Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
HAA-4093-A3-100 A. Jane (613) 957-2126
September 25, 1986
XXXX This is in reply to your letter of July 10, 1986 concerning liability for Canadian income tax for a non-resident employed in Canada under a Teacher Exchange Fellowship.
XXXX
1. Percentage taxation rates on gross incomes $29,000 (Aus.) - $31,000 (Aus.)
2. Procedures entailed in your paying Canadian taxation.
We must advise that there is presently no option regarding liability for Canadian income tax in the circumstances you describe. Pursuant to Article XII of the former Canada-Australia Income Tax Agreement (1957) a teacher who came to Canada temporarily for a period not exceeding two years for the purpose of teaching at an educational institution was exempt from Canadian income tax on his remuneration earned from such teaching duties in Canada and from Canada Pension Plan contributions. However, the above-noted Agreement was replaced for the 1976 and subsequent taxation years by the Canada-Australia Income Tax Convention (1980) and this Convention contains no similar exemption. Thus, liability for Canadian income tax in these circumstances is determined solely by the provisions of the Income Tax Act (Canada) (the "Act").
Paragraph 2(3)(a) of the Act requires a non-resident employed in Canada at any time in a taxation year or in a previous year to pay an income tax as determined in accordance with Division D (section 115 of the Act) on his taxable income earned in Canada. Thus, a non-resident earning income from an office or employment in Canada must file an income tax return in the same manner as resident taxpayers but reports only Canadian sourced income therein.
Subsection 115(1) of the Act specifies that a non-resident person's taxable income earned in Canada from an office or employment is the amount of his income from the duties of offices and employment performed by him in Canada minus certain deductions. For information concerning the permissible deductions please consult Interpretation Bulletin IT-171 Special Release, a copy of which is enclosed herein.
With respect to taxation rates on gross income for the 1987 taxation year, we must advise that income tax rate tables for that taxation year are not yet available. We enclose the T1 return and general tax guide for individuals resident in Alberta for the year 1985 which is the latest year that such materials are available. The tax guide contains a table of tax rates (based on Canadian dollars) as well as some general information which will assist you in determining taxable income and tax payable for 1985. With respect to the procedure for paying income tax we can advise that section 153 of the Act requires every person making compensatory payments including salary, wages or other remuneration to deduct or withhold therefrom an amount on account of the payee's income tax for the year. In addition, the payee is required to file an income tax return on or before April 30 of the following year at which time an additional payment of tax is made or a refund claimed as the case may be.
We might also advise that at the present time a resident of Australia who stays in Canada on a temporary basis as a non-resident and who is employed in Canada is required to contribute to the Canada Pension Plan. We understand negotiations are now underway for an agreement between Canada and Australia which may provide relief from the requirement that a resident of one of the Contracting States must make contributions to some of the social security programs of the other State when he temporarily resides in that other State. No details are available at the present time.
We specifically refrain from commenting on what your residency status would be during your stay in Canada. This is determined by the rules in Article 4 of the Canada-Australia Income Tax Convention (1980), and by domestic law. If you are determined to be a resident of Canada you would be liable to pay income tax in Canada on your world income. We would advise that under Canadian domestic law a person who resides temporarily in Canada for a period or periods exceeding 183 days in a taxation year is deemed to be a Canadian resident throughout that year. In the event that you are also considered a resident of Australia under Australian domestic law, the tie-breaker rules in Article 4(3) of the 1980 Convention would apply. Under these rules a person is deemed to be resident solely in the Contracting State in which he has a permanent home available to him or, if a permanent home is available to him in both States or in neither State, he is deemed to be resident solely in the Contracting State with which his personal and economic relations are the closer.
We trust that this will be of assistance.
Yours truly,
for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1986
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1986