2017-0713031E5 Investment account of a non-resident

Principal Issues: What are a non-resident's tax obligations in respect of an investment account held in Canada?

Position: Withholding tax will apply to Canadian-source investment income.

Reasons: Application of section 212.

Author: Graham, Kanwal
Section: 212

XXXXXXXXXX                                                                                                 2017-071303
                                                                                                                         K. Graham
July 28, 2017

Dear XXXXXXXXXX:

Re: Investment account of a non-resident

This is in reply to your letter of June 26, 2017, wherein you requested information regarding the application of Canadian income taxes to your investment account. In your letter you described yourself as a non-resident of Canada who is based in XXXXXXXXXX. You also indicated that you recently opened an investment account at XXXXXXXXXX in XXXXXXXXXX. We have tried to reach you at the cell phone number in XXXXXXXXXX which you provided to us, however, we have been unsuccessful in doing so. In lieu of reaching you by phone, we are writing this letter with enclosure.

Our Comments

A Canadian payer of certain types of Canadian-source income must withhold non-resident tax on income paid or credited to a non-resident of Canada. The rate of tax is 25%, but this amount may be reduced if there is a tax treaty between Canada and your country of residence.

Please find enclosed a copy of our guide T4058, Non-Residents and Income Tax, which provides information regarding a non-resident’s tax obligations in Canada. If you require additional information, go to www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html. You may also call the Canada Revenue Agency (“CRA”) from outside Canada at 613-940-8495 (please note that we accept collect calls by automated response. Contact your service provider or operator to initiate the collect call. You may hear a beep and experience a normal connection delay).

Although the CRA tries to meet the needs of all taxpayers and their advisors, the Canadian tax system relies on self-assessment because it is not possible to review the facts of every taxpayer’s situation before he or she files a tax return. The CRA values and acknowledges the important role of tax practitioners in the Canadian tax system and the assistance they give taxpayers.

Yours truly,

Lori Michele Carruthers, CPA, CA
Section Manager
for Division Director
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

Enclosure

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