Canadian Tax Refund as a Non-Resident: Timing, Cheques and Wires

How long does the CRA take to process a non-resident return?

The CRA's published processing time for non-resident or international filers is within 16 weeks. It lists 2 weeks for electronically filed returns as a separate group and does not say which group a departure return or an electronically filed non-resident return falls in. These times apply only if the CRA receives the return on or before the filing due date (CRA: Tax refunds). A return filed late has no published timeline. A refund also takes longer when the CRA selects the return for a more detailed review or asks you or your representative for more information or documents; it waits until the review ends. The refund itself arrives with, or after, your notice of assessment (Guide T4058).

Your case is less simple when the refund is large, spans several years, mixes Canadian and foreign income, or meets an old debt. Before you file, gather:

• your slips (T4, T4A, T4A-NR, NR4) and the tax each shows withheld
• the address the CRA has on file, and your new address abroad
• details of any Canadian bank or credit union account still open in your name
• the date you left Canada, and records of income earned abroad after you left
• any CRA or benefit notices about amounts you owe

Whether you must file at all, and how far back a refund can go (up to 10 calendar years), is covered in filing a Canadian return as a non-resident. How to send the return from abroad is in filing your departure return from abroad.

Which Canadian taxes can a non-resident get refunded?

A non-resident can get back income tax deducted from income taxed on a Canadian return, such as employment income on a T4, when the return shows less tax than was withheld. Part XIII tax, the flat non-resident withholding on items such as dividends, interest and pensions (generally 25% before any treaty reduction), is a different matter: "Part XIII tax is not refundable by way of filing a Canadian tax return" (CRA: Non-residents of Canada). The exceptions are the section 216 election for rent and the section 217 election for pensions and similar payments, shown in the table below.

Money a buyer held back when you sold Canadian property is a separate process; see buyer held back your sale proceeds.

How does the CRA pay a refund if I have no Canadian bank account?

Without a Canadian account, the CRA mails a cheque to the address it has on file. "Direct deposit is only available to Canadian bank and credit union accounts" (CRA: Direct deposit for individuals). If direct deposit is not set up before you file, the refund comes by cheque (CRA: Tax refunds).

Two traps follow from this:

• Old address. If a cheque goes to your old Canadian address and is returned, the CRA says any future payments "will be calculated but will not be issued until your address is updated" (CRA: Tax refunds). Update your address before you file.
• Foreign bank charges. A bank abroad that accepts a Canadian-dollar cheque may charge a fee or convert it at its own rate. Ask your bank first.

If you kept a Canadian account, you can sign up for direct deposit in your CRA account or through that bank; enrolment by phone is no longer offered, and the mailed form can take three months or longer (CRA: Direct deposit for individuals).

Can the CRA deposit a refund to a foreign bank account?

Not by direct deposit. If you live in a country that does not accept Canadian cheques, you can ask for the payment by wire transfer to a foreign account (CRA: Direct deposit FAQ).

For an income tax refund cheque, the CRA's steps (CRA: Uncashed cheques):

1. Ask your bank what it needs to receive an international wire.
2. Write a letter with the currency you want, the bank's name and address, your account number and type, the bank sort code or IBAN, the SWIFT/BIC code, and your name, address and handwritten signature. The CRA does not accept electronic, digital or stamped signatures.
3. Mail the uncashed cheque and the letter to: Attention: Team Leader, Direct Deposit and Program Support, Sudbury Tax Centre, 1050 Notre Dame Avenue, Sudbury ON P3A 5C1, Canada. If you already returned the cheque, mail the letter alone.

The CRA needs this information each time you return a cheque to have the payment reissued by wire or in a different currency. Only a Part XIII refund (an NR7-R claim or a non-resident tax account) uses Form NR304 and goes to the Non-Resident Withholding Section, P.O. Box 20000, Station A, Sudbury ON P3A 5C1 (CRA: Direct deposit for non-residents).

A CRA cheque never expires: an old one can still be cashed in Canada at no charge. For a cheque that was lost, stolen or never arrived, call the CRA (1-800-959-8281 from Canada or the United States; 1-613-940-8499 collect through an operator from elsewhere); it may send forms to fill out, such as the PWGSC 535 Undertaking and Indemnity, and issues a replacement if approved (CRA: Uncashed cheques).

Who uses Form NR304 and who uses the CRA account?

Form NR304 is the direct deposit form for two non-resident groups: people claiming an NR7-R refund and holders of a non-resident tax account (a number starting with NR, a letter and six digits). Both need a Canadian bank account in a name that matches the form or account (CRA: Direct deposit for non-residents).

Getting into a CRA account from abroad is covered in CRA My Account from outside Canada.

Why would the CRA keep part or all of my refund?

The CRA may apply a refund to money you owe before paying the rest (Income Tax Act, s. 164(2)). The CRA lists these debts (CRA: Tax refunds):

• an amount owing to the CRA, or one pending
• a family support garnishment order
• other federal, provincial or territorial debts, such as student loans
• overpayments of employment insurance, social assistance, immigration loans or training allowances
• unfiled GST/HST or payroll returns, unpaid payroll remittances, or GST/HST or payroll debt of a sole proprietorship or partnership

Benefit payments made after you left Canada can create an overpayment; see benefits after leaving Canada. The CRA may use your refund to pay a debt even while you object to or appeal that debt (IC98-1R8). For a debt you dispute or cannot pay, see CRA tax debt while living abroad.

Two more reasons a refund may not arrive:

• Unfiled returns. The CRA will not refund or apply any amount while any return it knows about is still unfiled, including a GST/HST or Underused Housing Tax return, not only income tax returns (s. 164(2.01)).
• Small amounts. A refund of $2 or less is generally not paid (CRA: Tax refunds).

Does the CRA pay interest on a late refund?

Yes. The CRA pays compound daily interest at the prescribed rate on an individual's income tax refund, but not on benefit or credit amounts such as the Canada child benefit or GST/HST credit. Interest starts on the latest of three days: 30 days after the balance-due day for the year, 30 days after you filed the return, and the day you overpaid (Income Tax Act, s. 164(3); CRA: Tax refunds).

Filing late therefore pushes the start date back: no interest runs on the refund until 30 days after the return is filed. Interest is also paid on an amount the CRA applies to a debt.

Where do I check my refund status from abroad?

Check online in your CRA account, which shows the return's status, the refund amount and your notice of assessment. By phone, call 1-800-959-8281 from Canada or the United States; from any other country, call 1-613-940-8495, where the CRA accepts only collect calls made through an operator (CRA: Tax refunds). If a payment seems lost or returned, the CRA asks you to wait 10 business days after the payment date before calling (CRA: Direct deposit FAQ).

Example

These examples are illustrative; figures are in Canadian dollars.

Over-withheld wages

Jun left Canada in May. His employer withheld C$9,000, and his part-year tax works out to C$6,500. He files his departure return by the due date, so a CRA published processing time can apply to his C$2,500 refund. He closed his Canadian account, so the refund comes by cheque to the foreign address he gave the CRA before filing.

Cheque abroad

Fatima's C$1,200 refund cheque reaches Manila, where her bank will not accept Canadian cheques. She asks her bank what it needs for an incoming wire, writes and signs a letter with those details, and mails the uncashed cheque and the letter to the Sudbury Tax Centre. She asks the CRA to reissue the payment by wire.

Refund applied to a debt

Leo's C$800 refund is applied to a C$1,100 benefit overpayment from the months after he left. His notice shows the refund used and C$300 still owing.

Different for you?

• You are not sure you must file, or you have refunds for several past years: see non-resident returns and catch-up filing and get individual tax help.
• The CRA is holding your refund until older returns are filed: see non-resident returns and catch-up filing and get individual tax help.
• A large refund is held for review, or the CRA asks for documents: get individual tax help before you reply.
• The tax was withheld on an NR4 slip: see NR4 slips and NR7-R refunds.
• The withholding was on a pension, RRSP or RRIF: see the section 217 return.
• The withholding was on Canadian rent: see non-resident landlords.
• Your refund went to a debt you dispute or cannot pay: see CRA tax debt while living abroad.
• A benefit overpayment took your refund: see benefits after leaving Canada.
• You cannot sign in to your CRA account from abroad: see CRA My Account from outside Canada.