Compliance
Compliance Checklist for Non-Residents and Deemed Residents in Canada: What’s New in 2025
Recent changes affect non-residents and deemed residents: the elimination of the Underused Housing Tax, revised rates & residency tests, and new reporting rules in CRA’s 2025 guides.
By NomadicTax Research Team • 5-8 min read • February 26, 2026
## Who This Applies To
- **Non-residents**: individuals who don’t reside in Canada and don’t maintain significant residential ties.
- **Deemed residents**: those with certain obligated ties (government employment abroad, military, etc.) or personal circumstances triggering residency status under tax treaties. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package/non-residents/5013-g/guide-non-residents-deemed-residents-canada-completing-your-return.html?utm_source=openai))
## Major Changes for 2025–-2026
- **Lowest income tax rate lowered**: From 15% to 14%, effective July 1, 2025, proration resulting in 14.5% for full-year 2025. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package/non-residents/5013-g/guide-non-residents-deemed-residents-canada-completing-your-return.html?utm_source=openai))
- **Underused Housing Tax (UHT) eliminated**: No UHT payable or returns required for **2025 or later years**. Penalties/interest still apply for 2022-2024 obligations. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package/non-residents/5013-g/guide-non-residents-deemed-residents-canada-completing-your-return.html?utm_source=openai))
- **Residency and Deemed Residency Rules**: Updated definitions and tests clarified in the 2025 CRA guide for Non-Residents and Deemed Residents. E.g., those overseas with government credentials, or in the 19th month, certain ties, etc. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package/non-residents/5013-g/guide-non-residents-deemed-residents-canada-completing-your-return.html?utm_source=openai))
## Obligations You Shouldn’t Miss
- **File tax returns if required**, even if your world income is mostly foreign; Canadian source income or benefits/credits may be at stake.
- **Reconcile withholding**: Non-Residents may see 15% withholding on Canadian source; deemed residents may need to report global income.
- **Update CRA when your permit/immigration status changes**, as eligibility for benefits/credits often depends on status.
- **Claiming credits**: make sure you correctly classify expenses and claims under the new lowest rate rules.
## Practical Example
Sara lives abroad, is a deemed resident because she’s a government employee posted overseas with a permit. Her world income is reported to Canada. In 2025:
- Adjust her withholding or instalments anticipating the lowest 14.5% bracket until July 1, then 14%.
- If she owned housing in Canada previously subject to UHT, she no longer owes UHT for 2025 or later.
- Use the CRA’s forms for non-residents / deemed residents, especially for benefits/credits.
## Tips for Smooth Compliance
- **Track your presence and ties**: days in Canada, property, bank accounts—to assess your residency.
- **Maintain immigration documentation**, valid permits, employer letters, etc.—crucial for deemed residency status.
- **Stay on top of CRA publications**, like updated guides/forms for Non-Residents and Residency Status.
- **Retain records** for foreign income even when taxed abroad, and access treaty credits if applicable.
**Bottom line**: For non-residents and those in borderline status, recent and proposed changes (UHT elimination, rate changes, redefined residency tests) are significant. Being fully informed now avoids lost refunds, unexpected taxes, or penalties.