ARCHIVED - Electing under section 217
What is a section 217 election?
Canadian payers have to withhold non resident tax on certain types of income, including the types of income listed in the next section, which they paid or credited to you as a non-resident of Canada. The tax withheld is usually your final tax obligation to Canada on this income and you do not have to file a Canadian tax return to report it.
Under section 217 of the Income Tax Act, you can choose to file a Canadian return and report the types of Canadian source income listed in the next section. By doing this, you will pay tax on this income using an alternative taxing method and may receive a refund of some or all of the non resident tax withheld.
Choosing to report these types of income on a Canadian return is called electing under section 217 of the Income Tax Act. The return on which you report the income is referred to as a “section 217 return.”
Does section 217 apply to you?
If you submitted Form NR5, Application by a Non-Resident of Canada for a Reduction in the Amount of Non Resident Tax Required to be Withheld, and we approved it, you have to send us a section 217 return by June 30 of the year following each year of the period covered by the approved Form NR5.
Note
When approved, Form NR5 is valid for a period covering five tax years.
You have the option of sending us a section 217 return for 2011 even if you did not submit Form NR5 to us if you received any of the following types of Canadian source income (referred to as eligible section 217 income) in 2011 while you were a non-resident of Canada:
- Old Age Security pension;
- Canada Pension Plan and Quebec Pension Plan benefits;
- most superannuation and pension benefits;
- most registered retirement savings plan payments;
- most registered retirement income fund payments;
- death benefits;
- Employment Insurance benefits;
- certain retiring allowances;
- registered supplementary unemployment benefit plan payments;
- most deferred profit sharing plan payments;
- amounts received from a retirement compensation arrangement, or the purchase price of an interest in a retirement compensation arrangement;
- prescribed benefits under a government assistance program; or
- Auto Pact benefits.
Note
Interest and other investments, rental income, and workers’ compensation benefits are not eligible section 217 income and are not reported on this return; however, they must be included in your world income when you complete Schedule A, Statement of World Income.
When is your section 217 return due?
Send your 2011 section 217 return on or before June 30, 2012.
If you send us your 2011 return after June 30, 2012, according to the Income Tax Act, your section 217 election cannot be accepted. If this is your case and the required amount of non resident tax was withheld on your eligible section 217 income, we will consider the amount withheld to be your final tax obligation to Canada on that income. However, if the payer withheld less than the required amount of tax, we will send you an assessment for the difference.
If, in addition to the eligible section 217 income, you are reporting other Canadian-source income on the return, such as a taxable capital gain from disposing of taxable Canadian property, or if you have to pay tax on employment income you are reporting, you have to file your return by April 30, 2012.
If, in addition to the eligible section 217 income, you are reporting business income and you have to pay tax on that income, you have to file the return on or before June 15, 2012.
Note
If you have a balance owing for 2011, you have to pay it on or before April 30, 2012. If you owe tax for 2011 and do not file your return for 2011 within the dates we specify, we will charge you a late-filing penalty. We will also charge compound daily interest starting May 1, 2012, on any unpaid amounts owing for 2011.
Completing your section 217 return
Before you start, gather all the documents you need to complete your return. This includes your information slips (such as your NR4 slips), receipts for any deductions or credits you plan to claim, and the following:
- Income Tax and Benefit Return for Non-Residents and Deemed Residents of Canada;
- Schedule A, Statement of World Income;
- Schedule B, Allowable Amount of Non-Refundable Tax Credits;
- Schedule C, Electing Under Section 217 of the Income Tax Act;
- Schedule 1, Federal Tax; and
- the federal worksheet.
Step 1 - Write "Section 217" at the top of page 1 of your return.
Step 2 - Complete the Identification area of the return.
Step 3 - Include the following income on your return:
- all eligible section 217 income (see the list in the section called Does section 217 apply to you? above) that was paid or credited to you in 2011; and
- your 2011 Canadian source employment and business income, taxable capital gains from disposing of taxable Canadian property, and all other Canadian source income that you are required to report as a non-resident.
Note
In order to determine the types of income you have to include on this return if you are a non resident electing under section 217, follow the symbol in the Total income section.
Complete Part 1 of Schedule C, Electing Under Section 217 of the Income Tax Act.
Step 4 - Claim only those deductions on lines 207 to 256 that apply to you.
Step 5 - Complete Schedule A, Statement of World Income, and attach it to your return.
Step 6 - Complete Schedule 1, Federal Tax , and attach it to your return. On Schedule 1:
- Claim the federal non-refundable tax credits on lines 300 to 349 that apply to you.
- Enter the correct amount on line 35 when calculating your federal tax on the back of Schedule 1.
- Complete Schedule B, Allowable Amount of Non-Refundable Tax Credits. Enter the allowable amount of non-refundable tax credits on line 46 on the back of Schedule 1.
- Calculate and enter the amount of surtax for non-residents of Canada and deemed residents of Canada on line A on the back of Schedule 1.
- If the amount you entered on line 35 of Schedule 1 was your net world income after adjustments as entered on line 16 of your Schedule A, complete Part 2 of Schedule C to calculate the section 217 tax adjustment for line C of schedule 1.
Step 7 - Complete lines 420 to 435 on the return, if they apply to you.
Step 8 - On line 437 of the return, enter the non-resident tax withheld on your eligible section 217 income (from your NR4 information slips) plus any other amounts withheld on your information slips for any other Canadian source income that you are reporting on this return. Complete the remainder of the return.
Note
Make sure you attach your information slips and a completed schedules 1, A, and C to your return. If you make a claim without the required receipt, certificate, schedule, or form, it could delay the processing of your return.
As long as you file your section 217 return on time, we will refund any taxes withheld that are more than the amounts you owe.
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