CANADIAN TAX REPORTING PENALTIES FOR NON-COMPLIANCE
Non-residents that conduct business in Canada must comply with Canadian tax reporting requirements or face penalties for not complying. Canadian tax rules require that all non-resident corporations, individuals, and partnerships that conduct business in Canada during a year must file a Canadian income tax return.
The definition of conducting business in Canada may include conducting business meetings in Canada, performing services in Canada, and acting as the importer of goods into Canada. There are many conditions that must be considered to determine whether or not one is carrying on business in Canada.
It is important to determine from the outset whether you are conducting business in Canada in order to ensure that all Canadian income tax filing requirements and applicable withholdings comply with government regulations. The CRA levies a penalty $2,500 for non-resident corporations that carry on business in Canada and do not file a tax return. The penalties for late-filed income tax returns and information returns apply even though there may be no tax owing.