(Source: Global Affairs Canada, Protocol Office, www.international.gc.ca)
Foreign representatives are not exempt from taxation of any income that arises from within Canada; this includes commercial undertakings (i.e. rental income), the sale or transfer of real property and interest or dividends earned from personal bank and investment accounts. Only a foreign representative’s salary and emoluments that originate from outside of Canada and are paid by the home state to an accredited member of a mission are tax exempt.
These rules are in accordance with Article 34 of the Vienna Convention on Diplomatic Relations and Article 49 of the Vienna Convention on Consular Relations.
The types of rates of taxes that a foreign representative must pay vary, depending of the type of income received while in Canada and the established treaties regarding an avoidance of double taxation, as do the requirements for filling out an income tax return with the CRA. The International Tax Service Office can address any concerns regarding tax returns (Tel. 1-800-959-8281) or visit http://www.cra-arc.gc.ca/tx/nnrsdnts/ntcs/frgn-eng...
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Any foreign representative, their spouse or children who are required to file an income tax return can do so online, by mail or with the help of a certified accountant. Generally, most Canadians file their taxes online. There are a variety of software and online programs that can guide an individual through the tax filing process, such as TurboTax and H & R Block Online Tax software. These programs submit the income tax returns directly to the CRA via their secure NETFILE service. By filing online, refunds are issued faster, paper receipts are not required and the refunds are more accurate. A step-by-step guide to filing a Canadian tax return is available at: http://www.cra-arc.gc.ca/getready/.
Before filing a Canadian income tax return, ensure that all the necessary information and documents have been collected, including T4 (Statement of Remuneration Paid) and T5 (Statement of Investment Income) slips, receipts and tax forms relating to personal investments or income made in Canada. Additional information and tax forms relating to income amassed by foreign representatives can be found at: http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/menu-e...
All locally engaged employees must ensure that they are using the General Income Tax and Benefit Package that corresponds to the province or territory in which they lived on December 31st of the year for which they are filling an income tax return. These packages are available at: http://www.cra-arc.gc.ca/formspubs/t1gnrl/menu-eng.html.
If a foreign representative has any questions pertaining to their residency status for tax purposes, they must complete the NR74 form (Determination of Residency Status (Entering Canada), and mail or fax it to the following address:
2204 Walkley Road
Ottawa, ON, K1A 1A8
Fax: 613 941 2505
Foreign representatives are advised that Canada generally prohibits the practice of private gainful employment by foreign representatives outside official functions. Exceptions are made in special cases where written approval has been granted in accordance with the Vienna Convention on Diplomatic and Consular Relations.