Frequently Ask Questions:

Question:

Some of my business income is from other countries. How do I report this?


Answer:

An individual (or Corporation) who is a Canadian resident (or deemed to be) is taxes in all of his/her income, regardless of whether the income from sources inside or outside of Canada from the first day he establish resident in Canada. Therefore, income from outside Canada before establishing residency in Canada is not a taxable income.

Generally, you treat foreign business income the same way you would handle business income from Canadian sources on your Canadian income tax return. That is, if you are a sole proprietor or part of a partnership, you will report foreign income as part of your business or professional income on Form T2125: Statement of Business or Professional Activities. Income driven from employment or investment should be reported in a different form.
If you are actually performing your work in a foreign country, such as the United States, you may have to pay income tax in that country. The United States bases its income tax system on citizenship and where the work is performed, unlike Canada which bases its income tax system on residency. To further complicate matters, some states have state income tax and some don't. So you may end up having to file a tax return with the Internal Revenue Service (IRS) and pay American taxes. If this is the case, you will also file a Canadian tax return (although you would not pay Canadian income tax as Canada and the U.S. have a tax treaty and you would be credited with the income tax you had paid in the U.S.).
In other words, you only pay your income tax in one place, but you may need to file two income tax returns.
If you have any doubts about your situation and what country you should be filing your income taxes in, don’t guess; contactus and one of our professionals will be happy to assist you with your international taxes issues


Note: this page will be dedicated to your tax questions. Please send your questions to: tax@base-ca.com