Electing unde r section 217

What is a section 217 election?

Canadian payers are required to withhold non-resident tax on certain types of Canadian-source income, including the types of income listed below, that they pay to you as a non-resident of Canada. This tax withheld is usually your final tax obligation to Canada on the income.

However, under section 217 of the Income Tax Act, you can choose to report the types of Canadian-source income listed below on a Canadian return. By doing this, you may be able to pay tax on this income using an alternate taxing method and may receive a refund of some or all of the non-resident tax withheld.

Choosing to report these types of income on a Canadian return is called "electing under section 217" and the return on which you report the income is referred to as a "section 217 return."

Does section 217 apply to you?

You have to send us a section 217 return for 1999 if you submitted Form NR5, Application by a Non-Resident of Canada for a Reduction in the Amount of Non-Resident Tax Required to be Withheld, to us for 1999 and we approved it.

You have the option of sending us a section 217 return for 1999 if you did not submit Form NR5 to us for 1999 and you received any of the following types of Canadian-source income (referred to as section 217 income) in 1999 while you were a non-resident:

• Old Age Security pension;
• Canada Pension Plan or Quebec Pension Plan benefits;
• most superannuation and pension benefits;
• registered retirement savings plan payments;
• registered retirement income fund payments;
• death benefits;
• Employment Insurance benefits;
• certain retiring allowances;
• registered supplementary unemployment benefit plan payments;
• deferred profit-sharing plan payments;
• amounts received from a retirement compensation arrangement, or the purchase price of an interest in a retirement compensation arrangement;
• prescribed benefits under a government assistance program; and
• Auto Pact benefits.

When is your section 217 return due?

Your 1999 section 217 return has to be filed on or before June 30, 2000.

However, if you are also reporting on the return Canadian-source income such as employment income or taxable capital gains from disposing of taxable Canadian property and you have a balance of tax owing on that income, you should file the return on or before April 30, 2000, to avoid a late-filing penalty. You should also pay the balance of tax owing on that income by April 30, 2000 to avoid any interest charges.

Completing your section 217 return

Before you start, gather all the documents you will need to complete your return. This includes your information slips (such as your NR4 slips), receipts for any deductions or credits you plan to claim, and the following (which you will find in the centre of this guide):

• Income Tax and Benefit Return for Non-Residents and Deemed Residents of Canada;
• Schedule A, Statement of World Income;
• Schedule B, Allowable Amount of Non-Refundable Tax Credits;
• Schedule 1, Federal Tax Calculation; and
• the Worksheet (which includes the "Line 445 - Section 217 tax adjustment" chart).

Step 1 - Write "Section 217" at the top of page 1 of the return.

Step 2 - Complete the Identification area of the return following the instructions on page 13 in this guide.

Step 3 - Include the following income on the return:

• all section 217 income (see the listing on this page) that was paid or credited to you in 1999; and
• your 1999 Canadian-source business and employment income, and taxable capital gains from disposing of taxable Canadian property.

Do not include any gain or loss from disposing of taxable Canadian property if, under a tax treaty, the gain from that disposition would be exempt from tax in Canada. However, attach a completed Schedule 3, Capital Gains (or Losses) in 1999, to show the details of the disposition. See line 127 for more information.

Do not include a loss from a business carried on in Canada if, under a tax treaty, any income from that business would be exempt from tax in Canada.

If you are a former resident of Canada, only report employment income received from a Canadian resident, if, under a tax treaty between Canada and your new country of residence, the employment income is exempt from tax in your new country.

Step 4 - Claim the deductions on lines 207 to 256 that apply to you.

Step 5 - Claim the non-refundable tax credits on lines 300 to 349 that apply to you.

Step 6 - Complete Schedule A, Statement of World Income, and attach it to your return.

Step 7 - Complete Schedule B, Allowable Amount of Non-Refundable Tax Credits.

Step 8 - Complete Schedule 1, Federal Tax Calculation. Be careful to enter the correct amount on line 1 of Schedule 1. You may need to complete the "Line 445 - Section 217 tax adjustment" chart to determine the amount to enter on line 445 of Schedule 1. You will find the chart on the Worksheet included in the centre of this guide.

Step 9 - Complete lines 406 to 435 on the return, if they apply to you.

Step 10 - On line 437 of the return, enter the non-resident tax withheld on your section 217 income plus the non-resident tax withheld on the other Canadian-source income you are reporting on the return. This amount will be shown on your information slips. Complete the remainder of the return.

Note
Be sure to attach your information slips and a completed Schedule A, Statement of World Income, to your return.

As long as you file your section 217 return on time, we will refund any taxes withheld that are more than the amounts you owe.

Declaration of Taxpayer Rights

International Tax Services Office

International Tax Services Office
Canada Customs and Revenue Agency
2204 Walkley Road
Ottawa ON K1A 1A8
CANADA

Regular hours of service

Monday to Friday (holidays excluded)
8:15 a.m. to 5:00 p.m. (Eastern Time)

Extended hours of telephone service

February 21, 2000, through April 30, 2000
Monday to Thursday (holidays excluded): 8:15 a.m. to 9:00 p.m. (Eastern Time)

Calls from the Ottawa area -
952-3741

Calls from Canada and the U.S. -
1-800-267-5177

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