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What is a non-resident withholding tax?

  • Updated

Within Canada, income is subject to taxes and is withheld from the payer instead of the recipient.

Your employer is the payer, and you are the recipient. For instance, your employer would be the payer of income. Therefore, any applicable income taxes will be withheld and paid to the Canada Revenue Agency (CRA). Everything else is what you see on your paycheque.

  • As required by the CRA, a flat rate of 25% in income tax is levied on non-residents earning Canadian sourced income
  • The money withheld by Canadian financial institutions and other payers is remitted to the CRA
  • Common payments on which taxes will be withheld include interest payments, dividends, pension benefits, rents, and royalties

Income from Neo Invest will be subject to non-resident withholding tax on interest and dividends.

  • To reiterate, this tax is only applicable to non-residents of Canada earning Canadian sourced income

To learn more about the non-resident withholding tax, visit the Canada Revenue Agency’s website here.

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