Canada welcomes international students, as well as foreign workers and others into the country where money can be involved by way of income. In order to prevent taxes having to be paid twice in some cases some countries will make tax treaties or agreements between each other to handle specific tax situations. Canada does this as well. It is also believed to be instrumental in helping to ward off tax evasion for both countries involved.
The tax treaties will usually define what specific taxes the agreement is going to cover. It will draw up the guidelines as to who will be eligible under the tax treaty agreement and the criteria to meet the eligibility.
It will contain details regarding the deductions in amounts that can be held. These often refer to interest, dividend or royalty income that is paid by a resident of one of the countries to the other country involved in the treaty.
It will deal with the amount of tax on business income with specific rules put in place.
It will outline the specific details regarding what will be taxed according to the circumstances as they are outlined in the treaty.
In some tax treaties there are exceptions of tax added for some type of organizations or individuals.
It will intricately outline the procedures that will be followed to enforce the treaty and how disputes will be handled.
While a Canada tax treaty may not be of any real interest to the average Canadian resident, it could be if they are the recipient of a foreign source income. For those that are non-residents then there concern must lie in how they will be taxed on their Canadian sourced income. For these matters there is an International tax services office that will answer queries and concerns about these types of tax matter.
No matter what your situation if it is deemed that you have to file a Canadian tax return then you would do well to have a professional accountant assist you with your returns. Tax filings even in their simple versions can be most confusing.
It is highly important that any individual who is responsible for paying taxes do so according the mandates of the Canadian tax rules and regulations. Not doing so can result in fines and penalties or some types of legal action.
When it comes to tax evasion on an international level many countries are tightening up their treaties and the way in which they share information between countries. For those that are intent on hiding assets and money off shore in the hopes of not having to pay taxes, there are not nearly the number of safe havens there once used to be. The Canadian government actually lists countries that they are negotiating exchange of information with.
