If you’re a non-resident who earns an income or owns a property in Canada, the tax system can seem baffling, and you may even feel that you’re not able to keep as much of your money as you should.
Fortunately, there are a number of strategies – all of which are entirely legal – that can help non-residents of Canada minimize their tax burden, and working with a tax accountant in Surrey is the most effective way to access these.
Getting to grips with taxation for non-residents
Canadian non-residents are subject to a very specific set of rules when it comes to taxes, which can result in higher taxes if not properly adhered to. Tax accountants are familiar with the in’s and out’s of these laws, and are in the best position to help non-residents get their taxable income as low as possible.
Below are some of the tax-minimizing strategies they may advise you to use:
- Filing of a Section 216 Election
This strategy gives non-residents the right to pay tax not on their gross income, but on their net rental. With deductions on allowable expenses, such as fees associated with property management, mortgage interest, and repairs, the tax burden can be lowered significantly.
- Using Capital Cost Allowance (CCA)
This particular allowance gives non-resident property owners in Canada, the opportunity to reduce their taxable income by claiming depreciation on their rental property. It’s worth noting, however, that a CCA must be used strategically, as when the property is sold, it can have an impact on capital gains tax.
- Claiming Foreign Tax Credits
Some non-residents of Canada may also be paying taxes in their home country, and to help them avoid double taxation, they may qualify for foreign tax credits. If so, it’s important to accurately claim these credits, and a local tax accountant can guide you on this.
- Structuring investments in a strategic way
By strategically structuring property ownership, such as through corporations or partnerships, non-residents of Canada can minimize their tax liability in the form of limited liability, and reduced tax rates.
- Deducting eligible expenses
Expenses deductions can have an impact on your taxable income by significantly reducing it, especially when a Section 216 return is filed. Be sure to claim all expenses that are eligible, like maintenance costs, insurance and fees.
- Avoiding common pitfalls
Such things as filing late, failing to report all income, and not seeking (or adhering to) professional advice, can all result in non-residents facing a heftier tax bill than may be necessary.
What role can tax services play?
Non-resident tax rules are notoriously complex, and without professional guidance, costly mistakes are all too easy to make. By investing in help from a CPA or similar tax expert, non-residents can identify tax saving strategies and utilize them, while never attracting undue attention from the CRA. While you can of course, go it alone, the money you’ll invest in tax services in Surrey, BC, could pay dividends when it comes to your tax return.
Reducing any tax burden demands a strategic approach, but none more so than with non-resident taxes. Without a full understanding of the Canadian tax system, it’s virtually impossible to find loopholes that are legal, and claim deductions you may be eligible for, which means you could be paying more in taxes than you need to. Make sure this never happens by working with an experienced tax consultant.