I have read this information. The actual tax rate also depends on if there is tax treaty between US and the original country which might provide for a lesser rate of taxation. I am concerned that if such treaty is for Canada residents or citizens. As mentioned I am canadian citizen but a Canadian non-resident for tax purposes. I want to know if the US-Canada treaty applies to me and if so, what's the exact tax rate for capital gains.
'Please note I have applied to be a non-resident for tax purposes for part of the year 2011 and onwards. And for the rest part of 2011 I lived in China.'
Thanks for the link and I read http://www.irs.gov/pub/irs-trty/china.pdf
esp article 12 (gains) but still can't figure out how much capital gains tax will be levied by US.
You are correct - there is a tax treaty between the US and China - http://www.irs.gov/pub/irs-trty/china.pdf
However - in order that tax treaty to be in effect - you should be a tax resident of China and your income should be taxed in China as for the resident.
See page 5 - ARTICLE 4 (Residence)1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that Contracting State, is liable to tax therein by reason of his domicile, residence, place of head office, place of incorporation or any other criterion of a similar nature.
It is not clear from your information if you are liable for income taxes in China or not?
Relating to US taxes on capital gains - see page 20 - ARTICLE 12 (Gains)
6. Gains derived by a resident of a Contracting State from the alienation of any property other than that referred to in paragraphs 1 through 5 and arising in the other Contracting State may be taxed in that other Contracting State.
Thus - the treaty allows either country to tax capital gains.
As a result - the 183-day rule mentioned above will be in effect - if you spent more than 183 days in the US during 2011 - the gains are taxed at 30% rate; If you spent less than 183 days in the US during 2011 - the gains are NOT taxed.
Let me know if you need any help.