada, then you’ll be entitled to claim the personal tax credits. If not, you shouldn’t claim the credits on the federal and provincial TD1 forms.

Do non-residents need to file a Canadian tax return?

If you have worked and paid tax in Canada throughout the tax year, you are required to file a tax return.

By doing so, this ensures that you remain tax compliant with the CRA. Additionally, filing a tax return is the only way that you’ll be able to claim your Canadian tax refund.

There are many common expenses you may be entitled to claim in Canada, such as medical expenses, moving expenses, home office expenses, childcare expenses, and more!

By not filing your tax return, you could be missing out on a lot of money. In fact, our average Canadian tax refund is a substantial CA$998!

File your non-resident tax return here.

What forms are required to file a Canadian tax return?

When filing your tax return, you will need:

Your Social Insurance Number (SIN) or Individual Tax Number (ITN)
Your T4 slip

T4 slip

Your T4 slip will be provided to you by your employer, and you should receive it from them by the end of February. This slip is important as it details your income and deductions throughout the tax year.

The average Canadian tax refund is $998

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How can non-residents file their tax returns?

It is possible to file your tax return online yourself before the 30 April tax deadline.

However, if you want to avoid the paperwork and ensure you are filing a compliant tax return, Taxback can help!

When you apply with us, we will ensure you claim every tax benefit you’re entitled to, and your maximum tax refund is guaranteed!

To get started, simply complete our short application form. Our team of tax experts will take your non-resident income tax return from there and transfer your tax refund directly into your bank account.