- If you are a resident of the United States;
- If you render services and get paid in Canada; and
- If your Canadian employers withhold tax from your earnings
...you may be entitled to a tax refund from the Canadian government.
Whenever you perform in Canada as a nonresident and are issued a tax slip for your earnings, a certain percentage of your gross earnings (currently 23%) are held back for 'nonresident tax'.
However, if you incur any expenses in order to earn that income, the amount of nonresident tax you actually owe is smaller than the amount that's been withheld. The difference belongs in your pocket.
How it works
Take the example of Jonathan, a Canadian-born actor who now lives in Los Angeles and files tax returns with the IRS. Because he is now a resident of the US, Jonathan is not obliged to file a Canadian tax return.
In May he visited Canada to work on a Canadian television production, and was issued a T4NR slip reporting his income of $20,000.00.
Of that income, $4,600 was withheld as non-resident tax (23% of $20,000 = $4,600).
Jonathan incurred some expenses in order to earn his Canadian income, such as agents' fees and research materials, as well as a portion of his general business expenses like his cell phone service, home office, and performance wardrobe.
Jonathan calculates that the expenses he incurred relating to the television job totalled $2,000, which should be deducted from his income.
Jonathan decides to file a nonresident tax return with the Canadian government, showing that although his fees for the television shoot were $20,000, after expenses he actually only earned $18,000.
The non-resident tax he actually owes is 23% of $18,000 (his net income from the job) is only $4,140. The Canadian government has withheld too much tax.
The Canada Revenue Agency sends him a refund for the difference.
Find Out More
To find out more about what
a personal tax advisor can do for you, contact us
at question@personaltaxadvisors.ca.
