Guide for Sri Lankans in Canada: Tax residency rules, liability & IRD e-filing for Y/A 2025/2026. Learn how to file your Sri Lanka tax return online from overseas with taxcalculator.lk.
If you are a Sri Lankan living in Canada, whether you hold Canadian citizenship, PR status, work permit, or are a dual citizen, you may still have tax obligations in Sri Lanka.
For the Year of Assessment (Y/A) 2025/2026 (April 1, 2025 – March 31, 2026), understanding your tax residency status is critical. It determines whether you are taxed on:
- 🌍 Worldwide income, or
- 🇱🇰 Sri Lankan-sourced income only
This complete guide explains:
- Sri Lanka tax residency rules
- Filing liability thresholds
- How to file from Canada
- Key compliance tips for expats
- Important IRD e-filing requirements
Understanding the Sri Lankan Tax Year (Y/A 2025/2026)
Sri Lanka follows a tax year from:
April 1, 2025 – March 31, 2026
All income earned during this period is reported under Y/A 2025/2026.
Tax filing is administered by the
Inland Revenue Department (IRD)
through its official portal:
👉 https://www.ird.gov.lk
1️⃣ Sri Lankan Tax Residency Rules (For Sri Lankans in Canada)
Your tax residency status is determined mainly by the 183-day rule.
✅ The 183-Day Rule
You are considered a Sri Lankan tax resident if:
- You are physically present in Sri Lanka for 183 days or more
- Within any 12-month period during Y/A 2025/2026
If You Are a Resident:
You are taxed on:
- ✔ Sri Lankan income
- ✔ Canadian employment income
- ✔ Foreign business income
- ✔ Foreign interest, dividends, rental income
➡ In short: Worldwide income is taxable
❌ If You Are a Non-Resident
Most Sri Lankans living full-time in Canada fall into this category.
You are considered a non-resident if:
- You stay in Sri Lanka less than 183 days
- You are not a government employee posted abroad
- You do not otherwise meet residency criteria
If You Are a Non-Resident:
You are taxed only on:
- 🇱🇰 Rental income from Sri Lankan property
- 🇱🇰 Interest from Sri Lankan banks
- 🇱🇰 Business income in Sri Lanka
- 🇱🇰 Capital gains from Sri Lankan assets
➡ Foreign income is NOT taxable in Sri Lanka
Important Note About Citizenship
- Losing Sri Lankan citizenship does not remove tax liability
- Taxation depends on residency and source of income, not passport status
Even non-citizens must pay tax if earning Sri Lankan-sourced income.
2️⃣ Tax Scope Summary Table (Y/A 2025/2026)
| Status | Tax Scope | Key Threshold |
|---|---|---|
| Resident (183+ days) | Worldwide income | LKR 1,800,000 annual |
| Non-Resident | Sri Lankan-source income only | Any taxable local income |
3️⃣ Filing Thresholds – Who Must File?
You must file a Sri Lankan income tax return if:
✔ You are a Resident AND:
- Your monthly income exceeds LKR 150,000
- Or annual income exceeds LKR 1,800,000
✔ You are a Non-Resident AND:
- You earn any taxable income in Sri Lanka
(e.g., rent, interest, business profits)
Personal Relief for Residents
For Y/A 2025/2026:
- Personal relief: LKR 1,200,000
This reduces taxable income for residents.
When Filing Is NOT Required
You generally do NOT need to file if:
- You are a non-resident
- You have ZERO Sri Lankan income
- You have no property, business, or investments in Sri Lanka
However, filing may still be recommended for:
- Audit protection
- Property transactions
- Maintaining compliance history
4️⃣ Foreign Income & New Tax Changes (From April 2025)
Important update:
From April 2025, certain foreign service income may be taxed at 15%, depending on classification and residency status.
If you are considered a Sri Lankan tax resident, your Canadian employment income may become taxable in Sri Lanka.
⚠ Always assess residency carefully to avoid double taxation issues.
5️⃣ How to File Sri Lanka Tax Return from Canada (Step-by-Step)
You can file your return online from anywhere in the world.
All eligible individuals must file via the IRD e-Services Portal.
Step 1: Obtain or Register for a TIN
You need a Taxpayer Identification Number (TIN).
Register via:
IRD Portal → e-Services → Taxpayer Registration
You will need:
- NIC (Sri Lankans)
- Passport (for non-residents / foreigners)
Step 2: Obtain Your PIN
After TIN registration:
- Request activation PIN
- Log in to the IRD system
Step 3: Select Return Type
Choose:
✔ Simplified Return
For:
- Employment income
- Bank interest
- Solar income
✔ Standard Return
For:
- Business income
- Rental income
- Foreign income
- Capital gains
Step 4: Declare Income & Reliefs
You must declare:
- Income earned (Sri Lanka & foreign if resident)
- Withholding taxes (WHT)
- Reliefs and deductions
- Assets & liabilities (Residents only)
Residents must declare:
Worldwide assets & liabilities as at March 31, 2026
Non-residents declare:
Only Sri Lankan assets/income
Step 5: Submit & Pay Tax
- Submit electronically
- Upload documents if requested
- Pay any tax due
If you are an instalment taxpayer, pay quarterly.
6️⃣ Key Compliance Tips for Sri Lankans in Canada
✔ Keep Track of Travel Days
Maintain accurate entry/exit records.
✔ Monitor Rental & Bank Income
Even small amounts may trigger filing.
✔ Maintain Updated TIN Details
Ensure your overseas contact details are updated.
✔ Consider Double Taxation Relief
If taxed in both Canada and Sri Lanka, relief mechanisms may apply.
7️⃣ Common Scenarios
Scenario 1:
Living full-time in Canada
No Sri Lankan income
Stayed in SL 2 weeks
👉 No filing required.
Scenario 2:
Living in Canada
Own apartment in Colombo earning rent
👉 Must file as non-resident.
Scenario 3:
Spent 7 months in Sri Lanka during tax year
Working remotely for Canadian employer
👉 Likely Sri Lankan tax resident.
Canadian salary may be taxable.
8️⃣ Frequently Asked Questions (FAQ)
❓ Do I need to file if tax was already deducted at source?
Yes. Filing may still be required if income exceeds threshold.
❓ Can I file without being in Sri Lanka?
Yes. E-filing is fully accessible from Canada.
❓ Do non-citizens need to file?
Yes, if earning Sri Lankan-source income.
❓ What if I miss the deadline?
Penalties and interest may apply.
9️⃣ Deadlines for Y/A 2025/2026
Official deadlines are announced by IRD.
Previously, extensions (e.g., November 30) were granted.
Always check the IRD portal for updated dates.
10️⃣ Why Use taxcalculator.lk?
At taxcalculator.lk, we help Sri Lankans overseas:
- ✔ Assess tax residency
- ✔ Calculate Sri Lanka income tax
- ✔ Determine filing liability
- ✔ Understand expat compliance
- ✔ Prepare and file tax returns
We are Chartered Accountants in Sri Lanka, specializing in expatriate tax matters.
Final Checklist for Sri Lankans in Canada
Before March 31, 2026:
☐ Check number of days in Sri Lanka
☐ Confirm tax residency status
☐ Review Sri Lankan income sources
☐ Ensure TIN registration
☐ Prepare supporting documents
☐ File via IRD portal
Conclusion
Sri Lankans living in Canada must carefully evaluate their Sri Lankan tax residency status for Y/A 2025/2026.
The key determinant is the 183-day rule.
- Residents → Taxed on worldwide income
- Non-residents → Taxed only on Sri Lankan income
With mandatory e-filing through the Inland Revenue Department, overseas compliance is now straightforward — but requires careful planning.
If you are unsure about your status or filing obligation, consult a qualified tax professional.
📌 Need Help Filing from Canada?
Visit 👉 www.taxcalculator.lk
Or contact us for a professional assessment.
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