Advertisement
Gregor is worried because his dividend paying mutual funds aren't sending him tax slips
Q. I have been retired and living in the Philippines since 2009. I file my taxes as a non-resident of Canada. I have an RRSP, a LIRA, as well as a non-registered account with a major Canadian bank. My world income is 100% from Canada consisting of CPP, systematic withdrawals from retirement savings, and OAS to follow when I reach 65 next year. When monies are withdrawn the bank retains a 25% holdback for taxes. When I file my non-resident taxes I get a partial refund as my withdrawals to date have been minimal hence my tax rate has been less than 25%.
My question has to do with taxes being withheld from dividends earned from both my registered and non-registered stocks. The bank also deducts a withholding tax from dividends as they are paid out. I do not receive an information slip for taxes withheld from dividends. These dividend-paying funds were purchased when living and working in Canada during my long career. They are primarily held in U.S. funds. Why am I being taxed on these dividends without receiving an information slip?
Thank you in advance, Gregor
A. Gregor, the non-resident rules are very complex and there are certain qualifications and exemptions depending on the type of income and the country of residence. Canada has tax treaties with several countries and the list and details can be found on the Department of Finance website: www.fin.gc.ca.
As a non- resident of Canada receiving Canadian source income you are required to pay Part XIII tax on certain types of income. The types of income that fall under Part XIII income include: dividends; rental and royalty payments; pension payments; OAS; CPP and QPP; withdrawals from RRSP and RRIF; and annuity payments. Canadian organizations that pay these amounts to you are required to withhold the Part XIII tax which is 25% unless there is a tax treaty between Canada and the country you live in–in your case the Philippines.
The Part XIII tax is considered to be your final obligation to pay tax in Canada unless you have Canadian Qualifying income in which case you can elect to file an income tax return under Section 217. Canadian Qualifying income includes: CPP and QPP; RRSP withdrawals; pension payments; and other types of retirement income. Before you elect to file a tax return consult your accountant to make sure that filing a tax return is worthwhile for you.
As I mentioned, Canadian payers are required to withhold the Part XIII tax and in the case of your dividends there is no option to elect to file a Canadian tax return and the amount withheld on your dividends is your final tax amount payable. The Canadian payer of your dividends is not required to provide you with a T slip—T5 or T3—but is required to provide you with an NR4 slip showing what has been withheld.
Theresa Morley, CAP, CA is a partner with Morley Chartered Accountants in Barrie, Ont. Read her blog.
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
Canadians with no children or siblings must consider estate planning alternatives. Here’s why trust companies can be a good...
The federal government’s capital gains inclusion rate increase has yet to become law. There’s a slight chance it may...
Canadians have reporting requirements for foreign assets, income and tax paid. Here’s how to claim each of these on...
A Certified Financial Planner provides perspective on the TFSA vs. RRSP question for a couple in their late 50s...
In retirement, some income is not subject to withholding tax, and you may potentially owe tax after filing each...
Some strategies are time-sensitive, while others can help you start the new year on the right foot.
Sometimes, it’s not action, but inaction, that can hurt you financially. Here are examples of when selling may be...
Wondering whether your estate planner knows the latest tax laws? Do you need a tax lawyer too? Discover three...
Do Canadians need to consolidate RRSP accounts before converting to RRIFs? Find out this and more.
Here’s a primer for Canadians on choosing between employment and self-employment for a new work arrangement.
I will have a similar situation. I’ll be retiring in the Philippines in the future and I would like to know if as a non resident am I required to pay taxes on capital gains from shares of Canadian or international public companies?
Thanks in advance
Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.