How to report income earned outside of your province on a tax return

If you've found a way to earn money outside your province of residence, here's how to properly report it when filing your tax return to avoid the possibility of incurring any unexpected penalties.

How to report income earned outside of your province on a tax return

If you currently reside in one province but work in another, you'll need to report any income earned outside the province where you reside. Why is this important?

When the time comes to pay your taxes, you’ll need to make sure you file your taxes with the proper province. This is important because the income taxes paid to the federal government make up the majority of revenue for the Government of Canada, which is how subsidies are determined for each province.

Pay heed to due dates

The taxes collected are used to fund essential services available to the people in your province. That's why it's essential for taxpayers to calculate and assess the amount of taxes they owe or are owed.

  • As a private individual, you're given until April 30th to file your personal income taxes.
  • If you're self-employed the due date is June 15th. However, if you owe money you'll be subject to interest charges as of April 30th.

To determine for which province you need to file a tax return

Your first step to reporting the income you earned while outside your usual province of residence is figuring out to which province you are liable for taxes. The rule to determine this is relatively clear:

  • You will need to file taxes to the province where you resided on December 31st of the taxation year. This means if you had lived (for example) in Ottawa on December 31st of 2016, you would have been considered a resident of Ontario and therefore responsible for paying taxes to the province.

Even if you’re temporarily living in a province, under these guidelines you’re still considered a resident.

Another way your status as a resident of a specific province can be determined is by how many significant ties you have to one province versus another. There are a few factors involved, including:

  • Which province is home to your place of dwelling?
  • Where does your spouse or common-law partner live?
  • Where do any of your dependents reside?

If you’re a resident of more than one province

You may now have a clearer idea in your head to which province you'll need to file income taxes, but there is another important fact you need to think about.

  • In some cases, you may be determined to be a resident of more than one province.
  • This type of case is clarified in section 1.3 of the Canada Revenue Agency (CRA) Income Tax Folio S5-F1-C1: Determining an Individual's Residence Status.

How it can happen

According to the Canada Revenue Agency, this can happen when you physically reside in one province, other than the one you usually live in on December 31st of the tax year.

  • This occurs when you take a job opportunity or go to school in another province and it happens to overlap December 31st of the tax year.

Residential ties

Does this all sound confusing? Not to worry.

  • If you are one of those people who are determined to be a resident of two provinces, for your income tax purposes you are considered a resident of the one province where you have the most significant residential ties.
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