Moving from Canada to Singapore: Canadian Tax and the Treaty

Does Canada have a tax treaty with Singapore, and what does it change when you move?

Yes. Canada and Singapore have an income tax convention signed in 1976 (Finance Canada: Canada-Singapore Convention). A later protocol replaced only the exchange-of-information article, so the rates below are unchanged (Finance Canada: Protocol).

Two features make this treaty different. Reduced Canadian rates can depend on whether the income is brought into Singapore (Article XXI), and the six-year window for taxing former residents' gains is long.

What makes a move not simple: a home or family kept in Canada, a posting of a few years, employer shares or stock awards, a Canadian company you own, a Canadian rental, or a large RRSP. Gather your departure date, the date you got a home in Singapore, a list of everything you own with values on that date, your employment contract, and your Canadian account and pension statements. Singapore's own tax rules are outside this page.

When do you stop being a Canadian tax resident after moving to Singapore?

You usually become a non-resident of Canada on the latest of the day you leave, the day your spouse or common-law partner and dependants leave, and the day you become resident in Singapore (CRA: Leaving Canada). If you lived in Singapore before coming to Canada and are going back, you generally become a non-resident on the day you leave, even if your family follows later (Folio S5-F1-C1, ¶1.23). The CRA treats a home, a spouse or partner, and dependants kept in Canada as ties that are almost always significant, and they weigh heavily toward keeping you resident (Folio S5-F1-C1, ¶1.11). The full tie test is in Canadian tax residency, and how to ask the CRA for its view is in asking the CRA to decide your residency.

What if Canada and Singapore both claim you?

The tie-breaker applies only if Singapore also treats you as its resident under its own law. Article IV(2) then settles it in this order:

1. Permanent home: you are resident where you have a permanent home available to you.
2. Centre of vital interests: with a home in both, where your personal and economic relations are closest.
3. Habitual abode: if that cannot be decided, or you have a home in neither, where you habitually live.
4. Competent authorities: if you have a habitual abode in both or neither, the two tax authorities decide by agreement.

If the tie-breaker places you in Singapore, Canadian law deems you a non-resident of Canada for all purposes (Income Tax Act s. 250(5)). The CRA says the rules for people leaving Canada, including the deemed sale of property, then apply from that date (Folio S5-F1-C1, ¶1.38).

Is a two- or three-year posting to Singapore enough to leave Canada for tax?

A fixed-term posting can end Canadian residency, but the length alone does not decide it; your ties do. One exception: if you work for the federal or a provincial government, Canadian law usually deems you a resident of Canada for the whole posting, however few ties you keep (Income Tax Act s. 250(1)(c)). A short posting where you keep your Canadian home, or your family stays behind, often leaves you a Canadian resident who reports world income and claims a credit for Singapore tax. The treaty adds one thing: if you are resident in both countries, a Canadian home kept available for your return is still a permanent home, so the question moves to where your personal and economic ties are closer. If you lease your Canadian home to an unrelated tenant on arm's-length terms, the CRA may not count it as a significant tie, unless it comes with other ties (Folio S5-F1-C1, ¶1.12). Postings are covered in working abroad for a few years, and a family that stays in family stays in Canada while you work abroad.

What do you owe Canada in the year you move to Singapore?

You file a final return reporting world income up to your departure date, and Canada treats most of your property as sold at fair market value that day (CRA: Dispositions of property). Canadian real estate, RRSPs, RRIFs and pensions are not deemed sold. You list property worth more than $25,000 on Form T1161 and can defer paying the tax with Form T1244, sometimes by posting security. The forms and steps are in Leaving Canada; vested and unvested stock awards are in departure tax on stock options and RSUs.

Can Canada still tax your gains after you live in Singapore?

Yes, in two ways. Canada may tax gains on Canadian real estate, and on shares or interests whose value comes mainly from that real estate, for as long as you own them (Article XIII(1) and (3)). For any other property, the treaty normally leaves the gain to the country where you live, but Article XIII(5) keeps Canada's right to tax under its own law if you were a Canadian resident at any time in the six years before the sale.

Canadian law itself taxes a non-resident's gains only on taxable Canadian property, such as Canadian real estate and unlisted shares that took more than half their value from Canadian real estate or resource property at any time in the past 60 months (Income Tax Act s. 2(3); s. 248(1)). So the six-year rule matters only for that property; shares of an ordinary operating company, already taxed as sold on departure, usually are not taxed again. Listed shares, such as bank shares, were also taxed on your departure date; a later sale is taxed only if you and related persons held 25% or more of a class and the shares took most of their value from Canadian real estate or resources. Selling your company after the move is in selling your Canadian company after moving abroad. Selling your former home is in selling your home after leaving Canada.

How much does Canada withhold on dividends and interest under the Canada-Singapore treaty?

Canada withholds 25% on dividends paid to non-residents unless a treaty lowers it (IC76-12R8, ¶6). Article X(2) caps Canadian tax on dividends at 15% of the gross amount for the beneficial owner (the person actually entitled to the dividend), subject to Article XXI. Unlike many newer treaties, there is no lower rate for a company holding a large stake.

Article XI(2) caps Canadian tax on interest at 15%, provided Singapore taxes the interest. In practice, Canada does not withhold on interest paid at arm's length, such as interest on a bank deposit (Income Tax Act s. 212(1)(b); IC76-12R8, ¶32). The treaty cap matters for interest from a related person, such as a loan to your own Canadian company.

To get the treaty rate, you give the payer enough information to show you are the beneficial owner, live in Singapore and qualify, usually on Form NR301. A payer that applies a reduced rate wrongly can be held liable for the shortfall (IC76-12R8, ¶12, ¶19, ¶20). Rates under other treaties are compared in non-resident tax rates in Canada.

Why can the treaty rate depend on what you bring into Singapore?

Article XXI limits the treaty relief: if Singapore taxes a type of income only on the amount remitted to or received in Singapore, Canada's exemption or reduced rate applies only to that amount. The CRA says a payer must apply a limitation-of-relief provision before reducing withholding, and gives an example where a dividend not remitted to the other country is withheld at 25% (IC76-12R8, ¶57–59).

So before you claim the 15% dividend rate on Form NR301, check how Singapore taxes that income for you and whether it is brought into Singapore. Income left in a Canadian account may not qualify.

What does Canada take from your RRSP, RRIF, pension, CPP and OAS?

Canada withholds its general non-resident rate of 25%, because the treaty gives no reduced rate. Article XVII says pensions and annuities arising in a country are taxable only in that country. The treaty does not define pension, so Canadian law fills the gap: payments from an RRSP, RRIF, registered pension plan or other retirement plan count as pensions (Income Tax Conventions Interpretation Act s. 5).

Service Canada's table of pension tax by country does not list Singapore, so CPP and OAS paid to you there fall under its rate for all other countries, 25% (Service Canada). That withholding is usually your final Canadian tax on the payment (T4058). OAS is the exception: Singapore is not on the CRA's list of countries whose residents are excused, so you must file Form T1136, the OAS Return of Income, by April 30 each year or your OAS is suspended in July. The return also works out the OAS recovery tax, 15% of net world income above an annual threshold, charged on top of the withholding (T4155). If your total income is modest, an optional section 217 return, due June 30 after the year, may recover part of it; see the section 217 return. Whether to cash out an RRSP before or after the move is in RRSP cash-out before or after leaving Canada.

You keep your Canadian home and rent it out: what does Canada tax?

Canada may tax rent from Canadian real estate (Article VI) at 25% of the gross rent. A Canadian agent who collects the rent withholds it; an individual tenant who lives in the home and pays you directly does not, so you must remit it yourself. A payer who should have withheld and did not is liable for the tax (Income Tax Act s. 215(1.2), (1.3), (6)). You can elect to file a section 216 return and pay tax on net rent, with any excess refunded, and Form NR6 lets the agent withhold on net rent during the year (T4058). A home kept in Canada can also count as a residential tie. The steps, forms and agent rules are in non-resident landlords.

Your Canadian employer pays you while you work in Singapore: which country taxes the pay?

Once you are a resident of Singapore, pay for work you do in Singapore is taxable only there under Article XIV(1), even if a Canadian employer pays it. Canada can tax pay for days you work in Canada. The treaty's exemption for short visits needs all three of: no more than 183 days in Canada in the calendar year, pay from an employer resident in Singapore, and no cost borne by a business location in Canada. Pay from a Canadian employer usually fails the second test, so Canada can tax even a few workdays spent in Canada. On a secondment where a Singapore company pays or bears the cost, the answer depends on the arrangement.

While you are still a Canadian resident, for example on a posting where you keep your ties, Canada taxes all of your pay and gives a credit for Singapore tax on it. Payroll withholding and remote work are in working for a Canadian employer from abroad.

How is double tax avoided, and what do you file in Canada each year?

Article XXII gives the credit. While you are a Canadian resident, Canada allows a credit for Singapore tax on income arising in Singapore. Once you live in Singapore, the treaty has Singapore credit Canadian tax on income arising in Canada.

Which years need a return is in do you file every year after leaving Canada, and catching up missed years is in non-resident Canadian return and catch-up.

Example

These examples are illustrative; all figures are in Canadian dollars.

Banker moving from Toronto to Singapore with vested RSU shares

A banker leaves Toronto in March, sells the condo before going, and holds C$150,000 of shares from vested RSUs with a cost of C$100,000. Canada treats the shares as sold for C$150,000 on the departure date, so the final return reports a C$50,000 capital gain. The shares are worth more than the T1161 threshold, so the banker files T1161. Half the gain, C$25,000, is taxable; even at the top federal rate the federal tax is about C$8,250, below the security threshold, so the banker can defer paying it with T1244 without posting security.

Former resident with Canadian bank shares

A former resident in Singapore holds C$400,000 of Canadian bank shares paying C$16,000 of dividends a year. With a valid NR301 and the Article XXI condition met, Canada's tax is capped at 15%, or C$2,400. If the condition is not met, for example because the dividends are not remitted to Singapore and Singapore taxes them only on remittance, the payer withholds 25%, or C$4,000.

Retiree drawing a RRIF in Singapore

A retiree in Singapore takes C$40,000 a year from a RRIF. The treaty gives no reduced rate, so Canada withholds 25%, or C$10,000, each year. If the retiree's world income is modest, a section 217 return may refund part of the C$10,000; the section 217 return guide shows the test.

Different for you?

• Your posting is under three years, or you keep your Canadian home: residence decides everything else; see working abroad for a few years and get cross-border tax help.
• You hold employer shares, RSUs or stock options: the departure gain and later vesting need planning on both sides; see departure tax on stock options and RSUs and book cross-border tax help.
• Your family stays in Canada: see family stays in Canada while you work abroad.
• You rent out your Canadian home: see non-resident landlords.
• You have a large RRSP or RRIF: compare RRSP cash-out before or after leaving Canada and the section 217 return.
• You want the treaty rate on Canadian dividends or interest: whether Article XXI cuts it depends on how Singapore taxes that income for you, a question on both sides; get cross-border tax help before you send NR301.
• You keep Canadian bank, brokerage or TFSA accounts: see Canadian bank and brokerage accounts after leaving and contributing to an RRSP or TFSA after leaving Canada.
• You own a Canadian company or lend it money: see paying yourself from your corporation after moving abroad, corporation residency after the owner moves abroad and shareholder loan when you leave Canada; the six-year rule and related-party interest need cross-border tax help.
• You may move back to Canada later: see moving back to Canada after paying departure tax.