Each of the following independent cases involves a non-resident individual who has Canadian source income during the current year. All amounts are in Canadian dollars.

Case A

Hebert Haman is a resident of a country that does not have a tax treaty with Canada. He owns debt securities issued by a Canadian company that pay interest at a rate that is determined by the profits of the company. During the current year, he receives interest of $1,672 from this investment.

Case B

Kerri Kmetz is a resident of a country that does not have a tax treaty with Canada. During the current year, Kerri receives $6,350 in dividends from a Canadian private company. Kerri owns 20 percent of this company's voting shares.

Case C

Eddy Beale is a resident of the United States. He owns debt securities that were issued by a Canadian public company. The interest rate on the securities is determined by the level of profits earned by the company. During the current year, he receives interest of $1,865.

Case D

Tyrell Rodi is a resident of a country that does not have a tax treaty with Canada. During the current year he earns $1,562 of interest on a savings account in Canada.

Case E

Stephen Chow is a resident of a country that does not have a tax treaty with Canada. He is the owner of a vacation property on Vancouver Island that he rents to Canadian residents. His gross rents for the current year are $56,000. Expenses related to the property, including maximum CCA, are $18,000.

Required: For each of these situations, indicate how the Canadian source income would be taxed under Canadian tax legislation. Explain your conclusion.

Answer rating: 100% (QA)

Solution Case A In case of no tax treaty Hebert has ... View the full answer