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Non resident canadian citizen with canadian income

A client of mine moved to Italy in 2018 and became a non-resident in September of that year. He works remotely for his Canadian employer. We last filed for him in 2018. He is now asking if he should be filing a Canadian Tax Return?

He’s still non-resident and only has to pay tax on Canadian sourced income. Employment income sourcing is based on where you do the work (i.e. Italy) and not based on who pays him (Canadian company). He doe not need to file a Canadian return due to his employment income.

as long as he doesn’t qualify as a factual resident, he is not required to file taxes

I have brother-in-law, w/dementia in Australia 50 yrs, who just rec’d a
Demand to File from CRA! All he receives is minimal CPP, 20+ yrs…?

I guess he got caught up in those offshore KPMG tax shelters? :laughing: Finally CRA found someone they could charge.

Your BIL will not be entitled to the Basic Exemption. Therefore, there will be tax owing on the CPP.

He should have notified Service Canada that he was a non-resident so that he would have had Part XIII tax withheld at source so that he did not have to file a Canadian tax return.

Your BIL had the options of:

  • Do not notify Service Canada of his non-resident status and must file a Canadian Non-Resident Return for each year,
  • Notify Service Canada of his non-resident status, have the Part XIII tax withheld (BUT may also not qualify for CPP as the rules are different from non-residents,) and no longer have to file a Canadian Non-Resident Return for each year, or
  • Apply for a Section 217 withholding, have a reduced Part XIII tax withheld (BUT may also not qualify for CPP as the rules are different from non-residents,) and must file a Canadian Non-Resident Section 217 Return for each year.

It appears that the first option was chosen, but the second step was missed.

I do not envy you… your sister has my sympathies. Dementia steals your loved ones memories and leaves a shell only.

If he was billing from Italy for services preformed in Italy for a Canadian company in Canada, seems to me that would not be Canadian income

Tim, thanks for this. However, he was married in 1971, and left for wife’s country later
He has never been asked to file, but kept his SIN, passport entitlement, & gave their
6 children a right to dual Cdn-AUS. citizenship, each with their own SIN; no demands
How this came about at this late stage@life has his wife devastated, & relying on me

I’ve just received the info from him that he is receiving a paycheque with CPP, EI and Tax deducted at source. So, he lives in Italy, has been acknowledged by the international tax office as a non-resident, but is an employee of a Canadian Company. And the money goes into his Canadian Bank account Ouch!

@gslegge What is the demand for? Multiple years? Depending on what the demand looks like, you might just file for the current year. With minimal CPP, there should be minimal tax as well. Once they demand you file, it becomes necessary to do so. But don’t file more than they ask for. Tim, am I wrong on this?

@gaymwise the Canadian bank account counts as “ties to Canada” and puts a kink in the non-resident status. The current bank info sharing between countries has no doubt given rise to this request. Don’t delay in submitting the return, but make sure the international ruling accompanies it.

Thanks Debbie,

I need to have a chat with him about that bank account.

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It is now been over three months, since the initial contact was made. Unfortunately, with all the covid lockdowns in AUS. recently, CRA is?
Not informing the client that their demand has been “stayed” for now