Foreign Academic Handbook: 13

A foreign worker in Canada faces two issues from a taxation point of view: whether they will be taxed as a resident of Canada and whether they will continue to be taxed in their country of origin. The foreign academic will need to resolve these issues in order to determine their tax obligations to both countries.

It is possible that the foreign academic may be subject to taxation on the same income in Canada and their home country. There are provisions for reducing double taxation when it occurs through income tax agreements between Canada and other countries, and through the use of tax credits claimed against one country for tax paid to the other country. Canada is signatory to a number of tax treaties which contain provisions to reduce or eliminate double taxation. Foreign academics are encouraged to contact the International Tax Services Office in Ottawa to obtain information on where to obtain copies of specific tax treaties. The toll free number is 1-800-267-5177. There is additional information on the Canada Revenue Agency Web site.

Each foreign academic needs to determine their residency status in Canada for tax purposes. This means they must determine whether they are a non-resident or a deemed resident of Canada. The determination is guided by principles applied by Revenue Canada that are outlined in Interpretation Bulletin IT-221, Determination of an Individual’s Residency Status.

In general, a person is a non-resident for tax purposes if they have not established sufficient residential ties in Canada and either stayed here for less than 183 days in a calendar year, or have lived outside of Canada throughout the year. A non-resident is subject to income tax in Canada only on Canadian source income. A person is a deemed resident for tax purposes if they have established sufficient residential ties in Canada and stayed here for 183 days or more in a calendar year. For clarification please refer to Interpretation Bulletin IT-221, Determination of an Individual’s Residency Status.

For more detailed information please refer to the closest Revenue Canada taxation office, or the Canada Revenue Agency Web Site.

Of special interest to foreign academics will be Interpretation Bulletin IT-75, Scholarships, Fellowships, Bursaries, Prizes, and Research Grants. This publication contains information on allowable expenses for recipients of research grants and is also available from Revenue Canada.