Schedule A, B, C and D - Non-Residents

The following table constitutes a summary of the ways in which the various types of income are taxed according to the applicable section of the Income Tax Act. Refer to this table to know the way in which the type of income is taxed and to properly prepare the return.

In the table, the word "Québec" means that the taxpayer must file both a federal and Québec return. The term "Province" means that the taxpayer must file a federal return including the Form 428 and 479 for the province or territory. The term "48% surtax" means that the taxpayer must only file a federal return in which the 48% surtax is calculated.

The federal return is created based on the information with reference to the province or territory of residence on December 31 and the province of taxation in the “Residence” section of the Identification form.

The deadline to file the income tax return is:

• If Form NR6 has not been filed: no later than two years after the end of the year during which the rental income has been paid or credited.
• If Form NR6 has been filed: June 30 of the next taxation year. However, the balance will be due on April 30 of the next taxation year.
• If there was disposition of rental property for which capital cost allowance (CCA) was previously claimed and recaptured if CCA is included in income: April 30 of the next year

The software taxes this income taking into account the 48% non-resident surtax and no personal tax credits are granted.

The taxpayer is entitled to the child support deduction as well as to a deduction for RRSP contributions made in Canada.

If rental income is deposited in a bank account and the taxpayer earns interest on this income, the financial institution must be advised to make non-resident tax withholdings on the interest income (Part XIII tax). This tax constitutes the taxpayer’s only tax obligation towards Canada. In addition, carrying charges are not to be considered. Consequently, these amounts are not to be included in the return.

You must identify the taxpayer’s residency status on December 31 in the “Information about your residency status” section at the bottom of page 1 of the Income Tax and Benefit Return for Non-Residents and Deemed Residents of Canada. The questions in this section can be answered in the “Residence” section of the Identification form.

You must also complete Schedule A, Statement of World Income and B, Allowable Amount of Non-Refundable Tax Credits.

These schedules allow for the calculation of the personal credits to which the taxpayer is entitled. You must indicate all the taxpayer’s types of income not covered by a section 217 election from both Canadian and foreign sources.

You must also complete Schedule C, Election under Section 217 of the Income Tax Act. This schedule provides a description of the income for which the election is made and is used to calculate the amount of non resident tax as well as the tax adjustment according to Section 217, which is claimed as a deduction on line 41450.

The major types of income for which a section 217 election may be made, are the following:

• Benefits under the Agreement on Automobile Products;
• Benefits under the Labour Adjustment Benefits Act;
• Certain pension benefits;
• Certain death benefits;
• Employment Insurance benefits
• Certain retiring allowances
• RRSP payments;
• DPSP payments;
• RRIF payments;
• Amounts received from a retirement compensation arrangement or the redemption price of a right in a retirement compensation arrangement.

An election cannot be made under section 217 with respect to support payments.

When an election is made under section 217 with respect to any of the above-mentioned types of income, the following income must also be taken into account in the return, if necessary:

• Employment income earned from Canadian sources, including tips, incentives and the amounts carried over from a previous year;
• Taxable capital gains from the disposition of taxable Canadian property;
• Income earned from a business carried on in Canada;
• Taxable portion of scholarships and net research grants.

Income with regard to an election under section 217 is subject to the 48% surtax for non-residents and deemed residents of Canada. If employment income or self-employment income are included in the same return, you can use Form T2203, Provincial and territorial Taxes - MultipleJurisdiction, in order for the program to calculate the provincial or territorial tax on this income, based on the province in which it was earned.

Under the Canada – US Tax Convention, Old Age Security benefits, federal net supplements and CPP and QPP benefits paid to a US resident are only taxable in the United States.

When the taxpayer receives interest income or dividends, the financial institution must be advised to make non-resident tax withholdings on this income (Part XIII tax). This tax constitutes the taxpayer’s only tax obligation towards Canada. Consequently, there is no need to include the interest income or dividend amount in the return. In addition, carrying charges are not to be considered.

The affected income is:

• Employment income earned in Canada, including tips, incentives and amounts carried over from a previous year
• Income earned from a business carried on in Canada
• Taxable portion of scholarships and net research grants
• Taxable capital gains from the sale of taxable Canadian property

When income is taxable in a province you must enter as the province of residence: Non-resident and as province of taxation, the applicable province of taxation.

In addition, you must complete Schedule A, Statement of World Income and B, Allowable Amount of Non-Refundable Tax Credits. These schedules allow the calculation of the personal credits to which the taxpayer is entitled. You must enter all the types of income of the taxpayer not listed under section 115 from both Canadian and foreign sources.

Employment income not exceeding $10,000 (Canadian) earned by a non-resident who is a US resident is exempted from Canadian tax under the tax treaty.

Make sure that the residency status of the taxpayer is correctly identified in the "Residence" section of the Identification form.

The residency status must be reported at the bottom of page 1 of the Income Tax Benefit Return for Non-Residents and Deemed Residents of Canada.

The residency status must also be reported on Schedule D (or Form T1248), Information About Your Residency Status and this schedule must be filed with the return when non-residents are deemed to file their returns by using the forms specific to a province or a territory. This schedule is automatically created from the information in the “Residence” section of the Identification form.

When income is taxable in a province you must enter it as the province of residence: Deemed resident and as province of taxation, the applicable province of taxation.

When the non-resident taxpayer is entitled to the amount for a spouse or common-law partner and the amount for a dependant, he must take into account the spouse’s or child’s net income from all sources for the full year even if the spouse or child does not have to file a Canadian tax return.

Moving expenses are only deductible by a full-time student.

The tax-withholding amount as per the NR4 slips is entered in the line 43700 workchart of the T1 return.