What Non-residents need to learn about gift tax in Canada?
If you are giving property to Canadian residents, being a non-resident, then you must keep cognizance of some guidelines related to the tax receipts and slabs. There is no such provision to attach a gift tax in Canada, however, only a gift of property imposes a fixed payable amount as per the threshold. This amount must be settled from both ends (the sender and the recipient).
Since the taxes imposed on real estate and income from employees are called probate fees which need to be analyzed vigilantly, certified tax consultants in Toronto or other states can help you decode the entire tax imposition and plausible issues associated with the transfer of gifts.
This article delineates some crucial measures that non-residents need to learn about gift tax in Canada.
A Tax Guide for Non-residents
Every source of income is monitored by the Income Tax Act (ITA), a federal law that imposes a tax on both the locals and the income sourced from non-residents. For instance, you being a non-resident, may be charged with a capital tax on the disposition of assets in Canada.
According to ITA, a trust is liable to be a taxpayer who can either be a Canadian resident or a non-resident. This will help the authorities to determine the income tax liability for both groups.
Interestingly, as ruled out by the Supreme Court of Canada, the ITA imposed on trust or property delineates the following mandate:
- A resident of Canada has an edge over the non-residents as a trustee.
- Significant decisions are taken by the resident, once proved as a verified resident of Canada.
- Moreover, the resident will also hold more dominance over the jurisdiction, where the non-resident has practiced his duties.
You can avoid these regulations by procuring a probate-planning alternative that can help you transfer the assets (listed) into a trust. A personal tax consultancy service can help you bring in leverage for trust on your side and relish the remainder interest. (Note: The remainder interest beneficial for non-residents is not subjected to the imposition of EAT, as the interest demolishes at the death of the trustee and henceforth can’t be considered as a part of the estate anymore.
However, it is equally important to understand the ramifications on the disposition of the interest rate as a non-resident over the property in Canada.
The Final Verdict
If you are a non-resident giving property to people residing in Canada, then you must thoroughly keep a track of the considerations made in the tax rules to avoid any complications during the procedure. It is advisable to seek verified tax consultants in Toronto and Canada Revenue Agency and get insights on the taxable property.
