I live abroad and get a Canadian pension, can I reduce the withholding?
That is what the application is for. Withholding on Canadian periodic payments is applied to the payment, not to the tax you will actually owe, so a non-resident whose Canadian income is modest is routinely over-withheld. The application asks for the reduction to be set by reference to the tax the year will genuinely produce. The test of whether it is worth doing is simple and you can usually answer it yourself: if filing the elective return has produced a refund, and you expect it to keep doing so, you are lending money to the CRA every month for no reason.
Do I have to apply for reduced withholding on my pension every year?
An approval is not a single-year permission. It covers a period, and it comes with an undertaking to keep filing the elective return for the years it covers, so the annual work moves from applying to filing. That is the trade worth understanding before you start: you stop the over-withholding at source, and in exchange you accept a filing obligation you have to honour on time each year. Circumstances that change the projection during the period, a new pension, a payment stopping, a change of residence, need to be reported rather than left for the next application.
Does approval mean I no longer need to file a Canadian return?
No, and it is the most common misunderstanding we see on this form. The reduction is granted on the basis of what the elective return will show, which means the return is the mechanism the approval rests on rather than something the approval replaces. Filing it is part of the undertaking given. Practically, the reduction and the return trade places: before approval the return is what recovers money already withheld, and after approval it is what justifies the lower withholding you are receiving during the year. Skip it and the basis for the reduction disappears.
My only Canadian income is a small annuity, is the application worth it?
Work it out on your own figures before deciding. The value of an approval is the cash you stop advancing each month, multiplied by the years the approval covers, against the cost of applying once and filing each year. Where the annuity is genuinely small the refund is small too, and some clients reasonably decide to keep claiming it annually instead. Where the annuity is the whole of a modest retirement income, the over-withholding is usually a meaningful share of the monthly payment, and the answer changes. We give the fixed fee in writing before you commit either way.
Who makes the application, me or the pension plan that pays me?
The application is the recipient's. You are the person whose expected tax position justifies the reduction, so the projection, the supporting figures and the undertaking to keep filing are all yours. The payer's part comes afterwards: the plan or insurer applies whatever rate it is instructed to apply, and it needs that instruction before it can change anything, which is why an approval that does not reach the payer changes nothing in your bank account. We check that the payer has acted on it rather than assuming the approval is the end of the process.
What happens if I stop filing the elective return after being approved?
You put the approval at risk, because the undertaking to keep filing is the condition it was given on. The reduction was granted on a projection of the tax a return would show; if the return never arrives, the basis for it has gone unverified. The practical result we see is withholding reverting to the full rate on the payment, and a recipient who now has both a missing return and a cash flow change to deal with. If a year has been missed, file it before the next application or renewal rather than after.
How do I report the sale of a foreign property?
On your residence-country return, as a disposition, with proceeds and cost base converted at the rates for their own dates. Separately, the country where the property sits may require its own return and may hold back tax at closing until a clearance or certificate is issued — Canada does this for a non-resident vendor, and the United States withholds on a foreign seller of US real property. Those steps have their own deadlines, often before closing. See clearance certificates on a property sale.
Which business structure has double taxation?
The corporation — specifically a US C corporation, where profit is taxed to the company and the dividend again to the shareholder. Sole proprietorships, partnerships and LLCs treated as flow-throughs are taxed once, in the owners' hands. Across borders that tidy answer breaks: an entity treated as a flow-through in one country can be opaque in the other, which produces a mismatch neither system planned for. See LLC against corporation for Canadians.
