1.0 liability for canadian income taxes
What is a resident in Canada? - ✔✔ correct answer every person who is a resident in Canada at any time
in the year is expected to pay income taxes on their worldwide income
Note: some residents who are taxed on their worldwide income may already have paid taxes to a foreign
government. Therefore this person may be eligible for a foreign tax credit.
what is a non-resident? - ✔✔ correct answer Non-residents are generally not subject to Canadian
income taxes unless they were:
a) employed in Canada
b) Conducted business in Canada
c) disposed of a taxable Canadian property
during any time of the year or previous year.
unlike a person who is a resident, non-residents are only liable for their Canadian income tax on sources
noted above. This tax that they owe can be reduced or eliminated all together by a tax treaty
Underused housing tax act - ✔✔ correct answer is a annual 1% tax on the value of vacant or underused
residential property directly or indirectly owned by non-resident non-Canadians
Part XIII Withholding Tax - ✔✔ correct answer on top of the taxed active sources of income, non-
residents are also liable for taxes on passive sources of income such as interest, rent, royalties, dividends,
and pension benefits.
Part XIII of the ITA imposes a 25% withholding tax on the gross amount.
what kind of reliefs are in place for part XIII withholding tax? - ✔✔ correct answer this tax rate of 25%
may be reduced or eliminated through tax treaties. or,
the non-resident can file a Canadian income tax return as if the person were a resident in Canada and
not be exempt from tax. this is only applicable to rent on real or immovable property in Canada or a
timber royalty
, 1.0 liability for canadian income taxes
by doing so, this allows for the tax payer to calculate their taxes owing based on net income rather than
gross income
persons who are exempt from Canadian income taxes - ✔✔ correct answer - Foreign diplomats and their
families and servants who reside in Canada
- Municipal authorities and First Nation bands
-Crown-owned corporations
- registered charities
-non-profit organizations
-etc
What are the requirements to be exempt from Canadian income taxes under the Indian Act? - ✔✔
correct answer the following property is exempt from taxation:
a) the interest of an Indian or a band in reserve lands or surrendered lands
b) the personal property of an Indian or a band situated on a reserve.
is Income considered personal property, if so is it exempt from taxes under section 87 for indigenous
peoples - ✔✔ correct answer yes, the supreme court agrees that income is personal property, therefore
income is eligible for section 87 exemption. Thus making income not taxable.
what does the ITA recognize as persons - ✔✔ correct answer 1) individuals
2) corporations
3) trusts
what are partnerships? - ✔✔ correct answer partnerships are a relationship that subsides between [two
or more] persons carrying on [an unincorporated] business in common with a view to profit.
partnerships are not considered "people" under the ITA and therefore not subject to taxation. instead,
they are seen as flow-through entities, meaning the business profits are taxed when the profits are in the
partner's hands.
What is a resident in Canada? - ✔✔ correct answer every person who is a resident in Canada at any time
in the year is expected to pay income taxes on their worldwide income
Note: some residents who are taxed on their worldwide income may already have paid taxes to a foreign
government. Therefore this person may be eligible for a foreign tax credit.
what is a non-resident? - ✔✔ correct answer Non-residents are generally not subject to Canadian
income taxes unless they were:
a) employed in Canada
b) Conducted business in Canada
c) disposed of a taxable Canadian property
during any time of the year or previous year.
unlike a person who is a resident, non-residents are only liable for their Canadian income tax on sources
noted above. This tax that they owe can be reduced or eliminated all together by a tax treaty
Underused housing tax act - ✔✔ correct answer is a annual 1% tax on the value of vacant or underused
residential property directly or indirectly owned by non-resident non-Canadians
Part XIII Withholding Tax - ✔✔ correct answer on top of the taxed active sources of income, non-
residents are also liable for taxes on passive sources of income such as interest, rent, royalties, dividends,
and pension benefits.
Part XIII of the ITA imposes a 25% withholding tax on the gross amount.
what kind of reliefs are in place for part XIII withholding tax? - ✔✔ correct answer this tax rate of 25%
may be reduced or eliminated through tax treaties. or,
the non-resident can file a Canadian income tax return as if the person were a resident in Canada and
not be exempt from tax. this is only applicable to rent on real or immovable property in Canada or a
timber royalty
, 1.0 liability for canadian income taxes
by doing so, this allows for the tax payer to calculate their taxes owing based on net income rather than
gross income
persons who are exempt from Canadian income taxes - ✔✔ correct answer - Foreign diplomats and their
families and servants who reside in Canada
- Municipal authorities and First Nation bands
-Crown-owned corporations
- registered charities
-non-profit organizations
-etc
What are the requirements to be exempt from Canadian income taxes under the Indian Act? - ✔✔
correct answer the following property is exempt from taxation:
a) the interest of an Indian or a band in reserve lands or surrendered lands
b) the personal property of an Indian or a band situated on a reserve.
is Income considered personal property, if so is it exempt from taxes under section 87 for indigenous
peoples - ✔✔ correct answer yes, the supreme court agrees that income is personal property, therefore
income is eligible for section 87 exemption. Thus making income not taxable.
what does the ITA recognize as persons - ✔✔ correct answer 1) individuals
2) corporations
3) trusts
what are partnerships? - ✔✔ correct answer partnerships are a relationship that subsides between [two
or more] persons carrying on [an unincorporated] business in common with a view to profit.
partnerships are not considered "people" under the ITA and therefore not subject to taxation. instead,
they are seen as flow-through entities, meaning the business profits are taxed when the profits are in the
partner's hands.
