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Becoming a Non-Resident of Canada

This article discusses how you can become a non-resident of Canada, and the pros and cons of completing Form NR73 (the Determination of Residency Status form). I will also review 10 major tax implications of becoming a non-resident of Canada for those considering leaving to work, live or retire abroad.

 

How to Become a Non-Resident of Canada

To become a non-resident of Canada, you have to break all of your primary and most of your secondary ties to Canada.

Primary ties include:
(1) A personal residence in Canada, which can be either rented or owned by you
(2) A spouse or common-law partner living in Canada
(3) Dependents living in Canada

If you have a single primary tie to Canada, then you are a factual resident.

Secondary ties include:Secondary Ties Scale

(1) Driver’s license
(2) Health card
(3) Bank accounts
(4) Credit cards
(5) Furniture and clothing
(6) Memberships in clubs
(7) Pension plans, RRSPS, and TFSAs
(8) Vehicles
(9) Pets in Canada
(10) Other personal possessions

For secondary ties, think of it as a weighing scale. More secondary ties that you have, the heavier the scale, and the more likely it is that you will be considered a factual resident of Canada.

Pros and Cons of Form NR73

If you are leaving Canada, you have the option of filling out the Determination of Residency Status form (Form NR73) with the CRA.

Pros:
By completing this form, the CRA can provide you with a notice of determination on your residency status. By doing so, you will lessen any uncertainty and become fully aware of your status as a tax resident or nonresident of Canada.

Cons:
By filing Form NR73, it may ‘invite the CRA’ to scrutinize your current situation. The CRA often takes a conservative position in determining your Canadian residency status and, as tax collectors, it is in their best interest to have you pay tax as a Canadian resident.

Tip: In lieu of filing form NR73, consider filing a departure tax return with the CRA on or before April 30 of the following year in order to become a non-resident of Canada. The departure return clearly states the date that you emigrated from Canada.

10 Major Tax Implications

 

 

1. Canada Child Benefit

  • You will stop receiving the Canada Child Benefit upon becoming a non-resident of Canada. You should inform the CRA of the change in your residency status to halt any payments.

2. GST/HST Credits

  • Upon becoming a non-resident, you will stop receiving GST/HST tax credits from the CRA.

3. Repay Home Buyers Plan and Life Long Learning Plan

  • From the date you leave Canada, you have 60 days to repay any amounts that you owe under the Home Buyers Plan or the Life Long Learning plan. If you fail to make payments, your balances owing will be included in your taxable income for your final Canadian tax return.
  • If very low income is expected in the year of departure, it may be beneficial to include the balances owing from the Home Buyers Plan and Life Long Learning Plan as income in your final Canadian tax return. This way, you will pay low tax on the income included and have no obligation to repay the balances owing.

4. TFSA (Tax-Free Savings Account)

  • After leaving Canada, the funds in your TFSA can still remain
  •  Any earnings accrued in your account and withdrawals will not be taxed but, they may be taxed in your current country of residence. You will not be able to accrue additional TFSA contribution room for any years in which you are non-resident of Canada.
  • If you make a contribution, as a non-resident, you will be subject to a 1% penalty for each month the contribution remains in the account.

5. Stop Contributing to your RRSP (Registered Retirement Savings Plan)

  • Most likely, you will not have any income upon leaving Canada. As a result, contributing to your RRSP will become unnecessary, as you will be unable to deduct any contributions made.

Tip: If you expect to have a significant amount of income on your final Canadian tax return, then consider making an RRSP contribution in the year of departure. The RRSP contribution will be tax deductible.

6. Inform your Bank, Financial Advisor and Pension Administrator

  • Upon becoming a non-resident of Canada, you should inform your bank, financial advisor and pension administrator about your change in residency status.
  • Your bank must begin withholding 25% of tax from any interest that it pays you. The same tax also applies for dividends paid to you.
  • 25% of tax will be withheld from payments made to you from the Old Age Security, the Canada Pension Plan and Registered Pension Plans.
  • As you can see, 25% tax is withheld from passive income paid to non-residents of Canada. The withholding tax rate can be reduced by a Tax Treaty that Canada has with your new country of residence.
  • If a retired Canadian does not inform the CRA that they are a non-resident of Canada, they will continue to receive the gross amount of CPP and OAS payments without withholding tax being properly deducted. You will then have to repay the amounts received, plus interest and penalties.

7. Disclose All Canadian Assets

  • When you become a non-resident of Canada, you must disclose all of the property that you own (totaling $25,000 or more) on Form T1161 of your final personal tax return. These are classified as ‘reportable properties’ and penalties of up to $2,500 can be levied by the CRA for non-disclosure.

Tip: Canadian real estate, RRSPs, RESPs, and certain types of property do not have to be disclosed.

8. Deemed Disposition of Property

  • When you become a non-resident, you are deemed to dispose of all of your property at its fair market value. Any unrealized gains will be subject to income tax, even if you have not sold the property. This is known as departure tax, and it can add up to a significant amount.
  • For instance, imagine selling all of the property you own and having to pay tax on the profits. This is what actually happens when you emigrate from Canada.

Assets that are subject to departure tax include:
o Stocks of all companies, private and public
o Mutual funds, exchange-traded funds, partnership interests
o Real estate situated outside of Canada
o Foreign Trusts
o Certain personal property, if it has appreciated in value

Departure Tax is not applicable to the following:

  • Real property situated in Canada such as Canadian resource properties and timber resource properties.
  • The property of a business that is maintained through a permanent establishment, including capital property, eligible capital property and property described in the inventory of the business.
  • Certain property of a returning former resident who last emigrated after October 1, 1996. This will no longer be treated as having realized accrued gains on departure.
  • Property belonging to a short-term resident (an individual who is a resident in Canada for less than 60 months in the 120-month period preceding the disposition) when that resident came to Canada or any property acquired through inheritance after that individual became a resident of Canada.
  • Property that is deemed to be an “excluded right or interest” of the taxpayer. This refers to future benefits and payments under certain plans and arrangements, including pensions, RPPs, IPPs, RRSPs, RRIFs, RESPs, DSPs, and RCAs. For the full extensive list, please consult Section 128 of the Canada Income Tax Act.
  • Life Insurance policies also fall under this category. However, this is only applicable to Canadian residents. Non-residents of Canada that own foreign life insurance will be subjected to departure tax.
  • Most Canadians do not pay departure tax because of the exceptions. Those Canadians who own investments outside of their RRSPs, or are business owners, should be prepared to pay departure tax upon becoming a non-resident of Canada. (There is a special election available to defer paying departure tax by providing the CRA with security or collateral for paying it later).

Security and Deferring Departure Tax

  • It is possible to defer the departure tax for those who intend to regain residency status or for those who do not have the funds to pay the tax. This can be done by providing the Canada Revenue Agency with deemed acceptable security such as bank guarantees, letters of credit, shares of a corporation which is equal in value to the taxes due. In order to select the payment you must file the Form T1161. Remember that security is only required if the tax owing on the deemed disposition is in excess of $14,500. Also, if you have already paid the departure tax and intend to return to Canada, then you are eligible for a tax refund. The taxes that are owed on the deemed disposition is due by April 30th or (June 15th if you are claiming self-employment income) of the year following the year in which you move.

9. Selling Your Home After Leaving Canada

  • If you sell your home after leaving Canada, you will have to pay 25% tax on the gross selling price of your home.
  • For example, if you sold your home for $400,000, then you would have to pay taxes of $100,000. A situation like this may lead to financial hardship for many Canadians who are non-residents.
  • Fortunately, there is a special tax election that you can make to reduce the amount of tax to 25%of the gain on sale of your home. The gain is calculated as the selling price, less than the original purchase price. You can claim the principal residence exemption for the period of time that you lived in the home. With the principal residence exemption, the increase in the value of your home while you lived in it will not be subjected to capital gains tax.

Tip: If you rent your home while you are a non-resident, which many Canadians choose, you will need to file a Section 216 Tax Return to report the rental profits earned.
For example: assume that the fair market value of your home when you left Canada was $390,000 and that you sold it for $400,000. The gain will be $10,000, which is subject to 25 percent tax, i.e. $2,500.

10. File Final Canadian Personal Tax Return

  • You must file a final Canadian tax return for the taxation year you leave Canada.
  • Disclose your date of departure on the final tax return.
  • Have your personal tax credits reduced by the number of days that you were outside of Canada.
  • List all of the assets that you own, if those assets have an aggregate cost of $25,000 or more.
  • Pay departure tax or file the applicable forms for deferring departure tax.

In Conclusion

Be aware of the primary and secondary ties and how they impact your residency status with Canada. If your goal is to become a nonresident, then you should sever all of your primary ties and most of your secondary ties. Lastly, file a departure tax return instead of Form NR73 to become a nonresident.

If you become a non-resident of Canada, you should call the CRA to stop receiving GST/HST credits, and the Canada Child Benefit. Repay any balances owing under the Home Buyers Plan and Life Long Learning Plan. Stop contribution to your RRSP and TFSA. Also, inform your bank, financial advisor and pension administrator about your change in residency status and disclose all Canadian assets. You are deemed to dispose all of your property at its fair market value and any unrealized gains will be subject to departure tax. If you plan on selling your Canadian residence upon departure, you will have to pay 25% tax on the gross selling price of your home. Lastly, don’t forget to file a final Canadian personal tax return for the taxation year you leave before heading abroad.

About the Author – Allan Madan

Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation . Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.

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Becoming a Non-Resident of Canada was last modified: July 29th, 2016 by superAmin
This entry was posted in International & non-resident tax and tagged , , , , , , . Bookmark the permalink.

About the author

is a Chartered Accountant, CPA and Tax Expert and enjoys working with business owners, individuals and entrepreneurs.

Disclaimer

The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.

243 Responses to Becoming a Non-Resident of Canada

  1. Petru says:

    Greetings,
    what happens in the case one owes money to CRA for Child benefit, but this person has left Canada for goods, and does not intend to re-pay back? What instruments can CRA use to get back the money from an already a non-resident person?

    Thank you.

    • superAmin says:

      Dear Petru,

      I would estimate that the amount is not very significant. However, the CRA does have information sharing pact with various countries around the world and it is possible that the tax authority in the person’s new country may contact you.

      Else, the person should think about the situation in which they return to Canada for visit or to re-establish residence in Canada. The debt owing could potentially bar the individual from leaving Canada in that instance.

      - Allan and his team

  2. Diane says:

    Thanks for this informative video Allan.

    What happens if I leave Canada but my husband stays behind in our house for several more years until he retires? I don’t plan on coming back. He has lots of holidays and will be coming to visit us and our children overseas. When he retires he will join us.

    Could I be deemed a non-resident for tax purposes?

    Thank you,

    Diane

    • superAmin says:

      Hi Diane,

      Your spouse is considered to be one of very strong ties to Canada and as such, it is highly probable that the CRA will treat you as Canadian resident for tax purposes.

      Thanks!

      - Allan and his team

  3. Shabbir says:

    Hi Allan

    Well I am planing to move to other country for 5-10 years and if i and family become non-resident what I have to do must in Canada i.e. do I have to sell a home,can I keep my bank accounts,can i keep kids RESP, can I keep my life insurance going,Can I take money to other country with me or later and what happens children higher eduction if we come back or kids want to study in university and if we still stay out side.
    In case if I am allowed to keep home and if I keep it on rental then what tax i need to pay.If I plan to come back Canada the money earned outside is allowed or do I have to pay tax on it.

    I put many questions as one related to another if one plans to be become a non-resident.

    Thank you and hope to hear from you.

    Shabbir

    • superAmin says:

      Hi Shabbir,

      To become a non-resident of Canada you need to sever all primary ties and as many secondary residential ties as possible. Primary ties include a home, spouse, and dependents. As your family will be moving with you, these ties will be broken. And if you rent your property out while away from Canada this will no longer be considered a primary tie. Secondary ties include bank accounts, insurance, RESPs, social ties, driver’s license, etc. Secondary ties are assessed collectively to determine strength of ties to Canada. If you continue to hold one or two ties (i.e.: bank account and RESP) you will not likely be considered a resident of Canada. But it is best sever as many ties as possible.

      Renting your home in Canada while away will result in rental income that will be taxable in Canada. You will have to pay a 25% withholding tax on rental income in Canada. You can later file a Section 216 return to recover a portion of the withholding tax.

      If you are considered a non-resident, the income earned outside of Canada will not be taxed in Canada. And if you come back to Canada at a later date you will not be liable for tax earned during the period you were outside Canada.

      If your kids come back to Canada for higher education, this will likely not affect your residency status as they will probably be over 18 and no longer considered a dependent (primary tie).

      - Allan and his team

  4. Fernando Alexandre says:

    HI. My father and mother, who have lived in Portugal for the last 10 years or so, just found out that they should have declared non-residency when they left. The CRA has stopped their pension payments. My parents are really worried about the implications of not having declared. They have bank accounts here, RRSP here, they have some furniture here still at my house, they have all of their main family here still. How do they deal with the CRA now? Should they get a tax lawyer?

    Please help.

    • superAmin says:

      Hi Fernando,

      Thank you for posting your question on our blog and contacting us for additional services. It has been great working with you.

      Take care.

      Allan and team

  5. Scott says:

    Dear Allen,

    In July, I will leave Canada with my wife and young family and start a new job in Indonesia (with which Canada has a tax treaty). We do not want to sell our home and would prefer not to rent it out. It is in a great vacation spot and we would like to return to Canada for vacation each summer and stay here. We have been non-residents before, but we had no primary ties in place, so it all seemed much clearer. Do you feel there any steps I should take before we leave from a determination standpoint? Thanks a lot,
    Scott

    • superAmin says:

      Hi Scott,

      In order to become a non-resident you should sever all primary ties and as many secondary ties as possible. As your family will be relocating to Indonesia, the spouse and dependent tie will be severed. We recommend you rent your Canadian home while in Indonesia to avoid having this property treated as a dwelling place in Canada.

      Secondary ties include credit cards, bank accounts, driver’s license, personal property (i.e.: car). You should sever as many of these as possible. The CRA will assess these ties collectively so holding a couple of these ties will not cause you to be a resident of Canada.

      -Allan and his team.

  6. Scott says:

    Dear Allan,

    I am moving to a country with a tax treaty with Canada in July, but would like to keep my house vacant as we want to take a vacation here each summer. I will be bringing my wife and young children with me. Are there steps I can take between now and July to improve my chances of avoiding tax issues? Thanks,

    Scott

    • superAmin says:

      Hi Scott,

      Holding your Canadian home as a vacation property will be considered a primary residential tie to Canada. This will likely cause you to be considered a resident of Canada. The best option would be to rent your home out at fair market value to an arms-length party (i.e.: not related). This will ensure that your home is no longer considered a primary tie as it will not be available for your use.

      -Allan and his team.

  7. Derek says:

    Hello thanks for the info!

    I’m planning to leave Canada on June 18th and become a non-resident.
    I’m wondering what happens to my instalment payments? Am I still required to pay
    to CRA?

    Thank you
    Derek

    • superAmin says:

      Hi Derek,

      You must make installment payments if you have taxes owing greater than than $3,000 in the current tax year or either of the previous 2 tax years. If you continue to have Canadian sourced income that will result in taxes owing of more than $3,000 you should make installment payments. If you are leaving Canada and will not earn any Canadian sourced income, it is not necessary for you to pay installments. However, as a non-resident you will have to pay Canadian taxes on any Canadian income.

      -Allan and his team.

  8. Joseph says:

    Dear Allan,
    I am not a canadian citizen but I do hold a PR card. I am planing on leaving canda and go back to Dubai as my self employed buisness is not that good. I own a small apartment and I have contributed to RRSP and RESP also. What tax implications do I have to sustain if I decided to drop my PR and leave Canada ?
    Thanks for your help
    regards
    Jo

    • superAmin says:

      Hi Joseph,
      If you are departing from Canada, you have to file a Departure return for your last year in Canada. Also, when individuals emigrate, there is a deemed disposition (sale) for most of their property and they have to pay tax on any capital gains.
      Regarding your RRSP and RESP, they do not have to be closed when you depart. Your RRSP can remain in Canada and you do not have to pay Canadian taxes on any growth in the RRSP. Your child’s RESP can also remain in Canada and earn tax deferred income in Canada.

      -Allan and his Team

  9. Liliana says:

    Hi Allan,

    I just became a permanent resident of US, and I have a rental property in Canada that I am renting out. I already found out that I now will have to set up a non resident account to withhold the taxes on the rental income. If in a few year I want to sell my properly I will have to pay 25% tax on the gains. You mentioned in your previous posts that I can submit a special tax election that you can make to reduce the amount of tax to 25 percent of the gain on sale of your home. The gain is calculated as the selling price, less the fair market value of the property when you left Canada. Do I have to do anything now to assess the value of my condo, or that is done at the time of sale. Is there a way to avoid paying this much tax, such as stop renting it out for a period of time and claim the condo as a vacation condo? Last question, I have a HBP, so I will have to repay or pay tax on the amount that I haven’t replayed yet?
    Thank you in advance

    • superAmin says:

      Hi Liliana,

      Thank you for your question. You will most likely be able to have the 25% capital gain tax refunded back to you by filing a special section 116 nonresident tax return by April 30 of the following year. It will be in your best interest to have the value assessed as of the date you departed from Canada as you will have to have this done sooner or later and it may be difficult to do so later.

      Finally, your remaining HBP balance is due within 60 days after your departure date from Canada. Otherwise, the amount will be included on your final (emigration) Canadian tax return as an income.

      Thanks,

      - Allan and his team

  10. Michelle.Wang says:

    Hi Alan,

    Will my residency status affect the tax rate of a potential life insurance policy paid out to me? or is it the same for both residents and non-residents of Canada?

    • superAmin says:

      Hi Michelle,

      Life insurance payout received following someone’s death is not considered as a taxable income so your Canadian residency status will be irrelevant for tax purposes in this case.

      Best Regards,

      Allan Madan

  11. Shane says:

    Hi Allan,

    If I were to become a resident of Canada again within a short period of becoming a non-resident, I would like to avoid paying the departure tax, how can I defer on paying this tax or would I be given a tax credit if I became a resident again?

    • superAmin says:

      Hi Shane,

      There are exceptions to the departure tax rules. For example, if an individual is resident in Canada for less than 60 months in the 120-month period preceding the disposition, then the rule is generally not applied to property owned by that individual . An individual may elect to defer the payment of the departure tax by providing adequate security or collateral. No security need be provided for the tax payable on the first $50,000 of taxable capital gains. In certain circumstances (specifically in cases of undue hardship) it is possible to negotiate with CRA as to the type, and amount of security.

  12. monkeyballzjr says:

    Hi Allan,

    I have contributed to the CPP for a couple of years now, If I were to leave Canada for a substantial time and then come back when I am of age to receive it, would I still be eligible to receive it? thanks.

    • superAmin says:

      Hi Huy,

      It is impossible for me to personally assess your eligibility as that would be dependent on the length of time and amount that you have contributed while you were working here. I do know that Canada has international social security agreements with many countries. These agreements can help you qualify for pensions or benefits from Canada as well as these other countries. For example, if you did not live or work long enough in another country to qualify under its rules, the time you spent there and/or the contributions you made in that country may be added to your contributions in Canada to allow you to meet the eligibility requirements.

      If you have lived or worked in another country, or you are the survivor of someone who has lived or worked in another country, you may be eligible for benefits from Canada and abroad.

      It is best to contact Service Canada to personally assess your situation.

      Best Regards,

      Allan Madan and Team

      • Chrissy says:

        Is it possible to collect CPP benefits even if one is not geographically located in Canada?

        • superAmin says:

          Hi Chrissy,

          As long as you have made contributions to the CPP, you can file and claim CPP benefits from anywhere in the world.

          Best Regards,

          Allan Madan and Team

  13. Charles says:

    What type of tax and or legal implications if I fail to disclose all my foreign based assets when becoming a non-resident?

    • superAmin says:

      Hi Charles,

      Canada along with the United States have begun to crack down on many offshore foreign assets. Depending on the country in which you have citizenship/residency status after leaving Canada you will face a hefty departure tax in addition to a fine of $25/day up to a maximum of $2,500 for each tax year for failing to disclose the foreign asset. There are possibilities of criminal prosecution for tax evasion as well.

      Best Regards,

      Allan Madan and Team

      • Thompson says:

        Is it possible to use foreign based assets as collateral in deferring departure tax?

        • superAmin says:

          Hi Thompson,

          At this time the CRA does not allow foreign assets to be used since those assets are outside of Canadian jurisdiction. Perhaps in the future where Canada establishes specific country to country treaties allowing them to take control of offshore foreign assets will this be a possibility.

          Best Regards,

          Allan Madan and Team

  14. Cruz says:

    Hi Allan,

    What type of assets can I use as collateral to defer payment on the departure tax, does it have to exceed a specific value?

    • superAmin says:

      Hi Cruz,

      Value is irrelevant for assets exceeding $25,000 or more since you have to pay departure tax in light of accrued capital gains. You can only use collateral specific to that property on which capital gains and departure tax is expected. You cannot use another property.

      Best Regards,

      Allan Madan and Team

  15. J.J. says:

    Is it possible to transfer my contributions made to the Canadian Pension Plan to another pension plan in another country?

    • superAmin says:

      Hi J.J.,

      You can transfer your contributions made to the CPP as long as the country has some sort of social security agreement in place with Canada.

      Best Regards,

      Allan Madan and Team

      • Timothy says:

        How exactly would they go about transferring these contributions and how would the contributions be calculated in process?

        • superAmin says:

          Hi Timothy,

          As long as your resident country has an agreement in place with Canada,
          there should be a system in place for you to apply and transfer your contributions.

          best regards,

          Allan Madan and Team

  16. William Smith says:

    Hi Allan,

    I worked in Canada for a period of two years as non-resident and am originally from England where I am now residing. During this time I paid and contributed towards the Canada Pension Plan. My question is, as a non-resident am I eligible to apply and receive CPP benefits?

    Thank you

    • superAmin says:

      Non-residents and temporary workers that have contributed to the CPP in anyway are eligible receive at least some benefits

  17. Arielle says:

    Hi Allan,

    Regarding departure tax on life insurance policy, what if I had purchase the policy when I was a Canadian citizen and now a non-resident? would my life insurance policy be considered as a Canadian life insurance policy?

    • superAmin says:

      Hi Arielle,

      Yes it would be considered as a Canadian life insurance policy and will not be deemed to departure tax as long as you have last emigrated after October 1, 1996 and file the election.

      Best Regards,

      Allan Madan and Team

  18. Mahmoud says:

    Regarding the 1% penalty for TFSA accounts, does this apply to the entire contribution or just contribution I made as a non-resident?

    • superAmin says:

      Hi Mahmoud,

      This will only apply to the ‘excess contribution’ so the contribution that you made as a non-resident. However you may also be hit an advantage tax of 100 percent for any ‘deliberate contributions’.

      Best Regards,

      Allan Madan and Team

  19. Sandra says:

    Please help me understand this departure tax better. If I sell my principle residence before I move from Canada to the US, I would not have to pay tax? And what about my personal belongings? Things such as living room and bedroom furniture, my personal vehicle that I need, and my small fishing boat for recreational use? I do not have anything fancy or other property or businesses or other belongings except for what I own in my non fancy house. If my house doesn’t sell until after I have moved, I have to pay tax on any profit that I make on it?

    Thanks.

    • superAmin says:

      Hi Sandra,

      Please see my responses below:

      * If you sell your primary residence prior to moving to the US, you will not have to pay tax on the profit realized on the sale to either the IRS or the CRA.
      * Personal use property is not subject to capital gains tax, generally speaking
      * If you sell your primary residence after you move to the US, you will need to obtain a Clearance Certificate from the CRA within 10 days of the sale. Otherwise, the buyer will withhold 25% of the selling price in the form of taxes. Note: For US tax purposes, the cost of your assets is equal to their fair market value on the date of entry into the US. Therefore, so long as your house did not increase significantly in value while you lived in the US, it’s unlikely that you will have to pay US taxes on the sale of your Canadian home.

      Thanks,

      Allan Madan, CPA, CA & Team

  20. Timothy says:

    Hi Allan,

    Thanks for your very informative video and article. I have a few questions as follws.

    I left Canada in March 2013, sold my house in Canada in June 2013, bought a house in USA in November 2013. I have income from both Canada and USA in 2013. My previous company continously paid me and contributed to my RRSP accounts in Canada until June 2013. My current company started to pay me in March 2013. Currently I still hold bank accounts (checking, TFSA, RRSP, Visa) with one Bank in Canada, have a life insurance policy in Canada. In addition I am separated; my childern live with their mom in Canada.

    My questions are:
    1. Am I a non resident?
    2. Do I have to pay tax for selling the house in Canada? (bought 2010, sold in 2013, gained $20,000)? If yes, should I deduct the agent fee from the gain?
    3. I borrowed money from my RRSP account for buying the house in Canada, Can I return the money to the RRSP account now?
    4. I still have room available for RRSP contribution, can I buy contribute some to my account before the end of Feburary?
    5. How to deduct alimony and child support?

    Thanks,

    Timothy

    • superAmin says:

      Hi Timothy,

      Thanks for your questions. My responses are as follows:

      1. You may continue to be a resident of Canada, since you have dependent children in Canada. While your former spouse will no longer be a significant tie for you to Canada, your children under 18 living in Canada will be. You can complete form NR73 to obtain the CRA’s opinion on your residency status.

      2. If you lived in the house, you can claim the principal residence exemption, in which case the gain will not be taxable.

      3. You can repay the HBP balance outstanding, but repayment in full is only required if you become a non resident of Canada.

      4. Yes, you can still continue to contribute to your RRSP so long as you have RRSP room available.

      5. Spousal support payments are generally deductible, if they are made pursuant to a separation agreement. Child support payments are non deductible.

      Thank You,

      Allan Madan, CPA, CA
      Tel: 905-268-0150

  21. Naresh Kumar says:

    Thank you Allan for providing valuable information. I used to work in the US (citizen of India at that time), moved to Canada in 2007, and attained Canadian citizenship. In 2013, I immigrated to the US after getting a permanent resident visa (aka greencard).

    I have IRA and Roth IRA accounts from the time period when I used to live in the US. On the T1161, do I have to include those IRA or Roth IRA holdings? Are they considered pension plans?

    • superAmin says:

      Hi Naresh,

      Both the IRA and Roth IRA accounts are considered pension plans and do not need to be reported on form T1161.

      Thanks,

      Allan Madan, CPA, CA
      Tel: 905-268-0150

  22. Hari Krishna says:

    Hi Allan,

    Your site is very informative and thanks for taking the time to write an article and answer the questions.
    My situation is that I got a Job in the USA and will be moving in April 2014. I bought a house in the July 2013 and I dont plan to rent it till my Family joins me in August 2014.

    1.) Can you please let me know exactly what forms/exemptions do I need to fill/get to make sure if that I sell the property after 2 years, I just pay the tax on the gain and not 25% on the value of the house?

    2.) If I have an incorporated in Canada, and if I make revenue on the incorporated when I am in the US how will that scenario work out.

    Thanks
    Hari

    • superAmin says:

      Hi Hari,

      Thanks for your positive feedback.

      My answers to your questions are as follows:

      1) You will need to prepare an application for a Certificate of Compliance. This will reduce the withholding taxes from 25% of the value of the home to 25% of the gain. See http://www.cra-arc.gc.ca/E/pbg/tf/t2062/README.html to get access to Form T2062. Note: You will be able to claim the principal residence exemption for the period of time that you lived in the home. I help my clients with the preparation of form T2062 and all of the related paperwork.

      2) If you have a corporation in Canada, the US revenue received by the Canadian corporation will be taxable to it. Note: Your Canadian corporation may be deemed to have a permanent establishment in the US, and be required to file a US Corporate Tax Return for income earned through the US permanent establishment.

      3) You should be mindful of departure tax when you become a non resident of Canada. Departure tax will likely apply to the shares you own in your Canadian corporation.

      Thanks,

      Allan Madan, CPA, CA
      Tel: 905-268-0150

  23. superAmin says:

    Hi Allan,

    Is there anyway to reclaim departure tax if I become a Canadian resident again and have not disposed of that property?

  24. Saba says:

    Hi there,

    I am a Canadian citizen and am offered a Job in UAE.

    I am under the impression that as long as I am severing all my ties with Canada like closing bank account, taking my family with me, selling my house etc, I would not be required to pay income tax’s on worldwide income.

    Upon contacting CCRA International Tax Department I was told that under the Canada-UAE tax treaty,(which covers UAE Nationals only), I (as a person on resident permit in UAE) have to pay income tax on my UAE income. Sounds stupid.

    According to CCRA I have to be a resident of somewhere in order to be taxed. As I am NOT an ARAB by birth therefore can not be UAE citizen I would be deemed to be a Canadian Resident for Income tax purposes.

    I contacted the Ministry of Finance and Foreign affairs and they advised me that I would be treated a NON-Resident for TAX purposes. It seems our govt departments don’t know who’s saying what. It seems that they themselves do not know what they were talking about.

    For some reason this does not make sense to me. This means that for Canadian Citizens, UAE is no more a TAX FREE country.

    Can you please advise based on your extensive experience. They are making me and a number of friends confused.

    I would appreciate your reply.

    Regards

  25. Saba says:

    I await your reply. saba

  26. Ben Q says:

    If I withdraw my TFSA after becoming a non-resident, is there a penalty?

    thanks.

    • superAmin says:

      Hi Ben,

      There is typically no penalty for withdrawing from a TFSA, how ever if you decide to re contribute in the same year, there can be a penalty of 1%. The amount you withdraw in the year is added back to your limit for next year, but if you exceed the TFSA contribution for next year there is a penalty of 1%. The same rules apply if you have become a non resident, however we recommend withdrawing from your TFSA before you become a non resident.

      Hope we were able to guide you.

      Thanks,

      Madanca Team

      • Kevin says:

        I don’t believe this is correct advice? My understanding is that you can’t re-contribute to your TFSA as a non-resident. You have to wait until you re-establish residency. Also, why would you recommend withdrawing from your TFSA before becoming a non resident? The funds can still grow tax free and be withdrawn tax free..

        Thanks!
        Kevin

        • superAmin says:

          Hi Kevin,
          You should stop contributing to your TFSA once you become a nonresident of Canada. Otherwise, a penalty of 1% per month will apply to the contributions made after you cease residency. You can keep your TFSA intact after leaving Canada and the existing funds inside your TFSA will continue to grow tax-free.

  27. Spoo says:

    Hi,
    I am a Canadian citizen trying to decide on a job offer in Abu Dhabi (UAE) with a very attractive income. If I have to pay tax in Canada, however, it is no longer attractive. To my understanding, as long as I become a non-resident of Canada, I wouldn’t have to pay tax on my UEA income. Is that correct? I am single, no kids, and own a small condo in Vancouver, with a corresponding mortgage. I owe $20,000 on the home buyer`s plan as well, but I should have no problem paying that off within 60 days of leaving. My concern is leaving that money sitting in an RRSR account in Canada and, in case I never return, having 25% deducted from it when it’s time to cash it. Is there any way around that? I was hoping to be able to rent my condo while I`m away, and use the rental income to continue paying my mortgage and strata fees. Would that make me a resident of Canada for income tax purposes?
    Thank you

    • amadan says:

      Hi Spoo,

      Thanks for contacting me. You are correct that non residents of Canada are not required to pay Canadian income tax on overseas income. To answer your remaining questions, I need additional information from you. You can contact me at amadan@madanca.com or by calling me at 905-268-0150.

      Thanks,

      Allan Madan, CPA, CA
      Tel: 905-268-0150

  28. Mohan says:

    Hello
    You have mentioned in # 10 that
    Your personal tax credits will be reduced by the number of days that you were outside of Canada.

    However there is more to that statement

    If the Canadian-source income the taxpayer are reporting for the part of the year he was not a resident of Canada is at least 90% of the net world income for that part of the year or if he had no income from sources inside and outside Canada for that part of the year, he can claim the remaining applicable federal non-refundable tax credits in full.

    Is this valid?

    • amadan says:

      Yes if after the departure, the Canadian sourced income is 90% more than the worldwide income, the individual will get full credits.

  29. Henry Rollins says:

    Hello, my friend is selling one of her properties in Canada. It is elected as her primary principal residence. If she currently resides in the US, will she still pay the capital gains tax? She is a Canadian and British citizen with landed immigrant status in the United States. She has not rented out the property since she left, and she has not continued to file Canadian returns.

    • superAmin says:

      Hello.

      Your friend cannot use the principal residence exemption in Canada for the years she was not a resident of Canada to reduce the capital gain. However, for the years that she was a resident in Canada, and living in the property, she can claim the exemption.
      According to your question, she has stopped filing Canadian returns. This means that she will most likely be subject to capital gains tax in Canada on the increase in value of the property while she was living in the US.

      There are two conditions she must fulfill in order to claim the principal residence exemption for the years she lived in the property. First, she must not have owned and occupied another home in America as her primary residence. Second, she must not have rented the property while she was gone.

      If she has become a US resident for tax purposes (automatically done if she has a green card), the Canadian house can be tax-free in the US (up to $250,000 US profit since she entered the US) on one condition. She has to have occupied it as her residence for a full 24 months out of the last 60. In this case, determining residency status is very important. If your friend failed to sever ties to Canada, she will still be liable for Canadian tax on worldwide income. Please contact me to learn more.

      Regards,
      Allan Madan and Team

  30. Mike Brown says:

    How long does it take to get the letter back determining that your are indeed a non-resident? I’m a US citizen who lived in Canada for almost 4 years and have moved back to the States and want to where my pension funds.

  31. Graeme Ogilvey says:

    Hello.

    I am permanently moving out of Canada on November 16, 2015, and will be retiring to Panama on that date. On January 1, 2016, I will receive a one-time lump sum payment from my employer for banked overtime. The payment will be included on my 2016 T-4 slip. Will this payment affect the CRA’s ruling in deeming me a non-resident? In addition, can I rent out my old house?

    • superAmin says:

      Hello.

      Only having a T4 in 2016 does not make you a resident of Canada. However, some other factors will determine your residency. If you go to live in a country that has a tax treaty with Canada, article IV of the treaty governs your residency for tax purposes. Since you are going to Panama, I would pay real attention to anything Canadian. Make sure you sever your ties properly.

      You can have a property here for investment, but you must rent it out on lease terms of a year or more. In addition, you must have an agent sign an NR6 for you. The NR6 guarantees to the Canadian Government that if you do not pay your taxes to Canada, the agent will. This agent can be a friend, relative, or a business like ours. Ultimately, residency for tax purposes in Canada has little to do with physical presence in the country. Therefore, it is advised that you contact me so that we can sort this out.

      Regards,
      Allan Madan and Team

  32. yesar44 says:

    I’m contemplating moving to Maldives permanently, with no intention of returning to Canada. I am aware that I owe the CRA one final tax return, but what happens if I give up my Canadian citizenship? Would I still be subject to their tax laws even though I am overseas?

    • amadan says:

      If you have any sort of income coming into Canada, then you will have to file a personal income tax return with the CRA. Even if you move to another country and renounce your citizenship, you will still have to file a return for the years you lived in Canada. There’s no getting around it; you owe the government taxes for the time you spent in Canada and earned money.

      Renouncing your citizenship will only stop you from having to pay future taxes in Canada, provided you sever any and all ties with the country. If you have any sort of income or investments within Canada, expect the CRA to expect a tax return from you.

      Also remember that Canada does have relations with the Maldives through their tax treaty with Sri Lanka. This means that the Canadian government and Maldivian government can exchange information if they need to find delinquent taxpayers.

  33. Ronald says:

    Hello.

    I filed a Canadian exit return in 2003 and moved to the US. Now, I realized I forgot to file a T1161 form. I own a house in Ontario that I wish to sell. Because of the change in housing prices, there will be no capital gains on the property. When I sell my house, what are the tax implications? Will I be penalized for not filing the T1161?

    • superAmin says:

      Hello Ronald,

      You will need to file the following forms within ten days of the sale: T2091,T2062 and T2062A. If you miss the ten days, you fill face a penalty of $25 a day for each owner with a minimum of $100 and to a maximum of $2,500.

      You need to get an appraisal of what the property was worth on the day you left. You can get this from the realtor who is selling the house. When they do their comparable market analysis, have them also do one for the day you left. It is very likely that you will face a taxable benefit on the property, so expect to pay at least some tax to Canada. Whatever you do, do not file a late T1161. This could very well land you a huge penalty.

      Regards,
      Allan Madan and Team

  34. henryc says:

    Hello.

    I am a Canadian citizen, currently living in Washington State. I have a locked-in RRSP with TD Canada Trust in British Columbia. I would like to unlock it, to purchasing a home in the US. Is it possible to do this? If so, how would I go about doing this?

    • superAmin says:

      Hello.

      First, you must be gone for more than two years. Then, you must write the Superintendent of Financial Institutions for written permission to withdraw the money. They will write a letter back to you, which you then take to the financial institution. TD will withhold 25% for tax purposes, and give you the rest.

      Regards,
      Allan Madan and Team

  35. ekta says:

    hello,
    my husband and I are moving to the middle east for teaching positions and we have amounts owing on the home buyers plan. This section is copied from revenue Canada: I am unclear aobut this section listed online on the HBP: “If you become a non-resident of Canada after a qualifying home is bought or built, you must choose one of the following options:

    ■ Repay the remaining balance to your RRSP by the earliest of the following dates:

    – ***before the time you file your income tax and benefit return for the year that you become a non-resident; (WHAT DOES THIS MEAN EXACTLY? DO I HAVE UNTIL APRIL 2015 to pay this??)
    or
    – 60 days after you become a non-resident.

    • amadan says:

      Hi Ekta,

      You should repay the balance on the earliest of:
      1. Time you file your departure tax return, which is due on April 30, 2015 if you departed in 2014, or

      2. 60 days after you become a non-resident

      So if your departure date is June 30, 2014, the balance must be repaid by Aug 29, 2014 (60 days after).

      Regards,

  36. Kristi B. says:

    I just moved to the United States with my fiancé and do not want to have tax implications for selling our house. We are only here for a year or two for my husband’s job and are planning to move back to Canada. When we return we will need a bigger house so either way we are looking to sell. Would it make sense to lease our house for the time we are gone and sell it when we get back?

    • superAmin says:

      If you know that you are coming back in about a year or two, you can hold off on selling your house. This way you won’t have to pay the 25% tax on the selling price of your home while out of the country. This would definitely be a better route if you are looking to save money. Just make sure that you file section 216 tax return to report rental profits. Hope this helps!

  37. benjamins says:

    My husband and I are both Canadian citizens. We have been working in the US for more than a year on TN visas. We worked more than 183 days a year in Florida, we own a condo as a residence, and file our income tax in the US. In Quebec, we also own a condo that we are renting out through an agency.

    We still have our driver’s licenses and medical insurance cards, though we did not use any of these government services while out of the country. We are also repaying our RRSP for the HBP, and hold a bank account in Canada. We use this bank account to repay our condo mortgage, and repay my student loans. Can we be considered non-residents rather than factual residents? Are our Florida wages taxable in Canada? We are planning to leave the country permanently.

    • superAmin says:

      Hello,

      Under Article IV of the US/Canada Income tax treaty, your wages are only taxable in Florida as it appears that you are non-residents of Canada. However, you should immediately forfeit your medical insurance card and other secondary ties to ensure a clean break from Canada. When you leave the country, the HBP is taxable on your final Canadian return. Alternatively, you can repay the money within 60 days of becoming a non-resident.

      On the final Canadian return, you must file form T1161. Since the condo is rented, you must file another Canadian return to report the rental income and expenses only. This is called a section 216(4) return, and is due by June 30th of the following year. For example, June 30 2015 for the 2014 year.

      Regards,
      Allan Madan and Team

  38. Elizabeth Walker says:

    My son has outstanding Canadian student loans of about $50,000, which he is paying off by direct debit from his Canadian bank account. His job is suddenly taking him to the US, where he will be living for at least 3 years. He is closing down all his Canadian ties so CRA knows he is not resident in Canada for tax purposes; however, there is no provision to debit a US bank account to pay down the loan (CSLP suggested using PayPal, which makes him nervous). We understand that leaving a Canadian bank account open may create tax problems. Do you have advice, other than mailing a cheque every month?

    • superAmin says:

      Having a bank account open in Canada by itself won’t create a problem. As long as your son severs other major/secondary ties to Canada like drivers licenses, investment accounts, home, social organizations, and personal property, he should be fine.

  39. Elise says:

    Hey.

    Thinking of leaving Canada for a new job in Asia, and wondering what implication this will have on several issues. I have been a permanent resident for two and half years. I have money in a bank account, a TFSA, and an RRSP. I am not planning to come back to Canada, and I informed the CRA on the day I learned about my move.
    Will I lose my permanent residence status immediately? Can I keep my accounts, or do I have to liquidate them immediately?

    • superAmin says:

      Hello,

      To maintain permanent resident status, you need to reside in Canada for 2 years within a 5 year period. To not be taxed as a resident of Canada, you must sever all ties to it. You can maintain your current TFSA and RRSP accounts, but you cannot add to them.
      If you are likely to leave Canada and never come back, then I would suggest withdrawing all your money this year. If you become non-resident before December 31st, your personal exemption may be prorated.

      Regards,
      Allan Madan and Team

  40. Amy Matheson says:

    Hello ,

    I’m currently a graduate student in the US and a Canadian citizen. For taxation purposes, I am a non-resident in Canada (I’m a grad student-350 days a year in the US). Do I still have the ability to contribute to my TFSA? I’ve been out of the country for 3 years now and am wondering if I’ve been accumulating space ever since?

    • superAmin says:

      Hello,

      You don’t accrue any contribution room during years you are non-resident. Also, if you have not done so already, send a letter to the CRA informing them of the date you became a non-resident. That will allow them to calculate your correct contribution room, and will also let them know why you haven’t filed a Canadian tax return. It is helpful to send the letter so their records are up-to-date.

      Regards,
      Allan Madan and Team

  41. Elizabeth says:

    Just wondering if you have a minute to reply to my earlier question – as my son leaves the country on Monday, we are trying to clean up all our loose ends, Thanks so much.

    My son has outstanding Canadian student loans of about $50,000, which he is paying off by direct debit from his Canadian bank account. His job is suddenly taking him to the US, where he will be living for at least 3 years. He is closing down all his Canadian ties so CRA knows he is not resident in Canada for tax purposes; however, there is no provision to debit a US bank account to pay down the loan (CSLP suggested using PayPal, which makes him nervous). We understand that leaving a Canadian bank account open may create tax problems. Do you have advice, other than mailing a cheque every month?

    • amadan says:

      Hi Elizabeth,

      Sorry for the delay in responding. If your son has severed all ties with Canada then I would advise that keeping a bank account in Canada would be okay. Having a bank account is only a secondary factor when the CRA judges if an individual is a resident for tax purposes. As long as your son has no significant ties such as:

      - home in Canada
      - spouse in Canada,
      - dependents in Canada

      and very limited secondary ties:

      - personal property(cars or furniture) in Canada
      - Social ties (memberships)
      - economic ties(bank account, credit card)
      - Canadian Driver’s licence
      - Canadian passport,
      - Health insurance in Canada

      Then he should be fine to keep a bank account open in Canada to repay his student debt.

      If you are not comfortable with keeping a bank account open I would talk to your American bank as there must be a method they can automatically debit your student loan from its account. You may just have to go through your US bank as opposed to who granted you the loan. If not then a cheque or wire transfer would be the alternative options. If you have any other questions feel free to contact me. Hope this helped.

      regards

  42. Michelle Fontaine says:

    Hello.

    I am originally from Luxembourg. Four years ago, I became a permanent resident of Canada. As of today, I will be working in the Middle East and will earn USD salary with tax-free status. I will not be moving back to Canada for the foreseeable future. I have around 500K to build a portfolio, but I will have no investments in Canadian securities. I do not want to use a local Middle-East broker. Is there a way I could have a portfolio based at a Canadian broker? I also want to keep a tax-free status, due to the fact that I am no longer a Canadian resident.

    • superAmin says:

      Hello.

      This depends on your new country of residence. You would have to check to see if they have a tax-treaty with Canada. However, Canada does not usually make it easy for non-resident to hold Canadian investment accounts. This is because they can easily be used for tax evasion and money laundering. It can be done under certain circumstances, but certainly not in a “tax-free manner. This is unless you have already established a pre-existing tax-deferred account while a resident, such as an RRSP.
      If you would like to speak to me more about your situation, I would be glad to go over the details with you. Then, we will determine what the best course of action is.

      Regards.
      Allan Madan and Team

  43. ShaanMohamed says:

    I left Canada a few years ago, and have not filed a return since. I have a couple of bank accounts in Canada, and they are earning interest. I did not fill out an NR73 form, but am wondering now if I should. Do I have to fill in the NR73 when I haven’t been requested to do so? Any advantage to doing it?

    • superAmin says:

      Hello Shaan.

      It is not necessary to fill out NR73 when leaving Canada. Its purpose is to request the CRA’s opinion on your residency status, which they determine on a case-by-case basis. You may want to fill one out if you are unclear on your current residency status for tax purposes. Not filing does not protect you from CRA review of your file. Also, note that NR73 opinions are not binding. This means that the CRA can change their opinion.

      The advantage of completing an NR73 is that you get a CRA opinion that you can use to determine whether to file Canadian tax returns. If you cease filing returns without knowing the facts, you may be subject to interest and penalties.

      Regards,
      Allan Madan and Team

  44. Subhra Dutta says:

    I am an Australian National and work in Kuwait. I have never lived nor worked in Canada nor worked for a Canadian company anywhere in the world. My children (one minor, two adults) live in Canada and I recently bought a house for them to live. My wife visits them but may live there more than 183 days, but I visit them only for 30-40 days in a year. I do not earn any interest nor have any Canadian source income. I fund my children education and their expenses.

    I believe I am a non resident. Would I have to file Tax Return and pay income tax on my Global income.

    Regards

    SUbhra

    • amadan says:

      Hi Subhra,

      If your minor child in Canada is a dependant on you; if the home you purchased for them is in your name; if your wife did indeed spend more than 183 days in Canada; there could be a high chance that you will deemed as a resident of Canada.

      Best Regards,

  45. Kala Abhay says:

    Hello,

    I am a Canadian citizen, and I am filing as married for the first next year. My husband and I were married this year, outside of Canada. He is neither a resident nor has he ever been to Canada. What proof does the Canadian government need to see as proof of our marriage? I assume a translated marriage certificate? Is there a form I need to fill out and attach?

    My second question is this. Am I able to get a tax credit for my husband’s out-of-country tuition payments? I’m aware I can put my spouse’s tuition fees on my taxes usually, but I don’t know if the same applies for an out-of-country tuition.

    • superAmin says:

      Hello,

      I would keep a copy of the marriage certificate and the translation. You would do this is in case the CRA requests this. On your tax return, you put your married status and the date of marriage. You also have to put his name and net world income. This is so that the system doesn’t incorrectly give you the spousal exemption and pay credits. The CRA will probably question the lack of his SIN. In this case, you could write them a letter and send or fax this and the marriage copies to them.

      As for the tuition payments, you cannot claim them as your own. Since he will not be completing a Canadian return, there is no way to transfer his tuition credits from his country to your Canadian return.

      Regards,
      Allan Madan and Team

  46. Richard Klaus says:

    Hello, I receive rental income in Canada, but I will soon be leaving the country for better opportunities. I am planning on selling the home that I rent out before I leave. What are the steps to make sure I get the most out of my tax returns?

    • superAmin says:

      Hello, if you haven’t done so already, you need to elect to file to potentially receive some or all the refunds from the Part XIII tax deducted. Once you elect to file, you must report the income from your rental in a separate tax return. However, you must not include any other Canadian income in this separate return. In your situation, you can file more than one Canadian tax return in a tax year: One for your Canadian rental income, and one for any other type of Canadian income that you receive.

      You can our blog post for more information about this topic here: http://madanca.com/learn/articles/entry/non-resident-of-canada-receiving-rental-income/

      Regards,

      Allan Madan and Team

  47. Ron Dircksens says:

    Hi, I live in Sarnia, Ontario and got a job in USA. I plan on commuting back and forth between the two countries to get from my home to my job. I was just wondering how this will affect my residential status and if I need to file my taxes differently?

    • superAmin says:

      Hello Ron, because you are commuting back and forth between Canada and USA, you will be considered a factual resident of Canada. As for the tax implications, your income will be taxed as if you never left Canada. You will continue to report income from inside and outside of Canada, and claim all deductions that apply to you. You will also have to pay federal taxes as well as Ontario provincial taxes. However, you can reduce both federal and provincial taxes by claiming all non-refundable tax credits that apply to you.

      You also need to file a US non-resident tax return and pay US federal and state tax on your US earnings. However, you will receive a foreign tax credit on your Canadian tax return for US taxes paid.

  48. Sam says:

    Hello,

    I am emigrating to the US in October on a family petition. I currently have TFSA, RRSP, and LIRA accounts. My plan is to leave the LIRA as is and manage a self-directed account from the US, since I understand the LIRA is 100% taxable in the US.

    1. For the TFSA, I was planning to cash out and close the account. Does it make sense to do this if I have some equity positions that are at a loss? I am guessing it is because of the deemed disposition of the assets at fair market value on the day I leave Canada and enter the US. Am I correct?

    2. For the RRSP, I am resetting the cost basis for all equity positions that have capital gains. However, for those that have unrealized capital losses, should I leave them as is or also sell them? How will the US tax this… will the cost basis for these RRSP investments be the original cost, or the fair market value on the day I entered the US? If it’s the original cost (which are higher than current prices), then I think I should leave these investments as they are and not reset the basis.

    Thanks in advance for any insights.

    Sam in Toronto

    • Sam says:

      Hello, just wondering if you have a comment on my question above?

      Thanks!

    • superAmin says:

      Hello Sam,

      On departure from Canada, the LIRA, TFSAs and RRSPs are not deemed to be disposed of. This leaves you a few options when considering your Canadian accounts. RRSP and registered pension plans in Canada maintain their tax deferred status in the US so long as you complete form 8891 annually. The TFSA is considered a foreign trust in the eyes of the IRS, and as such any income earned in the TFSA becomes taxable in the US.

      Your options for the TFSA include: Closing the TFSA to avoid any US tax, or you could hold onto the TFSA and pay taxes in the US on income earned inside the TFSA (Must continue to file Form 3520).

      My recommendation is to consider selling the investments that have unrealized profits inside the RRSP before you leave to the US. By doing so, you will get a step up in the cost basis of the RRSPs, and the taxable amount for US purposes on future withdrawals from the RRSP will be reduced.

      Consider this example. Assume you have an RRSP portfolio with $100,000 in book value and market value is $160,000. If you do not file form 8891, you will realize a capital gain of $60,000 on the date you become a resident of the US. By filing form 8891, you will only pay tax to the IRS when the RRSP balance is withdrawn. Using the strategy of selling your investments inside your RRSP prior to departure, you can withdraw up to $160,000 from your RRSP in the future without paying US income taxes on that amount. LIRAs work similarly to RRSPs and can be unlocked if the CRA confirms your non residency but will be taxed on their withdrawals.

      Allan Madan

  49. Jess Henderson says:

    Hi, I recently got married to my husband who is not a Canadian citizen. I am Canadian, but our wedding was in the USA. What do I need to put in my tax return to prove that we are married?

    Thank you!

    • superAmin says:

      Hello Jess, keep a copy of your marriage certificate and the translation in case the CRA requests them. On your tax return, mark down that you are married and the date you got married. Add your husband’s name and his net world income. This is so that the system does not give you the spousal exemption and incorrectly pay credits to you (GST, provincial). CRA will more than likely question your husband’s lack of SIN, so you will need to send them a letter along with your marriage certificate copies.

  50. Mike Forest says:

    I am a non-resident of Canada, living in California. I still have a bank account with BMO. I got an NR4 slip from BMO due to my RRSP withdrawal in 2013. I just want to confirm that I do not need to file a Canadian income tax return. 25% tax was withheld by BMO from my total RRSP withdraw. I was told by a BMO representative that the withholding tax will vary depending on how much I withdraw. Is this true?

    • superAmin says:

      As a non-resident of Canada, the withholding on your RRSP is 25% of the gross withdrawal regardless of how much you take out. The BMO representative is in error about your rate, but I believe this is because they may not have taken your non-resident status into account. When the 25% is withheld, BMO should issue a T4RSP-NR showing the gross withdrawal and the 25% withholding.

      This is the end of your tax filing responsibility to Canada. This is unless the CRA specifically asked you for a worldwide income statement, which is within their right to ask for. If they were to make such a request, you would report your worldwide income and deduct it all on Line 256 of the T1 under Article IV of the US/Canada Income Tax Convention (Treaty).

  51. Willie Green says:

    Hi, I am a Canadian citizen and resident. I am planning on moving to the United States next year for work. This year I have gone back and forth between Canada and US to scout out potential houses, the area where I am going to work, and I have traveled around the country meeting up with old friends. On top of that, I have made some money from my new job through remote work here in Canada. Do I need to file a US tax return on the money I made from the US even though I am not a US citizen?

    • superAmin says:

      Hello, you may need to file a US tax return based on the information you have provided. Even though you are not a US citizen, you might be a resident alien. A resident alien is determined by meeting one of the following tests:

      1) You are a legal permanent Resident (e.g., Green Card holder)
      2) You meet an 183-day substantial presence test. This is a two-part test, if you fail the first part, you will generally be considered a US resident. If you fail only the second part of the test, you can file a Closer Connection Exception Statement for Aliens (form 8840) to claim a closer connection to a foreign country (in your case, Canada) and will not be considered a US resident.
      a. Part 1 of the test: You are physically present in the US at least 183 days during the calendar year. If you are in the US for part of the day, it is still considered that you were there for a full day, the only exception is if you fly over the US on your way to another foreign destination.
      b. Part 2 of the test: You are physically present in the US for at least 183 days using the following three-year formula:
      i. Year 1: each day counts as one day
      ii. Year 2: Each three days counts as one day
      iii. Year 3: Each six days counts as one day
      For example, if you spent 130 days each year, each of the last three years, the formula would look like this:
      2013: 130 days in US, times 1/1 = 130 days
      2012: 130 days in US, times 1/3 = 44 days
      2011: 130 days in US, times 1/6 = 22 days
      The total number of days you spent in the US based on this example is 196, meaning you failed part 2 of the test and are considered a US resident. Remember, you can file Form 8840 to be considered a non-US resident.

      • Willie Green says:

        Thank you for the information! I have calculated based on your formula that I have been in the US 175 days over the past three years. I do not have a Green Card yet. With that all said, I am not deemed to be a US resident, correct?

  52. Karin Ely says:

    Hi, quick question: a job I am applying for in the US says I need something called an “identification number.” Is this the same thing as a Green Card? If not, how to I get an identification number?

    • superAmin says:

      Hello, the identification number is not a Green Card, but it is the next step after you do receive your Green Card or work Visa. An identification number is another term for a Social Security Number (SSN). An SSN signals to employers that you are legally allowed to work in the United States. The SSN is therefore restricted to only those people with certain types of visas or a Green Card.

      To apply for an SSN simply complete the Application for a Social Security (Form SS-5) and mail or take it to the nearest Social Security Administration office.

  53. Jaime Ewart says:

    Hi, I recently moved to America. When I got here, I received a $20,000 bonus from my old job in Canada. I was just wondering what the benefits would be for taking the tax paid on the income as a credit or as a deduction.

    • superAmin says:

      Hello Jaime, there are a few different benefits for each of these options. A deduction reduces your income that is subject to tax and is not a direct subtraction on your tax. The benefit of a deduction is based on the highest tax bracket you fall under (in other words, your marginal tax rate). For example, if you are marginal tax rate is 25 percent, you will reduce your tax $1 for every $4 deducted. However, a credit is a dollar-for-dollar offset of your tax, so for every $1 of credit, you will reduce your tax by $1. The catch is that you may not get to use every dollar of foreign tax paid as a credit because of various limitations.

      If you want to contact me directly, we can go more in depth about the benefits and consequences for each of these options.

  54. anu says:

    Hi, I am an Indian.i just moved to canada along with my husband and two kids through PR visa….planning to live here only for few years.I have two kids ,availing around 800 CAD/m.if i plan to go out and live in Gulf ,as my husband would be getting a better job in Gulf in future.what would happen to my child tax benefit and health card if i leave the country being an PR?Or else what would happen if i leave the country after becoming an canadian citizen.?

    Should we pay tax to canada for the income earned in UAE?

    How can i plan better to avail tax benefits,child benefits,as well as health card benefits?

    Thanks and Regards,
    Anu

  55. Parker Morgan says:

    Hi, I am a Canadian who received a job in the USA. Am I allowed to claim moving expenses for me and my family? Are there any restrictions if I can?

    • superAmin says:

      Hi Parker, you will be able to claim moving expenses when you move to the US. However, the requirements that you will need to meet are different if you are an employee of a company, or are self-employed.

      For both employee or self-employed, you will need to move at least 50 miles farther from your old home or job location. You cannot deduct the moving expense if you return to Canada, these expenses would have to be deducted in Canada, if allowed.

      To meet the length-of-employment test, an employee must be employed on a full-time basis at the new location for 39 weeks in the 12-month period following the move. If you are self-employed, you must work in the new location for 78 weeks during the next two years.

      If you deduct moving expenses to the US, you cannot deduct travel expenses. Moving expense result from a change in your principal place of business, and travel expenses are based on a temporary absence from your principal place of business. You can only deduct moving expenses that are not reimbursed or paid by your employer.

  56. Monika says:

    Hi, I am a non-resident living in the United States. I was thinking of selling my property that I left behind in Canada when I moved. What Canadian tax forms do I need to fill out to ensure I get the most of my profits from the house?

    • superAmin says:

      Hello, you will need to file from T2062, which is a notice by a non-resident of Canada stating you are intending to sell your property. This will need to be filled before the property is sold. You will also need to report on form T2062A, which states how you will sell it.

      Make sure you do file these forms. If you do not, there will be withholdings based on 25% of proceeds instead of on the estimated gain. The tax remitted with the T2062 and T2062A form generally exceeds the actual tax obligation. You will need to file a tax return in order to recover the remitted taxes.

  57. Joyce Davies says:

    Hello Allan, I am starting a new job in December that is located in the United States. I want to sell my Canadian house and buy a house in the US. The company that I will be working for has agreed to pay for the move, but will not cover the real estate expenses, like commissions and closing costs. I read that they would normally be tax deductible, but I am wondering if moving from one country to another will affect the taxes. Since I can only deduct the cost from my US income, and I am moving in December, I probably won’t have enough income to offset it. Am I allowed to claim the deductions in a later year when I can actually pay for it?

    • superAmin says:

      Hi Joyce, if you cannot fully use the deductions from the move, you may carry them forward to the next year.

      You may run into some problems however. On IRS Pub 521, you will notice that selling or purchasing your home(s) will not result in any tax deductions. You can only deduct moving and storage costs, and the cost of one trip. It seems like your firm is only covering the bare minimum. If it is still possible, you should negotiate with your employer to try to get more reimbursement.

  58. Sam says:

    Hi Allan, hopefully this is the right place for this question. My grandmother, who is currently living in the US, wants to gift me her home. I am 20 years old living in Canada and will probably move into the house she is gifting me in the future. My question is, do I or my grandmother need to pay any gift taxes?

    • superAmin says:

      Hi Sam, unfortunately you will likely have to pay twice as much tax on this gift compared to others. This is because you will be hit by something called a “generation skipping transfer tax.” This tax is imposed on transfers from a donor (your grandmother) to her grandchildren or great grandchildren (you). The tax prevents someone from skipping tax on a generation by gifting directly to the next generation. The gift will be taxed at basically double the unified tax rate for gifts and estates. There are exemptions, exclusions, and credits that follow similar rules to those for gifts and estates.

  59. Wietzie gerber says:

    Hi there. I left Canada for a sabatical in August 2013, under a french temporary residency permit allowing me to stay for one year. I have now applied for a three year permanent residency card and want to become a non- resident of Canada. Will CRA assess me as non- resident from Sept 2013 or 2014?

    Best regards,

    Wietzie

    • superAmin says:

      Hi Wietzie,

      Hi, it really depends on your circumstances and your ties to Canada. For example, what was your intention in 2013 and where was your permanent home during that time? When did your intention change and do you have any evidence of such? (including changing mailing address, obtaining driver license in France, etc). Please speak with us for further details.

  60. James says:

    Hello,
    My brother is Canadian. He left Canada more than 10 years ago with his family, he has severed all principal and secondary ties with Canada at the time he left with the exception for keeping his RRSP and a safety deposit box and a Canadian passport. Is he considered a non-resident of Canada?

    He is now contemplating to come back to Canada to reside. He wants to know how best to bring his savings to Canada. Will it be ok to bring only some cash at time of arrival and then do an overseas wire transfer to Canada after? Will there be any tax implication when bringing funds after arrival? What steps does he need to take to ensure he is able to bring his savings back to Canada without any problem with Canadian customs/tax authority?

    Your advice is greatly appreciated.

    • superAmin says:

      Hi James,

      Your brother will likely be considered a non resident of Canada. Cash that he accumulated while he was a NR of Canada, will not be taxable to him when he brings it back to Canada.

      Bank statements and tax documents in the foreign country can help identify the source of the funds, should the CRA ask to see them. Note: Canadian banks are required to report foreign transactions ins excess of $10,000 to the CRA.

      Thanks,

      Allan Madan, CPA, CA

  61. Jonathan says:

    Hi Allan, I am a farmer and am planning on retiring soon. I want to move to Florida so I can finally escape this cold! Are there any special rules for farmers who want to become non-residents of Canada?

    • superAmin says:

      Hi Jonathan, there are a few key things you will need to do before you are deemed a non-resident of Canada. First, like every other citizen, you must cut economic, social and family ties. Severing primary residential ties likely will require that you give up your home in Canada and establish a permanent home in the US. Your spouse and dependants must leave Canada as well and you must dispose of personal property and break social ties in Canada and acquire them in the US. Other secondary ties you may also need to cut include your Canadian driver’s licence and vehicle, Canadian bank accounts or credit cards, memberships, and health insurance with a Canadian province or territory.

      In the year you leave the country, your Canadian tax return must report income from Canadian and non-Canadian sources for the part of the tax year that you’re still a resident of Canada. After that, you will only need to pay tax to Canada if you receive income from Canadian sources.

      There are various tax implications that can arise from your required final departure tax return, particularly with the deemed disposition, based on fair market value, of certain assets referred to as “taxable Canadian property” (TCP). Fortunately for farmers, the deemed disposition rules do not apply to TCP such as Canadian real estate, capital property or inventory that is used to carry on business in Canada, and RRSPs, RRIFs and certain pensions.

      These assets are excluded from the deemed disposition rules because Canada maintains the right to tax gains on the assets or income whether or not the individual is a resident of Canada. A farmer who emigrates from Canada to the US but still maintains a Canadian farmland would be subject to 25% Canadian withholding tax on the rental income payments made by the tenants. The non-resident also has the option of filing a Canadian rental return and reporting the rental income on a net basis to recover the previously withheld tax.

  62. Tim says:

    I’m relocating from Toronto to London, UK in January on a Tier 2 Intra-Company Transfer visa for 18 months. Although my employer will be doing my taxes while I am abroad, they will not assist with my wife’s taxes.

    My wife is coming with me on a Tier 2 Partner visa. She is a sole-proprietor freelancer (with an HST number), and she contracts primarily with 1-2 Canadian companies. She will continue contracting to them while abroad, being paid in Canadian dollars into a Canadian bank account.

    We have a few questions about her tax situation:
    - Will she file and pay taxes in Canada or the UK? I’m not sure if she would be considered a Canadian Resident since she will be living in the UK with a Tier 2 Visa, while her business is in Canada. We do not own any property and do not have any dependents.
    - Will she continue to charge her clients for HST?
    - Will she have to pay any taxes in the UK?

    Any insight you can offer would be appreciated.

    As well, what does your company charge for filling out her required tax forms (Canadian and/or UK, as required)?

    Thanks!

    • superAmin says:

      Hi Tim, please see my answers to your questions below:

      1) She will likely be considered a NR so long as she breaks most secondary ties with Canada prior to departure. From what you’ve said, she will not maintain any primary ties in Canada (house, spouse, dependants). She should file a departure return. On the Statement of Business Activities, it’s important to indicate that his will be the final year of business.

      2) Yes she will.

      3) Business profits earned are taxable in the country where she maintains a permanent establishment (i.e. fixed place of business). Presuming that she closes her fixed place of business in Canada, and reopens in the UK, then business profits earned will be taxed in the UK, and not in Canada.

      4)​Please email me privately for fees.

      Regards,

      Allan Madan

  63. Sydney says:

    Hello,
    I am Canadian working in Hong Kong for the last 11 months in 2014 (employment income). I have a house in Canada which I didn’t rent and I plan to keep my Canadian Residency for tax purposes for a few years. In 2014 I have no other income neither in Canada nor anywhere else. No spouse and no children.
    After Hong Kong 15% tax my take home pay for the year will be $ 26,000 CAD. When I file my tax return in Canada how much tax will I pay in Ontario?
    Am I eligible for Provincial and Federal Tax credits?
    Does it make sense with my small income to maintain Canadian Residency and file tax return every year?
    How can I indicate to CRA that I would like to stay Canadian Resident for tax purposes?
    Thank you

    • superAmin says:

      Hi Sydney,

      Thanks for contacting me. Since you are keeping a home in Canada, which is available for your use, you will be considered as a resident of Canada for tax purposes. Residents of Canada are required to pay Canadian income taxes on their worldwide income. You will receive a foreign tax credit for HK taxes paid on your Canadian tax return, by completing the appropriate tax forms. This helps avoid double taxation.

      You do not have to pay CPP on foreign income. However, you can elect to do so, if you wish. You may be able to claim the GST Tax Refund quarterly, if you qualify based on your income, which is only available to Canadian tax residents (like you).

      The advantage of becoming a non resident is that you will not need to report or pay tax on your overseas income in Canada. However, this would require you selling or renting out your house.

      I am able to do personal Canadian tax returns. Email me if you are interested and I will be give you my fees.

      Thank you,

      Allan Madan, CPA, CA

  64. Matthew says:

    I became PR in 1998, Canadian citizen in 2002, became Non-Resident living in India (2011-2014) and I intend to re-immigrate and become resident again in 2015. For calculation of future capital gain on sale of real estate, what would constitute the base cost — the FMV at the time of becoming a PR or citizen or at the time of re-entering as resident in 2015? The question arises because or break in resident status, thanks

    • superAmin says:

      Hi Matthew,

      The ACB of the real estate is equal to its fair market value at the time you became a factual resident of Canada for tax purposes. The ACB of the real estate will not change if you emigrate from Canada or immigrate to Canada in the future.

      You may have become a factual resident when you obtained your PR Card. However I require additional information from you to make this determination.

  65. Travis says:

    Hi Madan,

    First let me tell you how i heard about you, I was going through some Canadian tax information videos and I came across your video series. I must say, those videos are excellent.

    My name is Salman Ejaz. Me my wife and two sons (one is 2 year old and other is 9 months) became Canadian PR in July 2014 but didn’t live in Canada since then. Just to complete the landing process we were there for 1 week.

    We are here is USA for past 9 years. Currently I am working here on H1B visa and get one W2 which is little more than 53K USD. My wife don’t work at all and we do not have any other source of income.

    My question is: Do we have to pay Canadian tax on this income? If yes, how much? I would really appreciate your response.

    Also please give me rough idea of your fees for situation like mine.

    Regards,

    Travis

    • superAmin says:

      Hi Travis

      If your only tie to Canada is a PR card, and nothing else, then you are likely a non-resident of Canada. Non residents of Canada only pay Canadian income taxes on:

      1. Employment income earned in Canada
      2. Income from a business carried on in Canada
      3. Sale of Canadian real estate

      Unless one or more of the above three situations apply, you do not have to file a Canadian tax return, nor pay Canadian income taxes.

      Thanks,

      Allan Madan, CPA, CA

  66. Aaron says:

    I’m holding Canadian PR Card for the last 8 years and working as consultant engineer in Oman in international consultant engineering firm, my monthly package income Canadian dollars approx 10,000 dollars. I’m Residing in Oman with my spouse who is Canadian citizen and living with me for the last 15 months. I transfer money by bank transaction to joint account with my wife to Canada bank approx 4500 dollars supporting my two kids school and monthly expenses plus the payment for the house mortgage which is registered on my spouse’s name.
    Both me and my spouse just came to know that we have to apply for non-resident before we leave Canada, please advise how to do it now with thanks.
    The above money is it taxable to CRA and how much tax we need to pay to Canadian CRA?
    Regards,

    • superAmin says:

      You are likely a resident of Canada because you hold a Canadian PR card, your wife is a Canadian Citizen, a home is available for your use in Canada, and your children are in Canada.

      As a tax resident of Canada, you are required to pay Canadian income taxes on your overseas income. You can receive a foreign tax credit on your Canadian tax return for foreign taxes paid. Based on 1 year’s income, your estimated tax bill (before foreign tax credits) is approximately $35,000.

      If you would like to become a NR of Canada, there are many steps that you would need to take. Email me personally if you would like to know more information.

      Thanks,

      Allan Madan, CPA, CA

  67. Parisa says:

    Hello,
    I am writing regarding transferring my savings from abroad to Canada.
    I am Iranian, studied/ worked in Switzerland in the past 5 years and I am also a Canadian permanent resident, which landed in Canada 3 years ago, but generally have not spent more than 2 weeks in Canada, have a bank account in Royal Bank( RBC) which is inactive now, no other Canadian tie. As I want to move to Canada permanently in next month, my questions are:

    -When I am transferring my money from Switzerland to Canada shall I pay the Canadian government the differences in taxes between these two countries?
    -Are there any ways to transfer my pension savings in a pension plan in Canada?

    I would be grateful to have your advice on these matters.

    • superAmin says:

      Hi Parisa,

      Income that you earned outside Canada while you were a non-resident of Canada, is not taxable in Canada. As such, you can repatriate these foreign funds to Canada, without having to pay Canadian tax on the amount transferred.

      I am not aware of any rollover provisions for transferring a Swiss pension into a Canadian pension account on a tax free basis.

      Allan Madan, CPA, CA

  68. Kristine says:

    Hi Allan, I am moving to the States soon and will be a non-resident of Canada. A friend briefly mentioned that I might want to look into Windfall Elimination Provision. I have tried to look for information, but the information I have found has been really confusing. Can you try to dumb it down for me?

    • superAmin says:

      Hi Kristine, sure thing! WEP may apply whenever you worked in a job that you earned foreign social security benefits (like the CPP or QPP), without paying US social security taxes. If the WEP applies to you, your benefits can be reduced by as much as 60%. The good news is that the WEP rules don’t apply to you because of the Canada-US Agreement on Social Security. The bad news is that the Social Security Administration employees have little to no training on this subject. If the Social Security Administration is telling you that you are subject to the WEP, I suggest to read the Canada-US Agreement on Social Securities and appeal your case. This information can be found at Service Canada website http://www.servicecanada.gc.ca/eng/home.shtml

  69. Natalie says:

    Hi Allan, my husband is a permanent resident in Canada and my son and I are Canadian citizens. My husband has completed 1.5 years in Canada as a PR. We don’t own any property in Canada. We will be moving to India for a 3 year contract job that I have received and accepted. I just have a few questions for you.

    1) If we become non-residents of Canada and my husband and I both start working in India, will we have to pay taxes on the income earned?
    2) If my husband stays with me outside of Canada, will he meet the PR requirement? Does this change if we both become non-residents?
    3) If we come back to Canada after the completion of the 3 year contract, will we be considered to be residents of Canada during those 3 years?
    4) If we considered to be residents during the 3 year contract period would we be entitled to receive the Canada Child Tax Benefit and the Universal Child Tax Benefit?

    • superAmin says:

      Hi Natalie,

      1) You can declare yourself as a non-resident on your next tax return after you moved. They shouldn’t bother you again after that.
      2) Becoming a non-resident for tax purposes doesn’t change anything. His PR will still be protected so long as he spends at least two out of the five years in Canada starting from the date he became a Canadian PR (please consult an immigration lawyer in all matters related to PR status).
      3) No, you could ask the CRA but you would write something about it when you moved to Canada again on your next tax return.
      4) You have to be living in Canada to get the child tax benefit.

      Hope this helps!

  70. Grahame says:

    Hi Allan, I just have a quick question. My wife and I moved to the US recently. She has a RRSP in Canada with $65,000 in it. She is not working currently. Should she take it all out at once?

    Thanks for any advice.

    • superAmin says:

      Hi Grahme, if your spouse is not working, she can withdraw her RRSP tax free over a 5 year period without paying a single dollar of Canadian tax! On the other hand, if she withdrew it all at once, she would be hit with a 25% withholding tax resulting in a tax of $16,250 if she did not file the elective tax return on an annual basis.

  71. Jeff says:

    Hi Allan, what happens to my retirement payments if I become a non-resident?

    • superAmin says:

      Hi, if you are receiving CPP, RRIF, or other retirement payments such as a retiring allowance you could receive approximately $17,000 a year tax free. If 100% of your worldwide income was from Canadian retirement benefits there would be a benefit even if you had retirement benefit income of close to $75,000, assuming the Canadian withholding rate would be 25%. Please note the potential savings also depend on how the income is taxed in the country you are now a resident of.

  72. Pius Kamal says:

    Hi Allan,
    I have quick question that, I am a Canadian citizen and filed tax return till I was there i.e. up-to 2010. From 2011, Now a days, I am residing with my family outside of Canada and working for an Indian Company; but I have bank account in Canada and driving license. I assume, I am maintaining secondary ties with Canada as a non resident of Canadian. I am planning to return back to Canada in 2020 again. What happens, if I return back to Canada with my family after 10 years. Do I need to pay tax to CRA for the period of 10 years while I was outside of Canada and can I continue my residency with my family as resident of Canada afterwards; and getting all benefits which I paid earlier for CPP, RRSP, health care and others.
    Thanks and best regards,
    Pius Kamal

    • superAmin says:

      Hi Pius,

      Did you file a departure tax return when you permanently left Canada in 2010? If not, this is the first thing you should do. Maintaing a couple of minor secondary ties will not affect your Canadian residency status. However, you should always break as many ties with Canada as you can.

      When you return to Canada, you will file a part year resident tax return. This means you will be taxable in Canada on your worldwide income starting from the date that you permanently move back to Canada. The income that you earned abroad while you were a non-resident of Canada will not be taxable to you in Canada. You can repatriate this money back to Canada, without paying Canadian taxes. In terms of government benefits such as the CPP, you will only be entitled to receive pension upon retirement based on the amount of contributions you made. Since you will not have made any contributions from 2011 to 2020, it’s very likely that you will not be eligible for the maximum CPP benefit upon retirement, and will receive a reduced amount.

      Allan Madan, CPA, CA

  73. Jon says:

    Hi, I will be a non-resident for at least five years starting next year. What should I do with my TFSA, HBP and LLP? Am I allowed to keep them and continue to contribute to them?

    • superAmin says:

      Hi Jon, to start, you will not be able to contribute to any of the above mentioned plans if you become a non-resident. I will go further in depth on each plan below:

      TFSA: You are allowed to keep your Canadian TFSA while you are a Canadian non-resident. You will be able to continue to benefit from investment income and withdrawals tax free. However, you will not be allowed to contribute to the TFSA and you will not gain any more contribution room for the years you are gone.

      HBP and LLP: The rules are similar for both your HBP and LLP. You have 60 days from the date you become a non-resident to repay any amounts that you owe under your HBP and LLP. If you do not make payments within the 60 day period, the balance owing will be included in your income on your last tax return in Canada.

  74. Charlotte says:

    Hello,
    Thank you for your very helpful video. I’m a non-resident of Canada who is currently working in Dubai, UAE. I have completed forms 3.5 years ago to gain non-residency status. I want to double check that this is still the case – is there somewhere online that will tell me? Or do I need to call the CRA?

    • superAmin says:

      Hi Charlotte,

      Call the CRA to find out if they have you recorded as a non resident of Canada on their system. If yes, then you do not need to do anything further.

      Allan Madan, CPA, CA

  75. Steve says:

    You mentioned the need to declare my assets upon leaving Canada and if not could very well be fined $2,500. What if I own approximately $175,000 worth of personal stuff, but no real estate. Such as household appliances, tools, toys clothes etc. And I just want to take it all with me and move to the States, will I be taxed by the CRA? Exactly how does this work?
    Thanks Steve

    • superAmin says:

      ​Hi Steve,

      If the assets are sold prior to leaving Canada, then you do not have to disclose them on your departure tax return. Note that you may have to pay capital gains taxes when you sell your assets, if they have gone up in value.

      Allan Madan, CPA, CA

  76. Niklas says:

    Hi Allan, I am becoming a non-resident of Canada soon but I still have a locked-in bank account. How do I go by getting rid of the account and withdrawing the money inside the account?

    • superAmin says:

      Hi Niklas, when you are determined by the CRA as a non-resident, you can apply to unlock and withdraw all the money in your locked-in account two years after you leave. Once you are a non-resident, you will need to complete and sign FSCO pension Form 5.

      You then need to submit the form to the financial institution that holds your locked-in account. You will also need a written determination from the CRA that states you are a non-resident for tax purposes. You also need written consent from your spouse or a certification that you do not have a spouse.

  77. John says:

    Hi Allan, i have a question – if i moved (with wife+kids) to another country and sold the canadian house (ie no primary ties to canada) but kept all the secondary ties (passport, driver’s license, health coverage, bank accounts, credit cards, personal property, etc) – how likely is it that CRA would determine me to be non-resident?

    i think it would be beneficial financially for me to remain resident (taxation of dividends is near-zero in canada up to 50k/p) while living elsewhere. Other than owning a house in canada, i’m wondering if the secondary ties are enough to ensure being deemed resident.

    • superAmin says:

      Hi John,

      The answer depends on the rules surrounding residency contained in the tax-treaty that Canada has with the country you are moving to. In the absence of a tax treaty with Canada, it is possible that you will remain a resident of Canada, if you maintain a large number of material secondary ties, and if your intention is to return to Canada.

      Thanks,

      Allan Madan, CPA, CA

  78. Rana says:

    Hi,
    I am Canadian citizen and working in USA. I am going to apply for Non residence to Canada. My question is if I do that and after 3-4 years if I want to come back to Canada permanently, is there any problem or If I want to come back to Canada after age 65 ,will I get old age benefit.
    .

    • superAmin says:

      Reply:
      The Old Age Security (OAS) pension is calculated based on how long you lived in Canada after the age of 18. You can either get the full pension or partial pension.
      For the full pension, you either have to meet one of the two.
      1. You resided in Canada for atleast 40 years after the age of 18, or
      2. You were born on or before July 1, 1952 and
      • on July 1, 1977, you resided in Canada, or
      • on July 1, 1977, you did not reside in Canada but after turning 18, you did reside in Canada for a period of time, or
      • on July 1, 1977, you possessed a valid Canadian immigration visa.
       In addition, you must have resided in Canada continuously for the 10 years immediately before the approval of your OAS pension. If you were absent from Canada during that 10-year period, you may still qualify for a full pension if:
      o you resided in Canada for at least one year immediately before the approval of your OAS pension, and
      o for every year you were absent, you had 3 times more years present in Canada between age 18 and before 55.
      You get partial OAS pension if you cannot meet the above requirements. Also, if you do not want to wait for additional years to be eligible for full pension, you can opt to get partial pension instead.
      A partial OAS pension is calculated at the rate of 1/40th of the full OAS pension for each complete year of residence in Canada after age 18.
      You need to have resided in Canada for atleast 10 years after your 18th birthday to qualify for partial pension.
      NOTE: Once your partial OAS pension is approved, there is no increase with additional years of residence in Canada.
      If you live outside of Canada, you become eligible for OAS if
      • you are 65 years old or older
      • you have been a Canadian citizen on the day before you left Canada and
      • you have resided in Canada for atleast 20 years after turning 18.

  79. Christine says:

    Hi,

    I am a Canadian resident who is considering moving to the U.S. in the next year or two. I own a few investment/rental properties in the U.S. right now under my own name. What do I need to do to plan ahead to minimize the tax consequences upon departure from Canada? Thanks.

    • superAmin says:

      Hi Christine,

      First, you need to determine whether you will be a resident or non-resident of Canada for tax purposes once you move to U.S. so that you are aware of which country you will be taxed in and on what income.
      As a non-resident of Canada for tax purposes, you will not be paying Canadian tax on non-Canadian source income. You will pay tax only on Canadian-source income (if any). To be considered a non-resident of Canada, you must sever all your primary residential ties in Canada and majority of the secondary ties.

      The following CRA bulletin discusses residential ties in more depth:

      http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html

      The most significant residential ties considered by the CRA are as follows:
      • a home in Canada;
      • a spouse or common-law partner in Canada; and
      • dependants in Canada;

      You can contact us if you would like to have a residency analysis performed regarding your situation.

      Departure Tax Return

      When you become a non-resident of Canada for tax purposes, you will have to file a departure tax return by April 30th of the following year. This will include filing Form T1243 – Deemed Disposition of Property by an Emigrant of Canada, and Form T1161 – List of Properties by an Emigrant of Canada. As you have investment/rental properties in U.S., these forms may be applicable to you.

  80. Haranadha Reddy Puttur says:

    Good Allan!
    I work for Canadian Federal organization and I am Canadian citizen. I am planning to go on long leave with UNPAID (and no benefits) due to my personal obligation back home in INDIA. As a result, I may need to leave Canada with my family for at least five years.
    As a result, I would to go on NON RESIDENT CANADIAN status and move to INDIA. However, I have following:
    (1) Bank accounts (TFSA, RESP in mutual funds, registered pension amount locked-in account)
    (2) Credit Cards
    (3) dependents

    Non Canadian Resident Status
    (a)Should I cancel credit cards,
    (b)Dependents will also move with me to INDIA
    (c) Should I keep Bank accounts? Or which one supposed to be closed?

    By doing above (a) – (c) is fine for Non Resident Canadian Status?

    I am planning to move in June 2015. Please, advise.

    Sincerely,
    HR Puttur

    • superAmin says:

      Hi Haranadha,

      You would have to complete and submit a NR73 Determination of Residency Status form to the CRA for them to assess your situation as you may have strong ties back to Canada including the fact that you plan to return. Also, you must file a departure return next year, outlining the date of departure to indicate you have left the country for a long-term. The more ties you have to Canada, the more difficult it is establishing a non-resident status. Canceling credit cards and closing everyday accounts will help your case during assessment of residency status.

      Link to NR 73 form:

      http://www.cra-arc.gc.ca/E/pbg/tf/nr73/README.html

      • Puttur says:

        Thank you.I have resigned for this position and no ties with Canada except RESP, Locked accounts.
        I have sent the faxed and letter by Canada Post in April 2015. The CRA confirmed that letter was received.
        Dr.Puttur

  81. Donald says:

    I plan to become a non resident of Canada in 2015. I realize that on leaving Canada I must pay taxes on any deemed capital gain on taxable assets. But what if I will have a loss on the deemed taxable assets. can I use the carry back provision for the previous 3 years when I had a capital gain to offset the loss that I will have on becoming a non resident? Thanks

    • superAmin says:

      Hi Donald

      The capital gain or loss resulting from the deemed disposition must be reported on Form T1243, Deemed Disposition of Property by an Emigrant of Canada. This gain or loss is then reported on Schedule 3 of your tax return. This loss can be carried back 3 years.

  82. kari says:

    Hello Allan,

    Thank you for your awesome info on this page. I am a Canadian citizen planning to move to Bahrain permanently for a long term job. I plan to severe all my ties except 1 bank account (none interest paying) and 1 credit card for emergency use, of course will keep my Canadian passport. With no primary ties, will my secondary ties be an issue?

    what if I earn income in Canada from an online business, will that make me non-resident? I know I have to pay taxes on Canadian income but don’t want to risk world income.

    does my spouse who doesn’t earn income need to severe her ties too?

    • superAmin says:

      Hi Kari,

      Primary ties include owning a home, having dependants and having a spouse or common-law in Canada. To sever these ties, you must sell your house including all personal property such as car and furniture and have your spouse and dependents move with you and severe ties regardless if they are earning income.

      Once you have no primary ties, the CRA may look into your secondary ties. These do including keeping your Canadian passport in addition to credit cards and bank accounts regardless if they are interest paying.

      In regards to your earned income in Canada, you become a non-resident when you, your spouse and dependents leave Canada and you have become a resident in Bahrain. You will be taxed in Canada on your world income until you have become a non-resident.

      In your specific case, you must prove that you have no intention of returning to Canada and your secondary ties are significant enough to prove that you might have the intention of returning.

  83. Nori says:

    Hello,

    I’m a Canadian citizen selling my primary residence in Canada and emigrating to Europe at the same time.

    Are there any tax implications related to the sale of my primary residence? If so, does it matter when the exact time is that I close the sale of the residence? Do I have to close the sale prior to departing or can I close the sale (using power of attorney) a week after emigrating without any tax implications?

    Your help is appreciated. Thanks

    • superAmin says:

      Hi Nori,

      If your desire is to become a non resident of Canada when you depart, then you should sell your primary residence before you leave. Having a home in Canada is a primary tie to Canada as per the CRA, and could cause you to remain a tax resident of Canada even while you live abroad.

      Since Canada has tax treaties with most European countries, it’s very important that you review the article in the applicable treaty pertaining to ‘Resident of a Country’. A tax treaty will help you determine your tax residency and can help you avoid double taxation. You can find Canada’s tax treaties on the Department of Finance’s Website.

      It’s also a good idea to sell your home before you leave, in order to avoid being caught with the dreaded 25% withholding tax. You see, the buyer of your home must withhold 25% of the selling price, unless you provide the buyer with a Clearance Certificate approved by the CRA. This is assuming that you are a non resident of Canada after you leave.

      Best Regards,

  84. Rajesh says:

    Hello Allan,
    My name is Rajesh. I was wondering if I can use my foreign income tax as a deduction under itemized deductions, rather than a credit – is this better for me?
    Thanks,
    Rajesh

    • superAmin says:

      Hello Rajesh,
      Yes you can but it is a choice you will need to severely consider. You may not have a large mortgage interest deduction when living overseas. Therefore, the chances of being able to advantageously use itemized deductions over the standard deduction may be difficult. Don’t forget that you cannot claim a deduction for foreign taxes paid on income excluded under the foreign earned income exclusion or house exclusion.
      Thanks,
      Allan Madan

  85. Maria says:

    Hello Allan,
    I am an international student at Ryerson and I do not work nor get any income within Canada. Am I
    required to file income taxes?
    Thank you
    Maria

    • superAmin says:

      Hello Maria,
      You are required o file taxes if:
      • you receive any income in Canada (this can include scholarships or bursaries)
      • you want to claim a refund
      • you want to apply for the HST, Ontario Trillium Benefit and other tax credits
      • If you and your partner was to start/continue receiving Canada Child Tax Benefit payments
      Thank you
      Allan

  86. Sarah says:

    Hello –

    I am moving to another country for work and just sold my primary residence in Canada. I assume therefore I will become a non-resident. However, I have significant cash from the sales of my primary residence that I do not want to take out of Canada (I plan to move back here in 2-3 years). I would like to invest that money so that it grows while I am away.

    Considering that I am becoming a non-resident, how does that affect my ability to make the investment? In particular, I have to leave Canada before the money from my house sale “clears” in the bank, so I wouldn’t be able to make the investment until I have departed the country.

    • superAmin says:

      Hi Sarah,

      Thanks for contacting me. You do not automatically become a non resident of Canada by selling your home and leaving Canada to move another country. The first step in assessing your residency status is to evaluate the ties that you still have to Canada after moving. Next, you must examine the ties that you have established with your new country of residence. Lastly, the tie-breaker rules (surrounding residency) contained in the tax treaty (if there is one) between Canada and your new country must be reviewed.

      If you become a NR of Canada, it’s important to inform all of your Canadian financial institutions so that they can begin withholding taxes at source from interest and dividend payments made to you. Non residents of Canada can continue to make investments in Canada.

      Would you like to setup a consultation to discuss further?

  87. Gio says:

    Hello Madan Team,
    I have been living in the US for approximately 1.5 years now, however, I am returning to Canada shortly and I was wondering if I have to pay taxes on the money I earned while living overseas.
    Thank you,
    Gio.

    • superAmin says:

      Hello Gio,

      This question is dependent on whether or not you have maintained Canadian residency. If you have few ties to Canada while you were in the US and established a clear US residency, you will be considered a non-resident and you could be liable to pay taxes on your earned income.
      However, considering you have been gone for 1.5 years there is reason to believe you are still maintaining a Canadian residency; therefore you are liable to for Canadian taxes on your earned income. Canada and the US have a tax treaty that ensures double-taxation does not occur.

      Thank you,
      Allan Madan

  88. George says:

    Hello Allan
    If I am penalized by the U.S. for my taxes, does the CRA aid the U.S. to collect it?
    Thanks,
    George

    • superAmin says:

      Hello George,
      The Canada-U.S. tax treaty states that Canada can help the U.S. collect certain taxes. However, keep in mind that the CRA will not aid the IRS to collect your U.S. tax liability if you were a Canadian citizen when the liability occurred.

      Thanks,
      Allan

  89. Ikaika says:

    Hi Allan,

    I plan on leaving Canada next year. I currently hold bank accounts like TFSA with a bank here in Canada. My question is, will I still be allowed to maintain my TFSA?

    Thanks,
    Ikaika

    • superAmin says:

      Yes! You will still be allowed to maintain your TFSA without being taxed on earnings in the particular account. However, keep in mind that you will no longer be able to contribute to your TFSA account. Also, no contribution room would accumulate for any year throughout which you remain a non-resident of Canada.

  90. Emmanuel says:

    Hello Allan,
    I want to leave Canada for work purposes, but return back and continue to live in Canada for several years. What happens to my housing situation?
    Thanks,
    Emmanuel

    • superAmin says:

      If you are thinking of selling or renting your Canadian home while being in another country, you should be aware of ‘rental income’ which is taxable in Canada. You will be obligated to pay a 25% withholding tax on the gross selling price of your home. Luckily, Canadians are allowed to file a Section 216 Tax Return form to recover a portion of the withholding tax.

  91. ALLEN RUTTAN says:

    Hello Allan: I am considering living in Panama and currently work for a United States company in Australia. I am selling my condo and am severing all ties to Canada. My question is will I be able to keep my passports as I have 2 of them, both Canadian and once I leave Canada are there any restictions on how often I return. I recently lost my father and my mother’s health is questionable. Should her health deterioate I will need to return to Canada on my time off from my job in Australia.
    I have already been to Panama and now have a lawyer there who will help me with my relocation needs on that end as well as set up a bank account and help with immigration concrns also.

    Please advise…Allen

    • superAmin says:

      Once you become a non resident of Canada, you should not return to Canada for more than 182 days in any 12 month period. Also, you should not be financially supporting your mother, as she would then be considered to be a dependent, thereby making you a tax resident of Canada.

  92. David Valent says:

    Hello Allan,
    I really appreciate your website. Here is my situation. My family and I , we have two school aged children, moved to Europe in October 2014. We had sold our home previous to leaving. We were not sure where we would settle, it was between France and Spain. After a move we decided on France. It wasn’t until the end of December that we signed a lease for an apartment. In the January I found a part time job. Since then I was able to get into the French social system, sin number, health insurance. As of right now I am still a tax resident of Canada, I have yet to change that. We have investment back home stocks, Gics, rrsp, tfsa, resp etc. Our investment make more than my income here. What I am asking is what would be the best step to take next. We have decided we want to stay here indefinitely. At the same time I want to do the best thing in financial terms. Should I severe all ties with Canada, can we keep,our assets in Canada pay taxes in both countries, but still be in the French social system. I really need your help to make the best decision. I know the French tax system is very aggressive, and I want to make sure I do everything correctly, so as to not create problems for my family. Any help would be greatly appreciate. To I have to keep in mind the horrible exchange rate at the moment between the canadian dollar and euro. By the way I have dual nationalities Canadian and Italian.

    Thanks so much, I away your reply
    David

    • superAmin says:

      Hi David,

      Thanks for contacting me. According to the Canada-France tax treaty, you are a resident of the country where your permanent home (either rented or owned) is located. If you have a permanent home in both Canada and France, then you are a resident of the country where your personal and economic ties are stronger to. It appears that you have only one permanent home which is in France, where you are living with your family. If this is true, then you are a non resident of Canada and a resident of France. Therefore, you will have to file a Departure Tax Return with the CRA (which my office can prepare) to cease your tax residency in Canada. Additionally, withholding taxes will be deducted from Canadian interest and dividend payments made to you, since you will be a non resident of Canada.

      Please let me know if you would like to discuss further.

  93. David says:

    Can you please contact so we can discuss further.

  94. Andrea says:

    Dear Allan, I really like your website and greatly appreciate all your responses. Here’s our situation: We are Canadian citizens. I got a great job opportunity in Austria and in a few weeks me and my children will be relocating and establishing our residency status there. My husband will stay in Canada in our house and will join us next year once we’re settled. We’re also keeping our RRSP, LIRA, TFSA, RESP in Canada. I’m also keeping my bank accounts, health card and drivers license. What would be my residency status in Canada? Factual resident or deemed non-resident? Would I have to file T1161 and T1243 with my 2015 tax return or pay departure tax? Also, I hold a foreign rental property that I do not intend to sell and plan on holding it for years after becoming a non-resident of Canada (a couple of years down the road once the family completely resettles in Austria and after severing all primary and most of the secondary ties). Is it somehow possible to recover the departure tax on the deemed sale of this property considering that the actual sale of the property and generation of capital gain won’t occur until years after becoming a non-resident? Your help would be greatly appreciated. If I would like to discuss more of these tax implications with you in the future and use your services where can i contact you and what are your fees for your tax services?

    • superAmin says:

      Hi Andrea,

      Thanks for contacting me. According to the tax treaty between Austria and Canada, you will be a resident of the country where your permanent home is located. If you have a permanent home in both countries, then you are a resident of the country where your personal and economic ties are strongest (i.e. centre of vital interests).

      What will you be doing with your house? Renting it, keeping it vacant or selling it? I will need to know this in order to determine your residency status.

      You will have to fill out form T1161 to disclose your assets if the total value of your assets is more than $25,000. Certain assets are excluded. Form T1243 must also be completed and departure tax will apply to your real estate located outside Canada. You can potentially defer paying departure tax until the property is sold – see form T1244. Please let me know if you would like to arrange a consultation to discuss further.

  95. Simon says:

    Dear Allen,
    Thanks you for the invaluable information on this blog and information you be able to provide in this forum is much appreciated.
    I have been living and working in the UK for the past 2 years and have now decided to stay indefinitely. I have decided to become a non tax resident and in the process of severing secondary ties with Canada. I have 3 remaining ties which I hope you may be able to give your advice are:
    1. Bank account to pay student loan from
    2. Credit Card which I will cancel once the remaining balance is paid off (3 months)
    3. Life insurance policy – would I be able to keep this or should I end this and what tax implication would this have? Should I do this before or after I declared non-residence?
    You reply is very much appreciated.
    Thanks in advance

    • superAmin says:

      Hi Simon,

      These are good questions. According to the Tax Treaty between Canada & the UK, you are a tax resident of the country where your permanent home is located. A permanent home can either be rented or owned. If you have a permanent home in both Canada and the UK, then you are a tax resident of the country where your personal and economic ties are strongest.

      The 3 secondary ties that you mention below are not, by themselves, a determining factor with respect to your tax residency. You don’t even have to terminate these 3 secondary ties, if you only have a permanent home in the UK and no home in Canada.

      However, should you have a home in Canada and the UK, then by terminating these 3 ties, you are strengthening your case for declaring non residency for tax purposes from Canada. To error on the side of caution, terminate these 3 ties before declaring non residency.

      Should you choose to keep the life insurance policy, you will have to pay departure tax if the market value of the policy is more than the cost amount. If you terminate the policy, there may be a capital gain.

  96. Janelle Tarnopolski says:

    Hello,

    Thank you for your informative website. I have a question regarding my own status. I left to live in the United States in October of 2010. My parents filed my final tax return in 2010 on my behalf. I never filled out the NR73 form since we didn’t really feel it necessary at the time and we were uncertain as to whether or not life in the States would work out (I hold duo citizenship). Since then I have made the U.S. my permanent home. I never owned any assets in Canada worth more than the cutoff amount, since all I ever did was rent. At the time of my departure, the only asset I had was a 10 year car worth nothing more than $2000 which I took with me. The only ties I have in Canada are a bank account, a locked in RRSP ($17,000), one Credit card, line of credit, which I am working to pay down and eventually close once they are paid off. I do also have a valid passport which has yet to expire. My intention is to withdrawal from the RRSP to pay down the line of credit and the credit. I was told by RBC to file an NR73 form and submit it to the bank in order to withdrawal from the RRSP in order to do this. Besides the 25% on the locked-in RRSP is there anything I need to be aware of?

    • superAmin says:

      Thanks for your question. Based on what you wrote to me, you only have to concern yourself with the 25% withholding tax on RRSP withdrawals made. This amount can be credited to you on your US Tax Return as a foreign tax credit. Remember to include the RRSP withdrawals made on your US Return as income (1040).

  97. Steve says:

    Hello,

    I have been working in a country for 5 years that has a tax treaty with Canada. Prior to leaving the country I sent a letter to the CRA to see if I qualified as a non-resident, they replied that based on the info I gave them I was a non-resident (no credit cards, no bank account, no property, no assets etc). When I left I had not worked full time ( I was a student) . I do not recall filing a final tax return before leaving and have not filed one since leaving. Is there anything I still need to do?

    • superAmin says:

      Hi Steve,

      Your first step is to call the Canada Revenue Agency to ask if you have any past-due personal tax returns to be filed. If the answer is no, there is nothing further to do. If the answer is yes, then we will have to file those past due returns and a departure tax return for your final year in Canada.

  98. kiran says:

    Hi Allan,

    I am planning to go to India for sometime. I have funds in RRSP and TFSA. I have checked with my bank and they said that I can keep funds during NRC period and trade also. Just wanted to confirm with you regarding the same.

    I think I don’t have to file taxes every year in Canada for any gains/losses during financial year. Could you please confirm?

    Also what would be tax implications in India if I get profit in a financial year in RRSP and TFSA. Could you please advise?

    Thanks for your help!!

    Regards,
    Kiran

    • superAmin says:

      Hi Kiran,
      Thanks for your question. Your understanding is correct from a tax standpoint. BUT, check with your financial institution if they will allow you to continue to trade stocks / investments inside your RRSP & TFSA without any restrictions.

      You should consult with a local CA in India to understand of the Indian tax authorities recognize the tax deferred status of RRSPs and TFSAs.

  99. Evan says:

    Dear Allan,
    I am a Canadian citizen leaving Canada to work in Germany. The closing date of the sale of my primary residence is the day after I leave Canada, but I will not apply for residence in Germany for a few weeks after I arrive. My lawyer wants me to fill out a T2062 and withhold tax as a non-resident, but I think I am still a resident of Canada until I become a resident of Germany. Is my lawyer right? What can I do to avoid the withholding?
    Thank you,
    Evan

    • superAmin says:

      Hi Evan,
      You can argue that you are still a resident of Canada while you have a primary residence in Canada. Your lawyer is being cautious. BUT, the treaty between Germany and Canada clearly says that you are a resident of the country where your permanent home is located.

      If you require me to prepare a departure return for you, plus the applicable schedules, please let me know.

  100. Erminio says:

    Hello Allan,
    First, I wish to say that this site is very helpful, I have read almost everything!
    Now my question: I am a non-resident of Canada and under election 217, I must complete schedule A “Statement of World Income” but I do not understand what the “net world income” means.
    As I pay or will pay taxes on that amount, here in Italy, I would like to know if taxes have to be deducted from the gross amount to get the “net income” to report in schedule A .
    Thank you very much.

    • superAmin says:

      Hello Ermino,

      The purpose of filing a Section 217 return is so that you can pay taxes on Canadian source income based on your marginal tax rate (as though you were a resident of Canada). For low income earners, a Section 217 return is helpful, because their marginal tax rate is usually lower than the withholding taxes deducted from their payments (e.g. CPP payments, OAS payments, etc.).

      Net worldwide income means all income that you earned from each country, net of related expenses. Your net worldwide income is used to determine your marginal tax rate in Canada. You will not be taxed in Canada on foreign income that you earned while you were a nonresident of Canada.

  101. sadaf says:

    Hello,
    My husband is working for US based company and moved to Texas.The company also gave him 2 projects in Toronto where they paid him as Non resident of Canada.He already paid taxes in US.Me and my three kids live in Toronto and will not join him.
    What are tax liability for him here?Can he keep the ties with Canada as his family lives here and pay taxes here too.Please advise

    • superAmin says:

      Hi Sadaf,
      It’s likely that your husband is still a tax resident of Canada, because he has a permanent home in Canada and his spouse and children live in Canada. As such, he will have to file a Canadian tax return and pay Canadian taxes on his worldwide income. He can receive a foreign tax credit for the American taxes paid on his Canadian tax return.

      Note that your husband will be considered a resident alien if he resides in the US for more than 183 days in the year, or if he meets the Substantial Presence Test. To get out of being a US tax resident, he should file form 8833 with his US 1040-NR tax return with the IRS. We can prepare both his US and Canadian tax returns if you would like us to do so.

  102. Razi says:

    Hi,

    Thanks for the info re. emigration.

    In regards to emigration, in case family leaves before selling occurs and myself later after selling (closing), would principle residence exemption be applicable and no gains tax will be incurred or otherwise?

    Please advise.

    Thanks,
    Razi

    • superAmin says:

      Hi Razi,
      Yes, you can claim the property as a principal residence if you leave after closing. More specifically, the principal residence exemption can be claimed for each year that you resided in the property.

      The downside of staying back while the house sells, is that you and your wife will still be considered as residents of Canada up to the date of sale. Residents of Canada are taxable on their worldwide income. If Canada has a tax treaty with your new host country, then you must examine that treaty to see if you can get any tax relief from double taxation.

  103. Ahmed says:

    Hi,

    Both my wife and I are considered as non.residents as of June 2014. I have a few questions.

    1. My wife went back to Canada in 2015 helped their parents out for 2 months at their business and generated a income of approx 6k. How will that effect our status?
    2 Can I register a business under my name and still maintain non residency as long as the company itself files taxes? Lets assume i incorporate.

    Thanks for the great article.

    • superAmin says:

      Thanks for your question. Just because your wife came back to Canada for a short period of time to help them out does not result in her becoming a tax resident. BUT, she should be careful to limit her ties to Canada, because if she has lots of them, then she could be considered a resident of Canada.

      Non residents are allowed to do business in Canada and so are corporations in Canada with nonresident shareholders. Again, be careful to limit the number of ties that you have to Canada to avoid being treated as a factual resident of Canada for tax purposes.

  104. Lily says:

    My husband has accepted a job in the USA on a TN visa, and starts work in 6-8 weeks. We would like to cut all ties to Canada for tax reasons. We need to sell our house, but there is no way it will sell or close before we leave (3-4 months is more likely). From what I understand, we need to file a T2062, T2062A, and T2091, on top of the T1161 that we file when we leave. I have a few questions. Our house has gained about $35k in value since we purchased it three years ago (significant renovations on our part!). For my questions, assume that it sells for $10k more.
    1. If the purchaser is required to withhold 25% of the purchase price until the clearance certificate comes through, do we need to find the additional cash to discharge the mortgage? From what I understand, getting a clearance certificate can take months?
    2. I assume that the USA will demand a chunk of the sale proceeds? Will they tax us on the full $35k or just the $10k? I understand that we can reduce this by a ‘foreign tax amount’, but I am worried that this will cost us thousands of dollars. I cannot find the answer to this question anywhere!

    • superAmin says:

      Hi Lily,
      The purchaser’s lawyer will holdback 25% of the sale proceeds until you provide him/her with a Certificate of Compliance from the CRA. Since it can take several months for the Certificate of Compliance to be issued, you may have to arrange for temporary financing to discharge the mortgage.

      The ‘cost’ of your foreign property for US tax purposes is equal to the market value of that property on the date that you become a US tax resident. Therefore, you will be taxed in the US on the sale of your foreign property to the extent that it has appreciated after arriving to the US. You can also claim a foreign tax credit for a portion of the Canadian taxes paid on the sale of the property.

  105. Mark says:

    Thanks for the great post.

    How long can one maintain their residency status within Canada while living overseas? Are there any strategies to extend this? In my case, the goal is to avoid departure tax as I have shares in a non-liquid private company. My wife has a job offer in Europe – we would like to take the opportunity and eventually return to Canada.

    Thanks again!

    • superAmin says:

      Hi Mark,
      Keep a home in Canada that’s available for your use. A home can either be rented or owned. Come back to Canada as often as you can each year. Also, maintain as many personal and economic ties as you possibly can with Canada and limit the number of ties that you have in your host country. This will help to ferment your status as a tax resident of Canada.

  106. Popy says:

    Thank you for all the information. I need some insight on the following situation. My husband declared non-residency 3 years ago and went to work in Europe. Me and the kids were not sure if we were going to follow him (depending on how his work would do/kids health/etc) hence I have not declared non-residency. We have spent some time with him overseas and I have now decided to also declare non-residency as his overseas job becomes permanent. I am currently overseas with him.
    So, what is the best way to do it? Come back to Canada, stay few days and then leave again so I can have a record of leaving the country? When is best to do this, right now or at the end of the year in order to declare non -residency when I file my tax return? I would like to do it as smooth as possible. I have filed taxes for the first 2 years but not for the last year. Your advice is much appreciated, thank you.

    • superAmin says:

      Hi Popy,
      In this particular situation, I recommend that you file form NR73, Determination of Residency Status, with the CRA. This is because you potentially became a nonresident of Canada a couple of years ago when you left Canada. Once you receive a determination from the CRA, you may have to adjust your previous years’ tax filings.

  107. fady says:

    Hello ,

    I have inherited a property in the middle east from my father , actually it is occupied by my mother.
    If I become Non resident to tax purpose , will this property be subjected to departure tax.
    thx u

    • superAmin says:

      Hi Fady,

      Yes, it will be subject to departure tax unless you become a nonresident of Canada within 5 years of moving to Canada and if you inherited the property while you were a nonresident of Canada.

  108. Kristy says:

    Hello!

    I am selling my home before leaving canada to get married in the U.S.
    I am planning on leaving after “closing” and I plan to close out as many Canadian bank accounts
    As possible. Will I be taxed on the cash I have in the Canadian bank? Should I move
    This cash to the U.S.? If so how long do I have to do this after I leave? (I do have a U.S. Bank account)
    Also, what do I do with my daughters RESP?
    Thank you!

    • superAmin says:

      Hi Kristy,

      You don’t have to close your bank accounts. If you decide to do so, the cash received is not taxable to you.
      You can keep your RESP but don’t make any contributions to it. Withdrawals are taxable to you in the year they are made (Canada). In the US, any income earned in the RESP is taxable in the year that it’s earned, and form 3520/3520A must be submitted to the IRS in respect of the RESP.

  109. Tahseen says:

    Hi,
    I became a Canadian citizen 4 years back along with my wife & son. Now we have received our family sponsored US immigrant visa, and are living Canada for good by the end of June. We don’t have any real estate in Canada. We’ll take all our household items with us including furniture as well as the car. We are planning to keep our bank account with TD to do cross border banking. We own a property in the US at which we are planning to reside. I would appreciate it very much if you could advise on what to do to declare ourselves as non-residents without having any tax implications. We don’t plan to come back to Canada to settle. Thanks!

    • superAmin says:

      Hi Tahseen,

      You should file a departure tax return + form T1161 on or before April 30 of the following year. Also, provide your US mailing address to the CRA, Service Canada, and any financial institutions you deal with. You may be liable for departure tax on your US real estate. We can prepare the required returns and forms for you.

  110. Sherry says:

    Dear Allan
    Thank you for the excellent resources you have provided on your website – very helpful.
    I married a US citizen last year and officially moved from Canada to the US on January 4, 2016 after obtaining my US permanent residency and Green Card. I am now living in the US. Before leaving Canada on Jan 4th, I sold my home, furnishings, car, non-RRSP investments, and divested my TFSA. Due to my elderly mother, I have come back to Canada to visit almost every 2 months for short stays and for the most part , I have used my mum’s home address in Canada as my mailing address for my ‘Canadian’ life still left there. The only financial assets I left were a significant amount of cash or term deposits in 2 Canadian financial institutions (the proceeds of my home sale), my RRSP, and my company pension plans that I wont be able to collect for another 5 years at the earliest. At the time I left, I also had my own HR Consulting company which I officially dissolved in May 2016 – taking $53000 in net proceeds from it as a dividend (issuing a T5). I also was in receipt of final 3 weeks EI due to me in the early part of the year when I was in Canada visiting – I checked with EI and confirmed I was entitled to it as long as I was on Canadian soil and looking for work (which I was) in the US. Finally, I filed an FBAR with the US government this past June. That said: 2 questions
    1) I know you mention to advise of financial institutions (with whom I have bank accounts, credit cards etc.,) of address change so they can withhold appropriate taxes… however in using the calculator you have provided as a link on CRA’s site, for the $6000 Interest income I expect on deposits, it should tax due of $0. I really would like to my banking and financial life in Canada as is using my mums address (as I hope to move back there in 5 years) – is it absolutely essential to change my address with the FI’s? Can I not just report the interest when I file the joint US Tax return with my husband in 2017 and pay the tax to the US as worldwide income? What would be the implications if I left the address as a Canadian address?
    2) I intent to file a departing ‘zero’ tax return in Canada in 2017 (for the 2016 tax year) for Jan 1 toJan 4, 2016. I plan on claiming the business dividend ($53000 T5 payout), the EI benefit (approx. 1$1500), and the Interest income mentioned above, on my joint US tax return with my husband in 2017. Any concerns from a Canada tax perspective on this approach?
    My sincere thanks for your guidance and this excellent resource!
    Sherry

    • superAmin says:

      Hi Sherry,

      In response to your first question, you can keep your Canadian mailing address, so long as you inform the banks of your nonresident status. Banks and other financial institutions must follow special rules for nonresidents, part of which is deducting taxes on payments made to nonresidents. You are correct that the withholding rate is 0% for interest paid to American residents.

      In response to your second question, your approach for filing is correct.

  111. Suzanne says:

    Allan,
    I also forgot to ask, what happens to my CPP benefits when I retire if I’ve moved to the US and claimed non-residency in Canada prior to the retirement age? Do I lose them?
    S

    • superAmin says:

      Hi Suzanne,

      You will not lose your CCP benefits. However, they will not increase anymore, if you stop contribution to the CPP. When you begin receiving CPP benefits, a tax of 25% will be deducted from the payments made to you.

  112. Sarah says:

    Hi allan,

    I left Canada 2.5 years ago moving to UAE.
    I worked here for 1 year and 10 months, own nothing in Canada only have a tax free savings which I have not contributed to at all.
    I never have claimed non residency till this day nor filed any tax returns, and never called CRAz basically did nothing and just left. I am wondering what will happen when I go back and need to file a tax return what do I do and say?
    Thanks so much.

    • superAmin says:

      Hi Sarah,

      File a departure tax return with the CRA to establish your nonresidency status with the CRA. We can prepare this for you.

  113. Alan says:

    I’ve been a non-resident of Canada for three years, working in China. I’ve recently switched jobs to a Canadian company but still living in China. They initially wanted to pay me into my Canadian bank account (as they do for most of their employees, who are Canadians living in China but not non-residents), but I obviously don’t want that as then I would most likely be paying Canadian taxes on it. They can’t pay me in a Chinese bank account. How can I get paid and avoid paying taxes on it? They suggested instead invoicing them and getting paid like that? I also thought of maybe getting paid into my paypal account as it does not have an SS number on it. Any suggestions?

    • superAmin says:

      Hi Alan,

      You can have your paychecks deposited to a Canadian bank account. Maintaining a Canadian bank account is a secondary tie and will not cause you to become a resident of Canada.

      However, I do understand your concern as you do not want any red flags. Receiving payments through PayPal is a better option.

  114. Steven says:

    Hi, me and my girlfriend are leaving canada next summer, both from quebec city, 24yrs of age, still living in parents houses so we don’t own our own house, we will sell the car and the only thing we will have is our passeport, 2 RRSP(2019-2020), driver licence, banking and maybe credit card we will travel the world on working holiday visa one after another for around 5 years, we will stop where we feel home. Is it possible to become a non-resident of canada for taxes purposes in our case ? I will not get any income from canada and will work in each country for living and activities. btw the 2 RRSP are on my girlfriend name. is that matter. and with working holiday visa we will be ask to open a bank account, should we close our canadian bank account and credit card we lessen our ties with canada. thanks in advance.

    • superAmin says:

      Hi Steven,

      You will likely become non-residents of Canada, because you have so few ties to Canada. To be conservative, you can cancel your bank account and credit cards.

  115. charlene says:

    Hi, I am divorced canadian with child under age of 18. They live with the other parent but we have shared custody. I currently live in another province in Canada but see them regularly.
    Would having dependents that dont reside with me prevent me from getting non resdident status.
    How would my child support be calcauted if the country I have moving to has no treaty with Canada?
    Thanks

    • superAmin says:

      Hi Charlene,

      By having a dependent in Canada, which you do, you will be considered a factual resident of Canada. If you move to a country that has a tax treaty with Canada, you may be able to claim non-resident status with the CRA. Spousal & child support will be calculated according to provincial law.

  116. Chad Watson says:

    Hello,I was deemed a non resident in February of this year and was in the canada for about 20 days In April I plan on going back this October for about 20 more days is this a problem cause I’ve read you need to stay out for a full year from the start. Also what if I don’t become a resident of another country and just travel is this also a problem ??

    • superAmin says:

      Hi Chad,

      If you are not in Canada for 183 days or more AND do not maintain significant ties to Canada, then you will be considered a nonresident.

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