Electing under section 217
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- What is a section 217 election?
- Does section 217 apply to you?
- When is your section 217 return due?
- Completing your section 217 return
What is a section 217 election?
Canadian payers have to withhold non-resident tax on certain types of income 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.
However, you can choose to file a Canadian return and report the types of Canadian-source income listed in the next section. You are then "electing under section 217 of the Income Tax Act." By doing this, you may pay tax on this income using an alternative method and may receive a refund of some or all of the non-resident tax withheld.
Does section 217 apply to you?
If you filed Form NR5, Application by a non-resident of Canada for a reduction in the amount of non-resident tax required to be withheld, for the year, and the CRA approved it, you generally have to file a section 217 return by June 30 of the year following each year of the period covered by the approved Form NR5. For more information, see Pamphlet T4145, Electing Under Section 217 of the Income Tax Act.
When approved, Form NR5 is valid for a period of five tax years.
You have the option of sending a section 217 return for 2018 even if you did not submit Form NR5 to the CRA if you received any of the following types of Canadian-source income (referred to as eligible section 217 income) in 2018 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 pooled registered pension plans
- 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
- Auto Pact benefits
Interest and other investment income, rental income, and workers' compensation benefits are not eligible section 217 income and are not to be reported on this return, but must be included in your world income when you complete Schedule A, Statement of World Income.
When is your section 217 return due?
Your 2018 section 217 return has to be filed on or before June 30, 2019.
If you send your 2018 return after June 30, 2019, 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, the CRA 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, the CRA will send you a notice of 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 must file your return on or before April 30, 2019.
If, in addition to the eligible section 217 income, you are reporting business income and you have to pay tax on that income, you must file the return on or before June 17, 2019.
If you have a balance owing for 2018, you have to pay it on or before April 30, 2019. If you owe tax for 2018 and do not file your return for 2018 within the dates specified, the CRA will charge you a late-filing penalty. The CRA will also charge compound daily interest starting May 1, 2019, on any unpaid amounts owing for 2018.
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 all of the following forms:
- 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
- Worksheet for the return
- Worksheet for Schedule 1
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 – Report all of the following income on your return:
- all eligible section 217 income paid or credited to you in 2018 (see Does section 217 apply to you?)
- your 2018 Canadian-source employment and business income, net Canadian partnership income if you are a limited or non-active partner, and taxable capital gains from disposing of taxable Canadian property, if applicable
To determine the types of income you must report on this return if you are a non-resident making an election under section 217, follow the ▲symbol in Step 2 – Total income.
Complete Part 1 of Schedule C, Electing Under Section 217 of the Income Tax Act.
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 your taxable income from line 260, or your net world income (Schedule A), whichever is greater, on line 38 of Schedule 1 when calculating your federal tax.
- Complete Schedule B, Allowable Amount of Non-Refundable Tax Credits. Enter the allowable amount of non-refundable tax credits on line 49 of Schedule 1.
- Calculate and enter the amount of surtax for non-residents of Canada and deemed residents of Canada on line 54 of Schedule 1.
- Complete Part 2 of Schedule C to calculate the section 217 tax adjustment for line 64 of Schedule 1 if the amount you entered on line 38 of Schedule 1 was your net world income after adjustments as entered on line 16 of your Schedule A.
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) as well as 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.
As long as you file your section 217 return on time, the CRA will refund any taxes withheld that are more than the amounts you owe. For more information, see Pamphlet T4145, Electing Under Section 217 of the Income Tax Act.
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