If you are a Canadian pensioner residing outside Canada, understanding the tax implications on your Old Age Security (OAS) and Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) payments is crucial. Here’s what you need to know about taxes and how they apply to your pension and benefit payments based on your residency status and income.
Taxes on Pensions and Benefits for Canadians Living Outside Canada
Non-Resident Tax
Your monthly OAS and CPP/QPP pensions and benefits are subject to Canadian income tax known as the “non-resident tax” if you live outside Canada. The standard non-resident tax rate is 25%, but this can be reduced or exempted if your country of residence has a tax treaty with Canada. The reduction or exemption is automatic if you file your income tax in a treaty country.
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Requesting a Reduction (Form NR5): If you reside in a country without a tax treaty or wish to reduce the tax withheld, you can apply using Form NR5. The application must be submitted by October 31 for the following tax year starting in January. Once approved, the NR5 is valid for five years, provided your income situation remains unchanged.
OAS Recovery Tax
If your net world income exceeds the threshold (e.g., $72,809 for the 2015 tax year), you may be subject to the OAS recovery tax, which requires you to repay part or all of your OAS pension. The amount withheld for recovery tax, along with non-resident tax, cannot exceed the total OAS benefits received in a year. Residents of countries with tax treaties may be exempt from the recovery tax.
Filing Requirements: Non-resident pensioners must file an Old Age Security Return of Income (OASRI) by April 30 to determine if they owe recovery tax and to ensure uninterrupted OAS payments. Some treaty countries may exempt you from filing this return.
NR4 Tax Information Slips
Each year, non-resident pensioners receive an NR4 tax information slip detailing their CPP or OAS payments from the previous year. This slip must be included when filing your annual income tax return. You can view these slips online starting February 1 or receive them by mail if not registered online.
Non-Resident Tax Rates by Country
Canada has tax treaties with many countries affecting the tax rates applied to CPP, QPP, and OAS payments. Here’s a summary of non-resident tax rates by select countries:
| Country of Residence | OAS Benefits | CPP or QPP Pensions | CPP or QPP Death Benefits | Applicable Exemptions |
|---|---|---|---|---|
| United Kingdom | 0% | 0% | 25% | – |
| United States | 0% | 0% | 0% | – |
| Australia | 15% | 15% | 15% | – |
| Germany | 15% | 15% | 25% | – |
| India | 25% | 25% | 25% | – |
| Others | 25% | 25% | 25% | – |
Note: Exemptions may apply for certain income thresholds or through filing the NR5 form.
Filing and Contact Information
For detailed information on taxes for non-resident seniors and filing requirements, visit the Canada Revenue Agency website. If you have specific tax-related inquiries, contact the Canada Revenue Agency International Tax Services Office at:
- Phone:
- 1-855-284-5942 (Canada and U.S.)
- 1-613-940-8495 (Other countries)
- Fax: 1-613-941-2505
- Mail: Canada Revenue Agency
International Tax Services Office
Client Services Division
P.O. Box 9769, Station T
Ottawa, ON K1G 3Y4
For questions about your OAS or CPP benefits, contact Service Canada:
- Phone:
- 1-800-277-9914 (Canada and U.S.)
- 1-613-957-1954 (Other countries, collect calls accepted)
This comprehensive guide helps you navigate the tax implications of your Canadian pension and benefit payments while residing outside Canada. Understanding these rules ensures compliance and helps optimize your financial planning. For further details, consult the official resources provided or seek advice from tax professionals familiar with international tax laws.
For more information you can visit canada.ca