What Does the Canada–China Tax Treaty Cover?

Avoiding double taxation, deciding residence status, which country taxes each type of income

Scott Tang, CPAUpdated 2026-11-052026 rules6 min read

China and Canada have a tax treaty for the avoidance of double taxation (what people usually call the "Canada–China tax treaty"), and Hong Kong has a separate one with Canada. A treaty doesn't let you report less income. It does three things: when both sides say you are a resident, it assigns you to one of them; for each type of income, it sets who taxes it and the most the source country can charge; and it sets out how the other side credits the tax already paid.

1986

Canada–China treaty signed May 12, 1986, in force December 29 the same year; generally applies from 1987

2012

Canada–Hong Kong treaty signed November 11, 2012, in force October 29, 2013; generally applies from 2014

10%

Under the Canada–China treaty, the maximum source-country rate on interest and royalties

10% · 15%

Limit on dividends: 10% where the beneficial owner is a company holding at least 10% of the voting shares, 15% otherwise

First: when both sides say you are a resident

China looks at whether you have a domicile in China, and if you don't, at whether you stayed in China for a total of 183 days or more in a tax year; Canada looks at your residential ties to Canada — it is not unusual for one person to be treated as a resident by both. The treaty goes through a set of tests in order, and stops at the first test that settles the question:

1
Permanent home
Where you have a home available to you long-term
2
Centre of vital interests
Which side your family, work and assets are closer to
3
Habitual abode
Where you mainly live day to day
4
Nationality
Which country you are a citizen of
5
Mutual agreement
The competent tax authorities of the two countries decide together

Pay special attention: if the treaty assigns you to China, Canadian tax law treats you as a deemed non-resident of Canada (even if you still have a home and family in Canada), and the way you file from then on is completely different. The result should be backed up in writing — don't go by gut feeling.

Second: which country taxes each type of income

Income	You are a Canadian resident Canada taxes worldwide income	China as the source country How much the treaty lets China tax
Rent from a home in China	✓Report it and credit the Chinese tax	✓The place where the property is located can tax it; the treaty sets no limit
Selling a home in China	✓Report it and credit the Chinese tax	✓The place where the property is located can tax it
Dividends from a Chinese company	✓Report it	◐Generally up to 15% (10% for a company holding at least 10% of the voting shares)
Interest from China	✓Report it	◐Up to 10%
Wages for work in China	✓Report it	◐China can generally tax the part for work done in China; if all three conditions are met, including being in China no more than 183 days in the year, it is taxed only in Canada
Living in Canada, working remotely for a Chinese company	✓Report it	✕Ordinary employment income for work done in Canada is generally taxed only in Canada; directors' fees and similar income are looked at separately

Rent from a home in China

🍁 You are a Canadian resident: ✓Report it and credit the Chinese tax
🏮 China as the source country: ✓The place where the property is located can tax it; the treaty sets no limit

Selling a home in China

🍁 You are a Canadian resident: ✓Report it and credit the Chinese tax
🏮 China as the source country: ✓The place where the property is located can tax it

Dividends from a Chinese company

🍁 You are a Canadian resident: ✓Report it
🏮 China as the source country: ◐Generally up to 15% (10% for a company holding at least 10% of the voting shares)

Interest from China

🍁 You are a Canadian resident: ✓Report it
🏮 China as the source country: ◐Up to 10%

Wages for work in China

🍁 You are a Canadian resident: ✓Report it
🏮 China as the source country: ◐China can generally tax the part for work done in China; if all three conditions are met, including being in China no more than 183 days in the year, it is taxed only in Canada

Living in Canada, working remotely for a Chinese company

🍁 You are a Canadian resident: ✓Report it
🏮 China as the source country: ✕Ordinary employment income for work done in Canada is generally taxed only in Canada; directors' fees and similar income are looked at separately

The pattern is: income from real estate follows the property, wages follow where the work is done, and investment income can be taxed by both sides, with a cap for the source country.

Third: how tax already paid is credited

The treaty states that tax a Canadian resident pays in China in accordance with the treaty can be credited against the Canadian tax on the same income (under the rules and limits of Canadian tax law). For how the credit works, see "Tax Already Paid in China: Can You Claim It in Canada?" in this series.

How Hong Kong is different

Hong Kong's tax system is simple
Hong Kong does not tax dividends or bank deposit interest and has no capital gains tax, so there is generally no Hong Kong tax to credit on this income, and Canada taxes it as usual.
Salaries tax depends on where you work
Hong Kong can tax wages for work done in Hong Kong; if you live in Canada and work remotely for a Hong Kong company, the income is generally taxed only in Canada.
There are two treaties
Mainland China and Hong Kong each have their own treaty with Canada, and the wording is not exactly the same. Which one applies depends on the tax residence of the person receiving the money and of the payer, and on the source of the income — not on where the money is sent from.

Points to watch

The treaty doesn't exempt you from reporting
If you are still a Canadian tax resident, you still report your worldwide income in Canada, and you still file foreign property reports such as the T1135. If the treaty makes you a deemed non-resident, the non-resident rules apply.
Check early if you may be "resident in both"
If you spend long periods back in China each year, or have family in both places, first work through the treaty tests; see "Spending Several Months a Year in China: Does It Affect Your Canadian Tax Residency?" in this series.
Relying on the treaty needs support
To have withholding reduced under the treaty, or to be treated as a resident of one side under the treaty, you generally need documents such as a certificate of residence.

How Sheng Qian CPA can help

Residence status first
Based on your home, family, work and assets, we look at which side you are a resident of under the treaty, and set it out in a written analysis.
Each type of income against the treaty
For rent, dividends, interest and wages, we look at who taxes each one, how much, and how Canada gives credit.
Local advisers for the China side
Filing and paying tax in China is handled by qualified local advisers there, and we work with them on the Canadian side; for fees, see "What Sheng Qian CPA Can Do for Cross-Border Families: From Tax Returns to Foreign Asset Reporting" in this series.

Sources

Department of Finance Canada: Canada–China Income Tax Agreement (1986) · Ministry of Foreign Affairs of China: Canada–China agreement for the avoidance of double taxation (English text)
Department of Justice Canada: Canada–Hong Kong Tax Agreement Act
China's State Taxation Administration: Individual Income Tax Law (in Chinese)
CRA: Income Tax Folio S5-F1-C1, Determining an Individual's Residence Status

Disclaimer

This article is general information only and is not tax advice. Everyone's situation is different; please consult a CPA about your specific arrangements, and consult qualified local advisers about tax matters in China. Service fees are as set out in our written quote.

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