Tax Implications for Canadians Working Abroad, Overseas, Outside Canada Watch Video
Allan Madan, CPA, CA
If you are a Canadian working aboard, whether permanently or temporarily, Read More…
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.
ABOUT THE AUTHOR
ALLAN MADAN
CPA, CA
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.
Hello,
I got a job with a Mexican Co, for 2 years and I was wondering , if could I make volunteer contributions to my Canda Pension Plan, after that I leave Canada??
As a Canadian Citizen should I have to report taxes to Canada for the time living in Mexico??
Thank you and I am looking forward to hearing from you,
Ana
Hi Ana,
Thank you for you inquiry!
In terms of you first question, whether or not to report your Mexico earnings here in Canada is simply dependent upon your residency status. For Canada tax reasons, you can be a Resident (must report), Non-Resident (need not report), or Deemed Resident (must report).
We can assist you in determining your residency status for Canada. A lot of factors must be considered as the CRA is very strict on this matter.
In terms of your second inquiry, CPP is simply payable on Canadian earnings. Contributions are based upon the amount of Income earned here in Canada.
If you are an employee working abroad, voluntarily based CCP contributions can be made if Canada has a Social Security agreement with the country. Fortunately, Canada and Mexico do have an agreement, but the following conditions must be met:
1. Employee is a resident of Canada
2. Employee is not in employment that would be pensionable under another provision of CPP
3. Election to pay contributions within one year from June 15 of the following year in which employment took place
Should you need any further assistance, please call us at the contact details noted on our website.
Sincerely,
The Team at Madan CA
Hello
I am a Canadian Citizen, I am working abroad ( Working around the Global ) as expt
Now almost 14 years outside of Canada. But I have no Canadian Credit Card/Bank accout/Driver`s lience/Health Insuranc/ and no property, Some time I visite canada to visite my friends, I have no spous to, so now what will be my status…. Do I have o pay any Tax
thanks
Hi Zahid,
Thank you for your inquiry !
If you have no ties whatsoever to Canada (including having no property or EI or Business Income), you should not have to pay any tax. This is not always the case, as there are both primary and secondary residential ties through which the CRA determines whether or not you are subject to Canadian Income tax.
In order to ensure that this is the case, we can help you with conducting a residency test, as well as making sure that all required documents were promptly filed when you left Canada originally so that you do not face any issues later.
You may feel free to contact us directly. Our contact information can be found on our website.
Thank you !
The Team at Madan CA
Hi,
I’m a Canadian citizen and been working abroad for one year now (Saudi Arabia) I do have a dual citizen ship as well. I don’t own anything in Canada such as a house, a car or anything. I have an expired driver license but i do carry a health card.
Do I need to pay any taxes to Canada?? If yes, Is there a base on paying these taxes such as income range? How much do I need to pay?
Thanks a lot
Hi Nasser,
Thank you for your question !
Saudi Arabia and Canada do not have a tax treaty.
In order to determine the answer to your question, we must first conduct a residency status test. There are both primary and secondary factors to consider while conducting the residency test. I understand that you have a health card, and this is a secondary condition. We cannot provide you with an answer until we have a better understanding of your situation. We will be more than happy to assist you in this process.
We cannot answer how much tax you need to pay at this point until we have a better understanding of your situation.
Thank you !
-The Team at Madan CA
Hi,
Me,my wife and my kid moved here in Pakistan to take care of our old parents as they are having some medical issues. Three of us are Canadian citizens. We called to CRA to stop Child Benefit but they said you have to get it until you decide that you are becoming a non resident.
In the mean time I am trying to find a job so that we can live here for a couple of years for our parents and then will go back when ever decide. Now the question is, are we eligible to receive Child Benefit? will CRA make trouble to give them the money back and pay penalties, interest etc….How we will file tax from outside Canada. We do not own and owe any thing in Canada but do have just a bank account.
Your guidance will be highly appreciated.
Kamran
Hi Kamran,
Having a Bank Account is Canada is a secondary tie to Canada; the bank account by itself cannot cause you to become a resident of Canada.
Note that you are receiving the Child Tax Benefit because the CRA believes that you are a resident of Canada.
You must continue to file your Canadian Taxes if you are a Canadian resident. We can assist you in this process.
Also, there are many other factors to consider when conducting a residency test. This must be done to assess whether are a Canadian resident at this point. We can assist you in this process.
If you are found to be a non-resident, you will have to pay back the CTB. If your a resident, you must pay tax on World-Wide Income, and will not be required to pay back the CTB.
In order for us to further assist you, we will require more detailed information. You may contact us on the contact details found on our website.
Thank you !
-The Team at Madan CA
Hello,
I am permanently living abroad. Left Canada 4 years ago to be with my husband at his home country in Norway. I got permanent residency in Norway. I have checked all the questions regarding if I have any connections with Canada and my answer is no. I sold my house, my canadian son relocated to Norway and all I have left is RRSP that I would like to move here to Norway. I am searching for financial advise how to do it and how to assure I will get pension when old. I worked in Canada over 18 years.
Thank you
Zuzana Holmen
Hi Zuzana,
Thank you for your inquiry!
If you are now a non-resident of Canada for tax purposes, the treatment of your RRSP withdrawal will be as follows:
1.You can withdraw on a semi-annual basis (subject to part 13 withholding tax of 25%)
2.You can withdraw on a lump-sum basis (subject to your marginal tax rate)
–This will result in lower income tax as you can file an election to get an amount of the tax paid refunded.
Thank you !
The Team at Madan CA
Hi,
I am a Canadian citizen about to take a job in US and will live in US for more than 10 months/year. My husband will remain employ and live in Canada. We have no dependent Children. We do not plan to sell our current house in Canada, but buy a condo in US instead. I can give up my health care card and driver’s license. what is my best tax options?
Thanks a lot
Hi June,
Thank you for your inquiry.
This is referred to as the residency test. There are Primary factors and Secondary factors to consider.
Some of the factors are as follows (based on what I know thus far):
-Frequency of visits to Canada and time you spend in Canada (applies to you)
-Personal Ties in Canada (your husband will be staying here and you will be keeping a dwelling in Canada)
There are many other factors to consider as well. Simply giving up your health card and driver’s license will not void your residency status. In fact, you might even be double-taxed (become a double resident of Canada and the US).
In order to determine and guide you in this process, we will need to conduct a residency test and advice you thereon. This will require much more detailed information.
In order for us to assist you, please feel free to contact us at our contact details noted on our website.
Thank you!
-The Team at Madan CA
Hi
I am thinking to leave Canada alone to work abroad in (UAE) leaving my children and wife in Canada
How shall the taxes will be calculated I heared that the 1st 80 000 dollars if earned in a year there is no tax on it
I did read the tax treaty between UAE and Canada I did not undestand from it any think
can you help me , is the tax on income earning abroad calculation similar to tax earning inside Canada
Thanks
Issa
Hi Issa,
Thank you for your inquiry.
There is an established tax treaty between Canada and the UAE.
In order to determine whether or not you are required to pay Canadian Income tax is simply dependent on your residency. Based on the information that is provided here, you are a resident for Canadian Tax purposes (as your family will be residing in a permanent establishment here in Canada).
Therefore, when filing Canadian taxes, you must report world wide income and will be required to pay tax.
We will be more than glad to assist you with the Residency Test, create a tax plan for you to minimize your tax liability, and help you with the filing of your international taxes.
You may feel free to contact us at our contact details provided on our website.
Thank you !
-The Team at Madan CA
Hi I am Canadian citizen working for a US Company contracted by US department of defence which is based in Afghanistan its been 3 years I am over in Afghanistan visiting Canada once a year to see my wife and kid, the job I do is part of NATO and UN I would like to know if I am entitled to overseas tax credit T626? thanks
I am looking at taking employement in Doha Qatar. I will receive a pension in Canada, and need to know if I must sell my home, or can I allow my grown child to live in it.. i expect to be gone 5-10 years..
Hi Claude,
Thank you for your inquiry!
In reference to whether or not you will be a resident of Canada for tax purposes once you emigrate to Qatar, the following applies:
If your grown child is not a minor, he is not considered a dependent for tax purposes. Therefore, he will not “tie” you back to Canada.
As for whether or not to hold onto your permanent establishment simply depends on the consequences. We require further detailed information so we can guide you and conduct for you a residency test.
We can simply be reached at our contact details noted on our website. We look forward to hearing from you.
Kind Regards,
-The Team at Madan CA
I’m considering a job in Doha & appreciate if you can drop an e mail for some information.
Thanks & Rgds,
Hi – I have an offer of employment as a consultant/specialist expert (1 year contract) with the Asian Development Bank working in Afghanistan. Will my earnings be taxed in Canada?
Regards
Your earnings will be taxed in Canada, if you maintain primary and secondary residential ties with Canada. If you break these ties, then you will become a non resident of Canada, in which case your employment earnings from Afghanistan will not be taxed in Canada. For more information, please contact me at amadan@madanca.com
Hi,
I have a job offer to work rotationally in either Algeria or Nigeria. The company will be paying the taxes to Algeria or Nigeria on my behalf and will then provide me a receipt. Can that tax paid by my company be used as a foreign tax credit against the taxes I will have to pay Canada?
I have rejected the company’s initial offer and they have requested a counter. Would you be able to help me by crunching some numbers so I can send them a counter before the job is given to another candidate? Any help is much appreciated!!!!!!!
Hi Brent,
Income tax paid on employment income in a foreign country is eligible for a tax credit on your Canadian personal tax return. This prevents double taxation.
I can certainly help you with your counter-offer. You want to make sure that you are not losing out on an after tax basis.
Thanks,
Allan Madan, CA
Tel: 905-268-0150 x 2
Hi Madan,
I am a Canadian citizen that has worked abroad since 2007, with a year back in Toronto, and a year studying/working abroad.
I came across some articles of yours and I would probably be classified as a factual resident, given RRSPs (which I have stopped contributing), health card(now expired), driver’s license, bank account. If that is the case, then I would potentially have to complete some tax filings in Canada even though I paid taxes in the other country (UK) during this time.
Would like to get this sorted to avoid any issues. Can you help? Would also be interested in fees for such personal income tax.
JC
Hi JC,
Thank you for your inquiry.
It seems that you are inquiring as to whether or not you are a resident or non-resident of Canada for taxation purposes for specific years. There are both primary factors (such as your Domestic Establishment) and secondary factors (some of which you have outlined above) to consider.
A residency test will need to be specifically conducted for each year in order to determine whether or not you need to submit tax on your foreign income here in Canada. As a firm specializing in International Tax, we will be more than glad to assist you in this process.
After we have determined your residency status, we will advise whether or not you will need to file a personal tax return or a personal tax return adjustment for each of those years.
As per our fees, we have a starting rate of $150 for each tax return or higher dependent upon the amount of work that is involved.
We will be more than glad to assist you so that any potential issues that may arise can be avoided. You may feel free to contact us on our contact details noted on our website.
Thank you!
-The Team at Madan CA
Hello – thank you for this great article:) Quick question though, I will be outside of Canada from Jan to May 2013. I will not be working at this time – just visiting family abroad. Will my husband be able to file my taxes on my behalf? If so, do I need to prepare a Power of Attorney or a Representation Agreement? Or both? PS, I live in BC, if that makes a difference – thank you!! Tania:)
Hi Tania,
Your husband can file your tax return on your behalf. You should provide him with a consent letter to file your return. This does not need to be submitted to the CRA. You should also complete form T1013, which provides your husband with authorization to speak with the CRA on your behalf.
You will still have to sign the return, even if your husband prepares it. This return can be signed electronically (i.e. sign the signature page of the tax return, and email the signed page to him).
Thanks,
Allan Madan, CA
If I was to move to Cuba. for 10 months a year would i have to pay income tax on my company and cpp pensions.I have no house in Canada.
Hi Tony,
Thank you for your inquiry!
In terms of your question, I will assume you are an individual and you are referring to your personal income tax return. If otherwise, just let me know. As an individual, we will need to determine if you are a resident or non-resident of Canada, which is dependent on primary and secondary ties.
Primary ties include:
– Having a home or dwelling house available to you while you are in Canada (owned or rented) and you mentioned that you do not have a house in Canada which is a step in the right direction.
– Having a Spouse or Common-Law Partner in Canada
– Having Dependants in Canada, such as children
If you have any primary ties to Canada, it is very likely you will be found to be a resident of Canada unless you can prove that your primary ties to another country, Cuba in this case, are stronger than in Canada.
Secondary ties include:
– Personal property that is generally left and used in Canada, especially property that involves registration in Canada such as cars, boats, motorcycles but also personal property that the taxpayer obtains storage for in Canada
– Economic ties such as involvement in the management or operation of business in Canada, Canadian bank accounts, and credit cards
– Maintaining health cards or driver’s licenses in Canada
– Social ties such as memberships in organizations in Canada such as golf clubs, social clubs, professional associations, unions or other social organizations such as community groups, religious organizations
– Maintenance of an ability to be contacted in Canada such as Canadian phone number or mailing address
– Having a Canadian Passport or visas to live or work in Canada
Should you be deemed a non-resident for tax purposes, you will need to file a final departure tax return, due April 30th after the year you were deemed so.
In terms of CPP, you will have a non-resident tax withheld from your monthly company and CPP payments (this also applies to OAS and QPP payments). Canada and Cuba do not have a signed income tax treaty. As such, the tax rate is 25 percent.
Hello Mr. Expert.
I got a job in South Korea and I started working from May, 2012.
Now, I came back to renew my driver’s license and health card and I just did that yesterday without any problem.
I do have bank account and credit card in Toronto, and my address is updated and has been fixed to my brother’s
house.
Now, according to your advise, I better not ask for GST return when I file tax report next spring in order to avoid any
possible penalties from CRA, please correct me if I am wrong.
I do not possess any properties in Canada.
Am I not resident or resident?
Your advise and help will be greatly appreicated.
Thank you.
Hi Rich,
Thank you for your inquiry!
So my understanding is that you’re receiving GST rebate checks from the government while being a resident of Canada. Should you become a non-resident, you will need to specifically disclose to the CRA that you’ve become a non-resident and to stop issuing you these checks. If you still continue receiving them and the CRA finds out that you are a non-resident during that time, you will be asked to pay back the amount received plus any possible interest accruing on the amount.
What we can do is perform a Canadian Residency Assessment by looking at your primary and secondary ties in Canada to determine if you are a resident or a non-resident and proceed from there. We can also prepare your final Canadian departure return for the tax year you’re leaving Canada.
Hi,
I have been living and working abroad for 6 years (1 in the US, 5 in Bermuda). I do not own a house or vehicle in Canada where my parents are still living. Upon moving to the US, I did not cancel my health card or close my bank accounts/credit cards. Is it too late for me to sever my ties with Canada?
Hi Linda,
Thanks for your inquiry!
It is not too late to sever your ties with Canada. We will require to do a residency assessment to determine if you were a resident or non-resident for the previous 6 years.
If you are a non-resident, you will need to file a departure return for the year you left Canada and any amended personal tax returns for the successive years only if you filed a tax returns for those years. If not, no further action is required after the departure return.
If you are deemed to be a resident of Canada, you will need to file tax returns to the CRA for all the years you did not file.
Hi,
Me, my husband an our two kids have landed 4 months ago in toronto as skilled workers, we have been given the permenant resident cards and do bank account but have not applied for health cards, but applied for child benefit.
We left canada and returned to home country, iraq, to complete some papers and family issuse before leaving to canada for good.
Now the benefit cheques are reaching our adress in toronto monthly
Im i required to do any thing while imabroad or wait until i go back again to toronto and are there any legal considrations on case?
Hi Noor,
Thanks for your inquiry!
It really depends if you are planning on moving back to Canada this year or not. As it stands, you are not a deemed resident since you have been in Canada for less than 183 days. If you are not planning on returning to Canada, you will need to return the benefit cheques back to the CRA and inform them immediately that you are no longer a resident of Canada.
– The team at Madan CA
hi ,
i am out side canada since last two year,and recive child tax continuesely ,and now m back last one month to canada and now recive one of notice from cctb one of questionre form ,they need all records from my childs school to show i in
last two months but i am not able to show offcourse b.c i was not in canada and they mention that if i am unable to show all the requirment the i have to pay back last two year cctb but i am not able to back all the money now i am in trouble please advise me asap what i reply to cctb
thanks
Hi,
Thanks for your inquiry!
As per the CRA letter, non-residents of Canada cannot receive CCTB and you will need to pay back the amount you received after you became a non-resident. You may call back the CRA and let them know that you currently don’t have the funds and see what payment options they provide you.
– The team at Madan CA
Thanks for reply
in my cast ,i was not any info i am not able to cctb if i am out side so if i have to tell cra then what will be happen b.c m not in position to return …and after that will m not able to recive any cctb after years?
please reply me thanks
I will be moving with my wife and children to work in Indonesia. We will keep a home in Canada, because we want a place to stay when we visit each summer. In your opinion, will the reciprocity agreement between Indonesia and Canada automatically earn me non resident status even though I maintain that primary tie (home)? Many thanks!
Hi Sam,
Thanks for the inquiry!
It depends on your plans to move back to Canada in the future. Also, will you be renting out your home while you’re away from Canada?
Article 4, paragraph 2a of the current Canada-Indonesia Convention states that: “he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closest (hereinafter referred to as his “centre of vital interests”)”
Hence based on your situation, if you can prove that you also have a permanent home available in Indonesia plus stronger personal and economic ties there, the CRA would more likely consider you a non-resident of Canada. Otherwise, it may be difficult to convince them that you’re not a Canadian resident.
– The team at Madan CA
Hi. Great video above. I’m an employer and i am looking to hire a non resident currently living in Mexico to represent me Mexico. i don’t have a Company in Mexico, however, a substantial amount of my business comes from Mexico. Can a person still be a non resident while being emplyed and paid by a Canadian Company? Would I have to remit 25% of each payment to CRA?
Hi Kevin,
Thank you for your question.
First of all, yes, an individual can be a non-resident while being employed and paid by a Canadian company. Furthermore, you would not be required to withhold and remit 25% of salary to the CRA. However, you would be responsible for Canadian payroll taxes, similar to that of Canadian employees.
Furthermore, if the said employee is given authority to make decisions for your Canadian company in Mexico, he/she may constitute a permanent establishment in Mexico and you will be responsible for paying Mexican taxes on the income generated in Mexico.
For further questions, please feel free to contact me.
– Allan Madan
Good evening
I would like to know how can I contact you to discuss my case in detail.
Thanks in advance.
Andres
Hi Andres,
You can contact me at (905) 268-0150. Alternatively, I can also be reached at amadan@madanca.com
Thank you,
Allan
Hello,
I am a UK citizen been living in Canada for 3 years and hold a PR card.
I may be moving to doha qatar or back to the UK and taking my wife who is Canadian and daughter with me.
I have two properties in Toronto which will be fully rented on long term leases. what are my tax obligations? I hear that as I am a uk citizen I don’t have any reporting obligations to Canada as I haven’t lived here for 5 years. I would simply have to pay 25% on the income from the rentals, is this true?
Also, I would be exempt on departure tax as a non citizen who has been here for less than 5 years.
Look forward to your response!
Thanks
Hi Gordon,
I believe that there are two issues:
1) It is true that since you have lived in Canada for less than 5 years, you will be exempt from departure tax on all of the assets that you owned prior to coming to Canada. However, you will be still responsible for departure tax on certain properties that you acquired after you came to Canada three years ago.
2) When you rent out a Canadian rental property while being a non-resident of Canada, your tenant or an agent designated by you must remit 25% of monthly rent to the CRA every month. Subsequently, you can file a section 216 election tax return after the year end to have some of the 25% withholding taxes refunded back to you, depending on your rental income.
Thank you,
Allan Madan, CA
(905) 268-0150
amadan@madanca.com
Hi,
I have been living and working abroad for 5 years. I do not own a house but own vehicle in Canada where my parents are still living. Upon moving to Europe, I did not cancel my health card or close my bank accounts/credit cards. Is it too late for me to sever my ties with Canada? I have not filed departure return? I have assets more than $25000. If Canada determines that I’m a non-resident of Canada, will the penalty still apply? Is it from the date of departure or the date they determine your a non-resident of Canada?
Thank You
Hi Frank,
Thank you for your question. First of all, we’ll have to assess your ties to Canada in more depth by analyzing for example, whether your spouse & dependents are still living in Canada, or whether you still have a Canadian driver’s license and such. For more information, please refer to the CRA link: http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html
From above, there are two scenarios:
1) you still maintain enough ties to be considered resident of Canada
– You will be responsible for filing a Canadian tax return for the previous five years on your worldwide income and late filing penalties and interest may apply.
– You must take the appropriate steps to sever the ties to be considered non-resident.
– You will file a final, departure tax return with a due date of April 30 of the following year in which you will report your departure date and your assets worth more than $25,000.
2) Your ties to Canada aren’t significant enough and you are considered non-resident of Canada
– You will have to file a departure tax return by the April 30 of the following year in which you left Canada and report your assets worth more than $25,000.
My team and I can assist you with your residency analysis and filing of necessary Canadian tax returns. Please do not hesitate to contact me if you have any more concerns.
Allan Madan, CA
Hello,
I am a Canadian citizen temporarily living in Germany. My husband is a member of the Canadian Forces currently serving with the British. I too am working for the British military in a civilian position. As this is a dependent status job outside of Britian under British law my income is tax exempt (only pay British National Insurance premiums). As there is a treaty between Canada and the United Kingdom does this mean my income is tax exempt in Canada too?
Hi Lynn,
First of all, we should determine your residency status with the Canada Revenue Agency (CRA). If the CRA deems you to be a non-resident of Canada, because of lack of any significant ties to Canada (eg. permanent home, economic ties to Canada, driver license), then you wouldn’t be liable for any tax in Canada.
If you are considered to be a resident of Canada because you are deemed to have significant ties to Canada, you will be taxed on your world-wide income and you must file your Canadian Income Tax Return. Your income may be exempt from UK because you are employed by the British military. However, Canada may not follow the same exemption.
Hi Madan
Mysellf,my husband and 2 children are movind to UAE for job purpose.I would like to know if
1) we can get a non resident status even if we own a house in canada?The house is rented out and and managed by propert mngmt.
2)My husband and children have citizenship and i have a PR and citizenship application under process
3)Do we have to pay taxes on the whole income earned (which also contains allowance for our kids school and housing every month ) or just the basic salary?
4)Do i have to report my income in UAE as i will be under my husbands” company visa?
Thanks
Dear Sue,
1) you can get the non-resident status if you rent out your property in Canada. However, there are also other ties that the CRA looks at in order to determine your residency status once you leave Canada (eg. Canadian driver license, subscription to newspapers, etc)
3) Normally, you would have to report the whole income including allowances as long as they are not considered non-taxable employment benefits.
4) If you become a resident of UAE, you will have to report your worldwide income when you file your UAE tax return.
If you would like more details and clarifications, please do not hesitate to contact me and my team.
-Allan
I will be starting a new job on a cruise ship this year. I will be out of the country for less than 1 year. I am a Canadian citizen, and I still have assets in Canada. The income I will receive will be paid in cash. How do I file my taxes the following year? Since I won’t get a tax slip, do I just input the amount in box 104? Is it as simple as that?
Hi David,
You are correct. You should report your cash earnings on line 104.
– Allan
Dear Sir
Thanks for your video, very helpful.
I am a Canadian citizen who has been living and working in Japan for the last 15 years. My wife is Japanese, unemployed. should I be paying tax to Canada? I didnt inform any parties when I left Canada.I used to have an Ontario drivers licence, but upon a visit to BC I converted my drivers licence to BC and I believe it expired 11 years ago. I dont own any property in canada, but I still have a bank account. who should I contact to inform them I am not a resident of Canada. And what should i do? Thanks again.
Hi Ali,
Based on the information you’ve provided us, it appears that you don’t have any significant ties to Canada and therefore, you will be treated as non-resident of Canada (which means, you will not have to pay any Canadian taxes unless you are earning income from Canada). As such, there is nothing further that you are required to do.
However, if you wish to make certain your residency status with Canada, you complete the form NR73 and submit it to the Canada Revenue Agency (http://www.cra-arc.gc.ca/E/pbg/tf/nr73/nr73-12e.pdf)
If you need any assistance with your residency determination or would want us to provide you with a residency letter, please do not hesitate to contact us.
– Allan
Hi dear i have PR for Canada in skilled worker category I m working on an oil rig in Dubai my schedule is 28 days on and 28 days off if I earn 100000 Canadian dollar annually how much tax I need to pay to Canadadian govt. I m residing in Calgary,,
Hi Bobby,
As a resident of Canada and residing in Calgary, you are looking at an approximate tax owing of $26,500 less any foreign taxes paid.
– Allan
Hi Sir,
I am a Canadian citizen and working on a private company in Seoul Korea. I already finished income tax report in Korea as 38.5% tax to 85,000CDN. How much tax I need to pay to Canadian govt.? My family are residing in Ontario now.
I appreciate your help in advance.
Justin
Hi Justin,
It depends on various factors. However, if you were deemed resident of Canada during the time that you worked in Korea and had Canadian tax responsibility, then you may be able to claim most or all of the Korean taxes against your Canadian tax owing through Foreign Tax Credit.
In order to provide you with a closer estimate of Canadian tax balance, we will need more information. Please do not hesitate to contact us.
– Allan and his team
We are deemed Non-residents of Canada as we have both filled in the appropriate forms & have lived outside of Canada for around 15years. However we plan to move back to Canada in the next 5 years & buy a property.
What is the best way to bring our funds back to Canada?
Do we just keep an offshore/overseas account & transfer directly to the person we are buying from?
Or is it better for us to slowly transfer small amounts to our Canadian bank account? If we have to transfer in small amounts, how much is allowed (non-taxable) per year/month?
Hi Tanya,
Since you would have already paid foreign taxes on your funds that you want to bring back to Canada, you are effectively transferring after-tax funds from a foreign country to Canada. Therefore, there will be no tax implications in Canada.
– Allan and his team
Hello,
My daughter is a canadian citizen. She got a contract job for 2 years in US starting July 2012, and she already filed up the US tax return for 2012 for what she earned in US. She is single, doesn’t have any properties in Canada, only a very small account. Does she need to file the canadian tax return also? Thanks.
Hi Albie,
It depends whether she is treated as resident of Canada or Not and this will depend on her ties to Canada including where her significant other is, if she owns a residence in Canada, her driver’s license, dependents and more. We can perform this analysis for you.
If she is non-resident of Canada, then she will have to file a departure tax for 2012.
If she is resdient of Canada, then she will have to include her US income on his Canadian tax return and claim a Foreign Tax Credit which will allow her to use her US taxes paid against her Canadian tax owing.
Please let us know if you need further assistance.
– Allan and his team
Hi there,
My 23 yr old son will soon work for a company in Fort Worth Texas starting this June. His 2 yr contract maybe extended further but at this point we can’t say. The only ties he would have to Canada would be his drivers lenience and health/ OHIP card. He does have a bank account, but I’m sure that would go along with him. What would his tax implications be and would/ should he be considered a non- resident of Canada even though he may return after a 2 year job contract in Texas.
Thank you in advance
Louie
Hi Louie,
With regards to the residency, I would suggest cancelling his Canadian driver’s license and obtaining Texas driver’s license. This is because one’s driver’s license is a strong indicator of their residency. Health/OHIP card would be cancelled automatically but it will still be prudent for him to contact Service Ontario and cancel it.
As for his tax implication, he will have to file a departure tax for 2013 in Canada where some of his capital assets (if he has any) may be subject to deemed disposition and capital gains tax.
Thank you,
– Allan and his team
Hey,
First off, thank you for the video and answering questions, it is really helping a lot of people.
I have a question that I cannot find a straight answer too. I am a Canadian Resident teaching English in South Korea. I began teaching here September 2012 and will finish and return to Canada August 2013. I worked in Canada from January 2012-July2012 and received my T4 for that. I also completed university in June 2012 and will get the tax form from my school. I have asked my employer to give me a print out of the money I made in Korea from Sept-Dec along with the tax deductions.
I was wondering how to go about filing my Canadian Taxes. Should I do it online or get papers and mail it? I have only ever gone to H&R block before. Is there a possibility that I could skip doing my taxes this year and do taxes for both years tomorrow. I have tax credits from my university tuition I believe if that makes a difference.
Also, While working in Canada in 2012, I made approx. $7500 and in Korea 2012 approx. $8000.
Based on this, do you have any idea how much I will have to pay Canada for my taxes. Korea only deducted about $400.00 in 2012.
Thank you so much for your time!!
Hi Matt,
Your situation fairly complicated. First of all, we will need to determine whether you remained a resident of Canada for the part of 2012 in which you were residing and working in Canada. You may still be considered resident of Canada if you maintained significant ties to Canada such as having your dependent, spouse, or principal residences in Canada.
Since it seems that you just graduated, it is very possible that you may be treated as non-resident of Canada for the period of time in which you were working in Canada.
If you are deemed to be resident of Canada for the entire 2012, you will have to include your Canadian and Korean income on your 2012 Canadian tax return and claim foreign tax credit for Korean taxes paid.
If you are deemed to be non-resident of Canada, then, you would need to file a departure tax return and include only your Canadian sourced income from January to August only.
Your university tuition credit would make a difference.
If you would like to further discuss your situation, please do not hesitate to contact me.
– Allan and his team
Hi,
Very useful information.
My situation is similar to Bobby, I work in the mining industry in the Dominican Republic. All of 2012 I worked 26 days on and 17 days off. In my days off i come back to Canada, but dont do any work for my company. Can i apply for overseas tax credit? Even though i dont stay in the domincan for 6 consecutive months, I have done more than 6 months of work in the dominican. Would it be possibe to qualify for the overseas tax credit?
Thanks,
Naveed
Hi. I want to be sure that I am doing my son’s taxes correctly. He is working for a british company, working on a ship, and is getting paid in American dollars. Up until November, Then a company called C-Mar Canada took over as his employer for tax purposes only. He received a T4 from them. But the income earned is not all the income earned. Prior to them, The british company (that he still works for) had already withheld british taxes before he got paid.He did not receive any document from them in regards to how much he made, and how much he was taxed.When he asked about a T4 or equivalent to that, they didn’t know what he was talking about. Does he have to claim that other income? If so, does he just make a guess as to how much his take home pay was, And if he doesn’t have to claim that income, what does he need this other company for.? He works 5 weeks in and 5 weeks out.This is very confusing to me. Is every chartered accountant familiar with the working outside of Canada tax laws? And if not, can you recommend an accountant in the Calgary area that is familiar? Thank you. Bonnie
Hi Bonnie,
Receiving cash income is the norm for employees working on cruise ships. Each employee is responsible for keeping track of all the cash payment they received and report it on their tax return.
Since your son’s previous british employer withheld taxes, your son should file a british tax return and apply the foreign tax credit for british taxes paid against his Canadian tax liability when he ultimately file his Canadian tax return.
My team and I have many experiences with clients that are in similar situation as you. If you would like us to investigate your son’s situation in more depth, please do not hesitate to contact us.
– Allan and his team
Hi, I am Canadian citizen, I will work to Philippines in private company for 2 years. What do I need to do and where I can start to have necessary requirements.
Ruisito
Hi Ruisito,
To respond to your inquiry regarding your income in the Philippines. You have two options as follows:
1. As Canadian resident, you must report worldwide income. So you would report your income from the Phillippines on the Canadian Tax return along with your Canadian earned income. Any taxes paid in the Phillippines would receive a Foreign Tax Credit from Canada.
2. You can also change your residency status by severing ties with Canada. If you have a home in Canada, family and economic ties (among other ties) you are deemed to be a resident of Canada and will have to file a Canadian return. To sever your ties with Canada you will have to move out of the country along with your family and sell or rent out your property in Canada and more. If you ceased to be a resident of Canada in 2012, you are deemed to have disposed of almost all your property at its fair market value (FMV) when you left Canada and to have reacquired it for the same amount right after. This is called a deemed disposition. It is as if you sold your Canadian property and you will be liable for Canadian capital gains tax.
Hope this helps!
– Allan and his team
Hello,
I’ve got a question that the CRA couldn’t help me clear up at all. I travelled to New Zealand on a working holiday visa from Jan 2012 to March 2013 with the main intention to holiday and work to support it. I wasn’t sure when I left if i would stay one month or 15. I was out of the country the entire time but I would like to think I was still classified a resident considering I had a canadian drivers license, canadian medical, passport, bank accounts, vehicle, most of my belongings, job and all of my family here. I worked long enough in New Zealand I believe to be classified as a resident for tax purposes there since I worked close to ten months of the time I was there. I paid tax on all my earnings to the New zealand government. How do i go about filing my Canadian tax return for 2012? Since there’s a tax agreement between Canada and NZ will I still be forced to pay any taxes here? I had 0 income made in Canada. Do i just claim on line 104 my foreign income then on line 256 claim it as exempt foreign income so i get a total of zero for my taxable income on line 260? And also show documentation of the tax paid in NZ? I just want to get this right and the woman at the CRA was pretty clueless and not very helpful at all. Thanks so much! Chris from BC
Hi Chris,
Canada has a tax treaty with New Zealand which prevents individuals from having to pay tax twice on the same income. Since you were a Canadian resident during your time in New Zealand, you will have to pay Canadian taxes on your worldwide income, including the income earned in New Zealand. Hence, you must include your foreign income in your 2012 Canadian tax return. Enter on line 104 your foreign employment income in Canadian dollars. Use the Bank of Canada exchange rate that was in effect on the day you received the income. If the amount was paid at various times throughout the year, you can use the average annual rate.
However, in order to avoid double taxation, you can claim foreign tax credits on your 2012 Canadian tax return for the amount of taxes that you have paid to the government of New Zealand. Complete Form T2209, Federal Foreign Tax Credits, and enter the amount from line 12 on line 405 of your Schedule 1. Also, complete the tax and credit form for your province or territory of residence as the provincial or territorial credit is calculated separately. Similar to the foreign income, the foreign taxes paid must also be converted to Canadian dollars. Claiming the foreign tax credits will ensure that you pay tax only once on your income.
Hope I have answered your question. Let me know if you have any further questions.
– Allan and his team
Hey Allan,
As a Canadian studying full time (not earning foreign income) in a post-graduate program in the U.S., which expenses can I claim against my Canadian income from last year? Moving expenses from Canada to U.S. and tuition I pay here in the U.S. are the big ones I’m unsure about.
Thanks,
Chris
Hi Chris,
You are correct.
You will likely be able to claim the moving expenses. To see if you are eligible, please see: http://www.cra-arc.gc.ca/E/pbg/tf/t1-m/t1-m-12e.pdf
Also, regarding your tuition expense, you will be able to claim it if your education institution can provide you with the following form: http://www.cra-arc.gc.ca/E/pbg/tf/tl11a/tl11a-11e.pdf
Thank you,
– Allan and his team
Thanks a lot Allan for your help. One last question. Since I’ll be able to avoid being taxed twice am I still required to pay CPP on those earnings I made overseas? Chris
Hello,
Normally, employment income earned outside Canada is not covered under CPP and therefore, you will not be required to contribute CPP on your foreign employment income. However, if it your Canadian corporation sending you to work in another country temporarily. you can choose to continue contributing to the CPP.
– Allan and his team
Hi Allan
I like to thank you for the video video and available to answering questions, the video really helped me to understand more about residency status , all though I have a question that I am not positively sure what to do, all I know is that I want to make it right before I apply for my CPP.
I have dual citizenship , lived in Canada for 41 years, worked for 31 years and since 2006 have been way from Canada living (own a home) and working and that I believe put me on situation (Canadian working Abroad, overseas , Outside Canada. When I left Canada in 2006 I filled my personal tax return and still continuing to do until this date, but I did not File the Departure Tax Return indicating the date that I emigrated from Canada.
To make it right I know that I need to determine my residency status and depending on the status should I be reporting my overseas income on my Tax return in Canada? ., but before I do that I would like your opinion and in order to help you in guiding me in determining my type of residency status here are some of my ties in Canada: I have Canadian drivers license, passport, bank accounts, RRSP accounts, mailing address to my son´s place where I lived before leaving Canada, no belongings, no income, have son and daughter living in Canada.
Thank you in advance
Al
Hello,
I am an entry level security consultant from ontario working Afghanistan. I will work about 26 weeks this year and Will make around 50k for my time here. How much tax will I have to pay? Will it only be federal or will i have to pay provincial, cpp and ei as well.
Thanks in advance,
Mike
Hi,
I am a permanent resident currently living with my family in the UAE. I have do not have a home in Canada or any belongings. However I do have a bank account and a drivers’ lisence. I had a successful interview with a Canadian corporation in the of oil and gas in Toronto and I will be employed to work for them abroad in the UAE on an assignment for a duration of at least one year. I will therefore have to remain in the UAE with my family. What is consider to be my status and how much tax should I pay if I earn 100000 cad annually? Would it be possible for me to benefit from the overseas employment tax credit? What do I need to do before getting this assignment?
Regards,
Hussein
Hi Hussein,
The key issue here is your residency status.
You may be considered a non-resident for tax purposes as you do not have primary ties (dwelling, spouse, dependant) or secondary ties (personal belongings) in Canada. Holding a single bank account and driver’s license will not, by themselves, cause you to be considered a resident. To further support you claim as a non-resident, we suggest you establish ties in the UAE (bank account, social ties, personal property). As a non-resident, you will not be eligible for Canadian tax on worldwide income. So any income earned in the UAE as a non-resident will only be taxable in UAE.
However, if you are deemed to be a resident of Canada, you will be liable for Canadian tax on your worldwide income, including income earned in UAE. If this is the case, you will have to file a Canadian tax return and pay tax on the $100000 CAD. Based on the progressive tax system, you owe $19,594.36 in federal tax before any foreign tax credits and overseas employment tax credit.
We recommend that you sever as many residential ties as you can prior to leaving for UAE so you are considered a non-resident for tax purposes. This will help you avoid having to pay Canadian tax the income earned in UAE.
– Allan and his team
Hi there!
Am very confused and perhaps you would be kind enough to shed some light..
I have on a working holiday visa in Australia for the past 2 years and a half..do I file as reaident or non resident?
Thanks!
Hi Angelina,
Thank you for your question. There are few factors that the CRA looks at to determine if you are a resident of Canada for tax purposes. For example, is your significant other, family, or your principal home in Canada? Then you are likely to be treated as resident for Canadian tax purposes and must report earnings from Australia. If not, then as non-resident, you will not be responsible for filing a Canadian tax return unless you had a Canadian sourced income.
– Allan and his team
Hi Allan,
I am a regular reader of your articles and today I have couple of questions.
A parent company in Canada transfer its one employee temporarily for 2 years to its subsidiary in other country, say Denmark, that has higher corporate tax rates than in Canada. The parent starts recording wages paid as consulting fees and no longer taking source deductions. Is this right treatment? If not, then what it should to comply with Canadian or international rules?
And if it is ok, then would there be anything to do about GST?
Employee’s family accompanies with him.
Thank you.
Hi Sohail,
Thank you for your question; it is quite a complicated issue.
First of all, if the company treated the person as an employee in Canada, then they should treat that person as employee in Denmark. As such, the subsidiary will have to deduct source deductions as per Denmark legislations. However, since the employee is being sent off to oversea temporarily, he can choose to not contribute to Denmark’s social security plan but rather, continue to contribute to CPP.
If the employee is providing services for the benefit of the subsidiary, then the wages will be deductible for the Denmark subsidiary.
I hope this clarifies your question.
– Allan and his team
Hi,
I’m a Canadian citizen (born and raised) working for a Canadian company. However, my role is “virtual” meaning I can live anywhere in the world.
What are the tax implications if I were to continue in this role, but move myself, my family, and my belongings to a foreign country?
Thanks!
Hi Kelly,
Canadian tax is determined based on residential status. If you are a resident of Canada, you are liable for Canadian tax on worldwide income. If you are a non-resident for tax purposes, you will only have to pay Canadian tax on employment and business income earned in Canada and taxable capital gains from sale of Canadian real property.
In order to determine residency status, the CRA assesses certain primary and secondary residential ties to Canada. Primary ties include dwelling place, spouse, and dependants in Canada. Secondary ties include social ties (religious, recreation memberships), economic ties (bank accounts, employment), personal property, driver’s license, and citizenship. If you wish to be a non-resident, it is imperative that you sever all primary ties (sell/rent Canadian property, move family to foreign country) and as many secondary ties as possible. Holding one or two secondary ties will not cause you to be considered a resident of Canada but secondary ties will be evaluated collectively to determine strength of ties to Canada.
– Allan and his team
Hi Allan,
Could you please let me know my tax position. Actually, I have employment outside Canada for last couple of years, I do not own any property in Canada, but have driving license and a bank account in Canada and also my family still staying in Canada. I visit Canada 4/5 times a year on vacation. Am I regarded as Resident for tax purposes? and have to file tax return as well?
Thanks
Hi Areeb,
You will be considered a resident of Canada for tax purposes. The CRA determines residency and whether you have to pay Canadian tax based on certain primary and secondary ties. If you hold any primary ties you will be considered a resident of Canada and must file a Canadian tax return. Primary ties include dwelling place, spouse, and dependants. Although you do not own any property in Canada, your family is in Canada so you still have strong residential ties to Canada. This means you must file tax returns (if you haven’t already) for any years you worked outside of Canada and report your worldwide income.
If you wish to become a non-resident, first you must move your family (spouse and any dependants) to where you work. Next, you should sever as many secondary ties as possible. Secondary ties include personal property (i.e.: cars), bank accounts (one bank account on its own will not cause you to be a resident), driver’s license (this is a minor tie), social ties (religious or recreational memberships), economic ties (i.e.:credit cards, safety deposit boxes). Secondary ties will be collectively evaluated to determine strength of ties to Canada. So holding one or two such ties (like your bank account and driver’s license) will not cause you to be a resident of Canada.
– Allan and his Team
Hi Allan and Team,
I am a Canadian currently working in Australia using a working-holiday visa. Because I have significant ties to Canada and intend to return, I am considered a factual resident and have to report income earned in Australia to the CRA in Canada — is this correct?
More importantly, however, how do I claim a tax benefit in order to avoid being double taxed, i.e. how to I take advantage of the tax treaty between Canada and Australia?
Thank you in advance!
Best,
Jordan
Hi Jordan,
As a factual resident with significant ties to Canada, you will be taxed on your worldwide income in Canada.
While filing your Canadian tax return you should report your foreign income and foreign tax paid. You will receive a foreign tax credit for the amount of tax paid in Australia. This will ensure you are not being double taxed.
However, since there is a tax treaty between Canada and Australia, you may become a deemed non-resident of Canada if you are considered a resident of Australia. The treaty states that you will be a resident of the country in which you have a permanent home. If you have a permanent home in both Australia and Canada, you will be a resident of the country in which your personal and economic ties are closer.
As a deemed non-resident, the same rules apply to you as a non-resident of Canada (i.e.: no Canadian tax on income earned outside Canada).
– Allan and his team.
Hi Allan,
I have been struggling working on my taxes. I have been working in Denmark in 2012. However, I still have residential ties here in Canada like a house, credit card and bank account. I have a small income from my old Canadian company in 2012 and I still have HBP to pay. I did not repay all my HBP balance because I was planning to work in Denmark only for the next 3 years and still planning to continue my RRSP payment. After reading a lot from the web, it seems I am considered as deemed non-resident of Canada and only need to file my Canadian income. Is this true? Do I need to file my foreign income from Denmark where I already paid a high tax on it.
Thanks for any inputs.
Hi Eunice,
As you have significant residential ties to Canada, you are considered a factual resident of Canada. But according to the tax treaty between Denmark and Canada you may be considered a deemed non-resident of Canada and resident of Denmark. The treaty determines residency as follows:
1. You are resident of the country in which you have a a permanent home. So unless you have a permanent home in Denmark, you will be considered a resident of Canada.
2. If you have a permanent home in Denmark, you will be a resident of the country in which you have closer personal and economic relations. As you were employed in Denmark during 2012 and expect to work there for the next 3 years, you seem to have closer economic ties to Denmark. However, you also mention that you have some income from a company you own in Canada.
Depending on how the CRA interprets your circumstance you may be a deemed non-resident of Canada or a factual resident of Canada. If you are a deemed non-resident of Canada, you will not have to file a Canadian tax return. If you are determined to be a factual resident, you will have to report worldwide income on your Canadian tax return. And all taxes you paid in Denmark can be claimed as foreign tax credit in your Canadian tax return.
– Allan and his team.
Hi, I am foriegn worker here in canada and i want to go back home in philippines this september 7 2013.How can i get my tax refund for 2013.Thank you in advance.
Hi Rene,
If you provide the CRA with your bank information, they will directly deposit your refund in your bank account.
Hope I answered your question.
Allan and his team
My husband and I are physicians in Canada. We have a joint medical corporation. We are looking to work/play in the US during our semi-retired years. We will maintain residency status in Canada since we have significant assets and ties in Canada.
1) Do we need to dispose the medical corporation?
2) How is tax treated on income earned in the US?
Thanks!
Hi Allison,
Thank you for sending in your question. Please see the answers to your questions below:
1) If you remain a Canadian resident for tax purposes during your time in the U.S., you will not be required to dispose your medical corporation. However, if you depart Canada and become a non-resident, then, there is a deemed disposition of most of your property which has to be reported on the Departure tax return. As a result, you may have to pay tax on any capital gains (50% taxable) incurred from this deemed disposition.
2) If you a Canadian resident for tax purposes, you will have to report worldwide income on your Canadian tax return. If you are required to pay U.S. taxes for income earned in that foreign country, you can claim foreign tax credits for U.S. taxes paid on the Canadian tax return. This will prevent you from having to pay double taxes.
Regards,
Allan and his team
Hi Allan,
1. In many of your comments above, you advised people working abroad to claim tax credits. However, your blog post mentions that tax credits can only be claimed if the individual works (at least for 6 months) for a Canadian company, in industries such as petroleum, construction, etc, correct?
Which means, that if a Canadian citizen works in, say, Australia, for, say, Telstra (an Australian telecommunications company), then he/she won’t be allowed to claim tax credits? Or…?
2. I’m considering a job offer in Australia, and if I were to take it, it would be at the beginning of June. So from January to May 2013 my income would be earned in Canada, and then June 2013 to Dec 2013 in Australia.
Next year when I am filing my 2013 tax, I guess I just have to report my Canadian T4 covering the Canadian income earned in Jan to Jun 2013? And then how would I go about reporting the Australian income…..do I just report the gross Australian income as foreign income on my 2013 T1?
3. I do not own a property in Canada. I don’t have a spouse or children in Canada either.
However I plan on keeping my Canadian driving licence, bank account, credit card, and investment accounts. In 2014 I would be residing entirely in Australia. So in 2015, how would I go about doing my 2014 tax filing?
Hi Michael,
1. If you are a Canadian resident for tax purposes and you have foreign income on which you have paid foreign taxes, you can claim foreign tax credits on your Canadian personal tax return. This is done in order to avoid double taxation. Hence, in the example you provided, foreign tax credits CAN be claimed on your Canadian return if Australian taxes paid.
The tax credit you are referring to for which individuals have to work outside Canada for at least six months and in specific industries is a different type of credit known as the Overseas Employment Tax Credit and should not be confused with the foreign tax credit.
2 & 3. How you will be taxed in Canada depends on whether you remain a Canadian resident for tax purposes or not after your move to Australia. If still Canadian resident, report world-wide income on your Canadian tax return and claim foreign tax credits for any foreign taxes paid.
If non-resident in Canada for tax purposes, file a Canadian tax return only to report any Canadian income.
Hope you find this helpful and thank you for your question. For more specific details on income tax return preparation and non-residency analysis, please feel free to give us a call.
Allan and his team
Dear Allan,
My husband, daughter and myself moved to Hong Kong in May 2012 on a permanent contract. Before moving we sold all our personal belongings, property, cars etc in Canada.
We have bank accts in Canada, but locked accts only, RRSP’s (not contributing) and a locked in mutual fund that I cannot get to unless I die! until 2015.
We have bank accts and credit cards in Hong Kong and all our fluid funds are now in HK.
My husband doesn’t work – house husband.
We recently filed our taxes for 2012 and i declared all income earnt in 2012 based on world wide income in both HK and Canada. I have now listed ourselves as NR status as we believe we have severed ties as much as we can.
I am on a permanent contract here, but who knows when we will return. Our daughter is in full time school here and our address is listed as here too.
My issue is ‘driving licences’. I have read on many sites that you can keep your driving licence whilst out of the country, is that correct? My concern is, my husband has a professional A-Z driving licence and as we originally emigrated from UK to Canada over 8 years ago, we exchanged our UK DL’s for a Ontario one then, so now only have that as a real valid driving licence for use internationally. Also, I need to ensure that my husband maintains his professional licence in that we cannot afford to come back and have to apply for those again, when it is his livelihood.
We do have driving licences here and In ternational permits, but losing his vocational licence would be a huge issue.
Unfortunately, we cannot return and exchange our HK licence for one should we return like we did when we arrived from HK.
I have recently wrote to the benefits offices and cancelled all UCCB payments – as this was not done when we left(despite me believing I had done so), so I appreciate that I will receive a BILL.
Other than the following – we have no ties to Canada.
Bank acct – to ensure that RRSP’s and Mutual locked in funds are protected and available to transfer upon maturity. We have Global HSBC premier accts, so to our knowledge, we can have bank accts globally (as do many expats in same situation) to protect locked in accts. Everything we could transfer and cancel we have done. I have a note from our Bank to advise us of such.
Driving licence – as per above.
Based on your comments, I assume we need to cancel OHIP cards too? we have not used them since leaving, but as per your note, we should write and advise them of us moving – correct?
My husband and I have just completed out Citizenship examinations and are waiting for our oath date to come through before we can apply for a canadian passport. Does this affect us too? We are currently permanent resident card holders until we get this.
Any advice you could provide us with would be appreciated.
Regards
Hi Sharon,
You do not have any primary ties (dwelling, spouse, dependant), which is most important in determining residency status for tax purposes. The CRA assesses secondary ties collectively to evaluate significance of ties. The bank account, driver’s license, OHIP, and citizenship are considered secondary ties.
There are no cut and dry rules for determining residential ties but based on our experience certain ties are more significant than others. The driver’s license is not considered to be a significant tie so your husband should be okay in holding on to his Canadian license. Holding a Canadian passport is also not a strong tie so this should not affect your residency status. However, you should cancel your OHIP as soon as possible – please read ‘Do I need to cancel my OHIP coverage if I plan to move to a location outside Ontario?’ on http://www.health.gov.on.ca/en/public/programs/ohip/ohipfaq_mn.aspx. The bank account is also considered to be a significant secondary tie but it will not cause you to be a resident by itself.
In summary, you should cancel your OHIP. Continuing to hold your bank account, the driver’s license, and Canadian passports will likely not cause you to be a resident.
Good luck!
Dear Sir
Your article very helpful
I got a contract with a company in Nigeria
I already read the tax treat between Canada and Nigeria one section said
Article 15
Dependent Personal Services
1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
did this mean that I shall not pay any tax in Canada, knowing that my duration work will be 28/28
and thaks a lot for your help
Raghad Issa
Hi Raghad,
No, it is not saying you do not have to pay Canadian tax. If you are a Canadian resident for tax purposes, you will obviously have to pay Canadian tax as Canadian residents are obligated to pay tax on world-wide income. Plus, you may also be subject to tax in the country where the employment is exercised (i.e. Nigeria). So basically, if you are a Canadian resident for tax purposes, you may have to pay taxes in Canada and Nigeria. However, in order to avoid this double taxation, you can claim foreign tax credits on your Canadian personal tax return for the foreign taxes (i.e. Nigerian taxes) paid. So in the end, you will basically just be paying Canadian taxes.
Now, if you are a Nigerian resident for tax purposes and not a Canadian resident for tax purposes, you will only be paying taxes in Nigeria. Therefore, whether or not you will be taxed in Canada on your Nigerian income depends on which country you are considered a resident of for tax purposes.
Hope you find this helpful and thank you for your question.
Allan and his team
Hi Allan,
I am trying to held a friend file their 2011 T1 return. A husband and wife worked in Doha Quatar for 12 years or so. They met in Doha and married over there as well as having a child together. They both worked for a Canadian company teaching in Quatar. They were deemed non residents and filed the appropriate paper work. They also had a rental property in Vancouver for which they file the appropriate paper work each year.
They came back to Canada in March of 2011. They received a T4 (as they did every year) with the province code of ZZ and there is no taxes taken off. Does this need to be reported on their 2011 T1 return? They have other T4’s for income that was earned in Canada as they started working in the city they landed.
Any help would be greatly appreciated!
Hi Debbie,
Yes, the income amount indicated on that T4 would have to be reported. Your friend may be considered a resident for tax purposes as of the immigration date (March 2011). As a Canadian resident, all income amounts (Canadian and foreign) are to be reported on the tax return. Any foreign income reported should be prorated for the months they were Canadian residents (i.e. 10 months). Any foreign income amount for Jan. and Feb. do not have to be reported.
Allan and his team
Hi Debbie,
Yes, the income amount indicated on that T4 would have to be reported. Your friend may be considered a resident for tax purposes as of the immigration date (March 2011). As a Canadian resident, all income amounts (Canadian and foreign) are to be reported on the tax return. Any foreign income reported should be prorated for the months they were Canadian residents (i.e. 10 months). Any foreign income amount for Jan. and Feb. do not have to be reported.
Hope you find this helpful and thank you for your question.
Allan and his team
Hi, I am confused. My daughter paid 3,666 Canadian dollars tax in the uk last year. When I do the calculations to determine the federal foreign tax credit it’s less than a third. Why am I not allowed to use the amount she paid in the UK? Thank you.
Hi Julie,
If your daughter paid $3,666 in UK taxes, she will be able to deduct the entire amount as a foreign tax credit (FTC) to reduce her taxes owing to $0. However, the FTC cannot be used to get a refund. You will be able to carryforward any unused FTC to be used in the following year.
-Allan and his team.
Hi, i am an irish citizen and i have just become resident in canada, in ireland i own a property with my brother. He still lives in the property. This was my primary residence when living in ireland. what are the tax implications for me here, i do not recieve rent nor profit from the property. In canada i am renting, i do not own property here.
Hi Rory,
As a resident of Canada you will have to file a Canadian tax return and have to report the foreign property totaling greater than $100,000. If your property is greater than this value, you will have to fill out form 1135.
-Allan and his team.
Thanks for all your information. You are very clear and helpful.
For some, it is easy to see that one is not going to be a resident but I feel confused or that I could think I have done everything right, but then CRA will find a reason to say I am resident.
I am a Cdn resident/ citizen (and a British citizen). I am looking for work in the Middle East and see lots of positions that are tax free. I am interested in working in Dubai, UAE.
I am single, have no dependents, but I do have a house that I can rent out so that it is not accessible and meets the requirement to be at arms length.
I am going to transfer ownership of my vehicle to my son. He can have it.
I would like to live and work overseas permanently and visit Canada occasionally, but not on a regular basis. That’s what my goal is. But, I don’t want to apply to be a non-resident and fill out the departure forms, inform the banks I am now a non-resident and give up all reasonable ties and feel like I have met CRA’s requirements and then have it say that I am actually a resident because I didn’t sever ALL secondary ties. I will need a bank account, would prefer not to return my Cdn passport, and will need the driver’s licence for a month or so til I get one in UAE.
in addition, my school district has told me that I can either quit my job or they will keep it open for me for up to two years, but after that, they will not. If I can keep the option of returning open, that feels safer than quitting in case I don’t like working in the Middle East and decide to come back after a few years.
It is not worth working in the Middle East if the money isn’t tax free, since I would be earning $35,000 less there than I currently do in Ontario, so receiving the money tax free is essential or I couldn’t afford to do it.
I notice in the video that you referred to teachers as being considered temporarily out of Canada and not non-residents. Did I understand that correctly? If so, why that profession?
I am prepared to sever as many secondary ties as is possible, or practical. Severing some of the secondary residential ties is impractical, and I wonder if CRA understands and allows for that. For example,
I need to keep a bank account here in Canada so I can transfer money from the M.E. to pay my mortgage and bills and for the renter to deposit his or her monthly rent.
In the interim, I need my Cdn credit card til I can get one issued in UAE and so I can rent a car when I arrive.
I need to keep my teaching licence to be permitted to practice teaching in schools in the M.E. It is a requirement. Those international schools want currently licenced Western trained teachers, not just a degree in education.
I would like to keep my driver’s licence until I get one in the new country. Once I get a foreign one, what do I do then to show I no longer want and denounce my Ont. Cdn driver’s licence? Do I just allow it to expire and not renew it, or do I fill out a special form?
If I declare myself a non-resident and hold back 25% of my gross rental income and pay CRA monthly until I can file to get a refund for the excess over the net income and I inform my banks I am now a non-resident and fill out the final departure form for CRA to satisfy all the requirements to show I am leaving, and I sever as many secondary ties as I can and as soon as is practical, can I confidently accept a job in UAE and leave?
Can I be considered a resident of a tax free country like UAE? Will I necessarily be deemed a resident of Canada while residing in UAE, even though I will have a rented residence, furniture, my possessions, a car, licence, work and take up social ties there?
I don’t want to find out down the road or if I decide to return to Canada that the CRA are going to tax me when I considered myself a non-resident and meet their requirements at face value, that’s all.
Thanks for your help 🙂
Bruce.
Hi Bruce,
Secondary ties are evaluated collectively so holding a few secondary ties will not cause you to be considered a resident of Canada. For instance, you can continue to hold a Canadian bank account while away from Canada without being treated as a resident for tax purposes. But as you mention, it is best to sever as many of these ties as possible to ensure you are a non-resident. Assuming you have no family (spouse or dependent) in Canada, you will have no primary ties as renting your Canadian home is allowed by the CRA.
You can further support you claim of being a resident of UAE by establishing personal and economic ties over there. According to the tax treaty, the individual’s status shall be determined as follows:
1. you will be deemed a resident of the Country in which you have a permanent home,
2. you will be deemed a reside of the Country in which your personal and economic relations are closer,
3. if neither 1 or 2 apply, you will be deemed a resident of the Country in which you have an habitual abode (where you spent most of your time)
4. if 3 isn’t conclusive, you will be a resident of the Country of which you are a national
Based on the information provided, you will likely be considered a resident of the UAE as you will have closer personal and economic ties to UAE as you will be working there full-time. As you will be renting your Canadian home, this will not be considered a permanent home by the CRA.
We recommend that you sever as many secondary ties as possible while also establishing as many ties to the UAE as possible (bank account, car, credit card, etc.).
Driver’s license is considered a very minor tie to Canada and it is not necessary to cancel it.
-Allan and his team.
Hi Allan,
I hope you follow this post still. I want to raise a point here – that if one looks at the tax treaty with UAE, it clearly says UAE resident is a UAE National. I will be copying the exact wording below. But if that’s true than a Canadian national can never claim to be a UAE resident.
Secondly, I want to ask you that if one continues to be a Canadian resident for tax purposes even if one is working in UAE or any other similar country then can that family claim all the child benefits (UCCB and CCTB). Please be specific, if one can claim only the federal benefit and not the provincial benefit?
I look forward to your response. Thanks!
For the benefit of you and everybody, I am posting the treaty component between Canada and UAE:
Article 4
Resident
1. For the purposes of this Convention, the term “resident of a Contracting State” means:
(a) in the case of Canada, any person who, under the laws of that State, is liable to tax therein by reason of the person’s domicile, residence, place of management, place of incorporation or any other criterion of a similar nature but does not include any person who is liable to tax in that State in respect only of income from sources in that State;
(b) in the case of the United Arab Emirates,
(i) an individual who is a national of the United Arab Emirates, provided that the individual has a substantial presence, permanent home or habitual abode in the United Arab Emirates and that individual’s personal and economic relations are closer to the United Arab Emirates than to any other State;
(ii) a company which is incorporated in the United Arab Emirates, provided such company can establish that:
(A) all of the shares of the company are beneficially owned by residents of the United Arab Emirates; or
(B) all or substantially all of the company’s income is derived by the company from the active conduct of a trade or business, other than an investment business, in the United Arab Emirates and all or substantially all of the value of the company’s property is attributable to property used in that trade or business.
Hello MMS,
Thank you for your questions. It is possible for a Canadian citizen or permanent resident to become a non resident of Canada, so long as that person has severed all of his primary ties and most of his secondary ties to Canada. The tax treaty between Canada and the UAE does not need to be relied upon to break a person’s residency status with Canada.
To qualify for the CCTB and UCCB you must be a resident of Canada. These are federal benefits, and so there is not a provincial component. Note that the CCTB and UCCB are being replaced by the Canada Child Benefit.
Hi,
I’m working in the US, but am a citizen of Canada. I’ve been working in the US on a TN Visa for 6 years now. I realize that I have to pay Federal Taxes to Canada, which are calculated using the Foreign Tax Credit and I’ve been doing this… but recently, I’ve started to wonder why do I also have to pay Provincial Taxes on my US income? I own a rental property in the province I was born but only go back to visit for vacation and I stay with family. So I’m wondering if Provincial taxes should only apply to the rental income or should it be on my rental income and my US income?
Thank you very much for your great website and video. There is not a lot of useful information out there on this topic, so it’s a great resource.
Dear TC,
Thank you for your question. An argument kind of goes like this: If you pay Canadian tax for income earned in the US, that means you must be considered resident of Canada. If you are considered resident of Canada, then you must be a resident of one of its provinces/territories. Your location of residency would be where your significant ties are. So for example, if your family and permanent home is in Ontario, you would be considered residing in Ontario. Therefore, you’d be liable for Ontario tax.
I hope this helps.
– Allan and his team
Dear Allan
My wife and I have both obtained three year extendable contracts in Singapore, and will be leaving with our two children at the end of July. We currently have a home here, but, of course will also have a rented apartment overseas as well, which for all intents and purposes will be a permanent home, at least for the contract period. We have placed our home for sale, under the belief that we are unlikely to return any time soon, and that we need to sell it to be deemed non-residents.
As I read the tax treaty however, if you have an abode in both Canada and Singapore in this case, the next step to determining residency is where the family lives. The reason I ask this is because at the moment the property market in our area is abysmal, and there is no interest in the house. I guess a question that may be asked is whether the CRA considers a contract with a realtor to sell the house, as effectively indicating an intent to be a non-resident if you get my point.
Ath
Hi Arod,
The intent and action to sell your Canadian property will be considered by the CRA as intent to becoming a non-resident.
– Allan and his team
Hi Allen and team,
Good answers and well done.
I am non resident Canadian working/living in Saudi Arabia. My son will move to Canada for studies. Will I be a deemed resident for tax purposes post my son moving to Canada?
Thanks
Najm
Hi Najm,
Thank you for your question. Based on your situation, you will still be considered non-resident of Canada as long as most of your significant ties such as your permanent home and spouse are located/living outside Canada.
– Allan and his team
Dear sir,
Thank you for an excellent article. However, no one seems to be writing about Canadians working on cruise ships. we are hired as independents; NOT employees; salary is paid onboard n cash…no deductions, but we cover all our own expenses whilst onboard as well as travel and personal. Last year, 2012, I was only in Canada a total of 19 days. I do not have a residence. I have a mail box. no phone. no active banking. no family.
Would I have to file Canadian taxes? How would I file? Independent Contractor? Self Employed? RGDS, G Johnson
Hi George,
Thank you for sending in your question. In order for you to have a definite answer on whether you have to file Canadian taxes, we would have to do a complete analysis, have you fill out a NR73, review and file it with the CRA. Please contact our firm if you would like us to provide you with the service.
From the information provided by you, it appears you have few residential ties to Canada and you reside in the country for less than 183 days. These are normal indicators that you may be a non-resident of Canada for tax purposes and may not have to pay Canadian taxes. However, to be certain we would require you to fill the NR73 form.
If you did have to file Canadian taxes, you would report under self-employment since you are not an employee.
-Allan and his Team
Hi Allan,
I’ve been outside Canada for 5 years now. When i left Canada i was single, I had a property that was co-mortgaged with my mother, she fully pays for the mortgage & my name was only on it so we can qualify for the mortgage. I don’t have any furniture/car/belongings. My driver licence/health card have expired by now, but I do have my credit cards still opened however they have never been used since I left & all are paid off, I have a current account which is still open because i’m repaying back a loan that i had borrowed 5 years back & I’m planning on closing after i finish repaying it. After moving outside Canada to Bahrain 5 yrs ago, I got married & my wife & my son live with me in Bahrain (she is not a Canadian citizen) nor she been to Canada before. I have my permanent residence here, along with car, furniture, bank accounts, credit cards, job, etc hence, it has become my permanent home for the past 5 years. I have visited Canada twice since leaving with 1 yr intervals between each visit. Will I be considered a resident or non-resident for the past 5 years? if yes, will i continue to be considered a resident of Canada & therefore pay tax? if yes, how much Tax do i owe CRA? how does CRA determine your foreign income & how much do they decide to charge you? Note that there is no income tax in Bahrain.
Appreciated your feedback
Hi Maurice,
Because it appears that you did not have many residential ties in Canada,spent less that 183 days in Canada during those years and have strong ties to Bahrain, you MAY be a non-resident of Canada for tax purposes. However, in order to be certain, we would ask you to fill out a NR73 form which we would then review and file with the CRA. If you would like us to provide you with this service, please contact our firm.
If you are considered to be a non-resident for those 5 years, you will be a non-resident until the situation changes such as you forming residential ties to Canada again. If you are a resident, then you have to file a tax return for each year which will indicate how much you owe to the CRA. If you were required to file a Canadian tax return for previous years and you have amounts owing to CRA for those years, you may also have to pay for penalty and interest.
-Allan and his team
I hold a permanent resident card and have lived in canada for almost 14months. I have been in canada since 1st June 2012.
I read your 6things to do list. However, i need to know if all you mentioned in the post on your blog applies to Permanent Residents of Canada or only to Canadian Citizens.
Also, would you be able to provide the links to the form for DEPARTURE TAX as well as HOW TO DECLARE TO THE CRA that I do not want to receive HST.
I plan to leave canada for Switzerland to join my spouse who is swiss. I worked for a company in Ottawa till 15July2013. Will i have to fill in a tax return when i am gone?
Am just so confused of all this. Any assistance is highly appreciated.
Hi Roby,
Thank you for your post. All of the ‘six things to do’ applies to Canadian residents for TAX purposes. This is quiet different from simply holding a P.R. card. To determine whether you are considered a resident of Canada for tax purposes, we must first determine how much ties you current have to Canada as compared to, say Swiss whether your spouse lives. We can do this for you if you contact us.
With regards to the form for Departure tax, it is the same as a regular tax return but on the return, you indicate the date in which you leave Canada. You can also call the CRA at 1-800-959-8281 to declare that you no longer wish to receive any more credits such as the GST/HST credit.
Your situation seems a bit complex and I will need to look into your situation in more depth before I can determine your Canadian tax filing status. If you wish, please don’t hesitate to contact me.
– Allan and his team
Hi,
I am a permanent resident of Canada and I was away for two years working in India, of which I am still a citizen.
I have been paying taxes in India as part of my job but I was wondering if I would have to file for taxes for the
time that I was away. Would I still be required to pay taxes?
Hi Pooja,
Your Canadian tax filing responsibility will be based on whether you maintained a significant ties to Canada or not (eg. your family, permanent home, children, etc) and not your citizenship status.
If you are deemed to have significant ties to Canada, then you will have to file a Canadian tax return (good news is that you’ll be able to use your Indian taxes paid to reduce your Canadian tax liability).
I recommend that before the CRA comes knocking asking for your significant ties and such, you take the initiative to determine whether you have to file a Canadian return or not and if so, file it. We can help with your residency determination.
If you wish to discuss more, please don’t hesitate to contact me.
– Allan and his team
(905) 268-0150
Hey guys,
My question is based on working in Panama. I am here on a short term contract that is finishing in March. I have many assets in Canada ( house, vehicle bank acct, license etc) , however no spouse of dependants. When I departed Canada I consulted a “foreign tax accountant” and he told me that I would get a tex credit for taxes paid here. I contacted CRA the other day and they tell me that because Panama and Canada don’t have a bi-lateral tax agreement I will only get a credit f 15% on the 30.5% tax that I am paying here, and then have to come up with the difference come tax time. So say Im in a 26% bracket, I pay 30% to Panama and get a 15% break on the Canadian tax and end up paying a total of 41.5% in total. Sounds to me like the economics are lost!
If you have any suggesting, please let me now.
Regards,
B. Drury
Hi there,
The CRA is correct on that one. The ‘Foreign tax credit’ where Canada gives tax credit for taxes paid to foreign countries (eg. Panama) works best only when there is a tax treaty between the country.
I am afraid there will be double taxation in your situation 🙁
– Allan
Hello, i am employed with a Saudi Arabia oil company. I am a Canadian resident with a family and home here. I have no plans to become a non resident. They company has given me the choice of depositing my cheques into a Saudi or Canadian bank. However only into a personal account. I was wondering if there is a way if i incorporated of making this income company income? Also how does the Canadian gov’t know or is able to find out how much income i make in Saudi Arabia? Since i do not pay Income Taxes in Saudi Arabia is the numbers the Canadian gov’t get based on me informing them or do they have another source. Thanks a lot for any information you can give me!!
Hi Rick,
As there are no tax treaty between Canada and Saudi Arabia, there is a likelihood that the CRA may never discover your foreign income if you don’t report it. However, this practice is obviously discouraged as in the case of discovery, you will face significant penalty and interest.
There are several ways that the CRA can locate foreign income such as comparing your family’s assets in Canada with their income level and by having foreign banks disclose information regarding Canadian residents.
– Allan
We moved to India in 2004 and took money from sale of home and RRSP’s with which we bought a house. In 2011 we decided to move back to Canada and sold our house. Due to the fluctuation in Indian currency we lost close to $100,000 and decided to wait for the currency to get better. The funds are in a NRI account, do I have declare capital gains on the FD or can I also declare the currency fluctuation as a loss?
Hello,
Thank you for your question. To put it simply, the gain you will report on the sale of your house in India will be as follows:
Sale price less selling cost converted to CAD on the date of sale
less: The value of the house on the date of return to Canada converted to CAD on the date of return
Thanks,
– Allan
Thanks for this very informative article.
I am a Canadian permanent resident (been here for the past five years) but have now decided to move back to my native country. I have paid into the CPP for 4 years. Is there anyway, I can reclaim my CPP contributions since I will not be able to claim retirement benefits once I retire (since I am not applying for citizenship and my PR status will expire in 3 years). If not, is there a way to transfer my CPP contribution to my native country?
Thanks and Regards,
Mayank
Hi Mayank,
Unfortunately, there are no recourse to get the cpp contributions refunded or transferred to your native country.
However, you may be eligible to receive compensation from CPP once you reach the age of 60-65.
– Allan
I was offered a position in US starting in mid January on a TN visa so I will not make any money in 2014 in Canada but wife will stay behind until May with kids to finish school and deal with house and such. She will continue to work in Canada until they come over.
Here are the questions :
1. I own a home in Canada (still paying the mortgage) and want to rent it out but also might sell it. For renting I read here there will be a 25% withhold tax on rental income.
2. What is the tax if we decide to sell the house ? This is our only property and I(we) will be renting for coming years in US because we will not afford a home. The rental money are intended to pay part of the mortgage and property taxes. Rest I will have to cover myself.
3. I have an RRSP, not to big, and also still have to make payments on HBP. How will this move affect the RRSP , will I be able to withdraw the money or I will be taxed ?
4. Do I have to notify CRA that I am leaving Canada for work purpose on a TN visa ?
hi Sylvester,
Thank you for your post. First of all, the most important issue to understand is whether you will be considered to be Canadian resident for tax purposes after your relocation in Mid January. Normally, as long as your dependents and spouse remain in Canada, you will be considered to be resident for Canadian tax purposes.
Once your children reach the age of majority and your spouse moves to the US with you, Canada will likely determine that you are no longer a Canadian resident for tax purposes. With that said:
1. The 25% withholding tax applies for non-residents. As such, once you become non-resident, the withholding tax will apply
2. The tax will apply on any appreciation of value of the property between the selling date and the date that you have become non-resident. This is considered capital gain and only 50% of the gain will be taxable. There are certain formalities to go through when a non-resident sells a Canadian real estate (ie. clearance certificate, section 116 tax return) which must be considered.
3. Once you become non-resident, all of HBP will be repayable within 60 days. When you withdraw from your RRSP as a non-resident, flat 25% withholding tax will apply.
4. Not necessarily. You should take certain steps such as closing unnecessary bank accounts, etc.
I’ve highlighted only the major points above. There are many more items to be considered when leaving Canada. I highly advise you to consult a tax professional as soon as possible since you will be relocating soon.
If you’d like to contact me, I can be reached at amadan@madanca.com; (905) 268-0150
Thank you,
– Allan
HI,
I have received permanent residency but have to leave Canada for 1 year for family issues.
If a Canadian company is ready to work with me if I sign up as a Sole proprietor/Corporation and pay me in my Canadian Bank account for the services that I will render remotely, do you think there are any tax/legal issues that I need to look into ?
I have a Drivers license , bank account and credit card as well which will be valid for at least next 1 year.
Thanks for taking time assessing my situation.
Thanks!
Hi Vinay,
The corporate residence will remain in Canada. However, if you sever your significant ties with Canada, you could be deemed to be a non resident. Departure tax is payable in this case, and your corporation will cease to be a CCPC. CCPCs enjoy a low tax rate of only 15.5% on the first $500,000 of taxable profit.
Should you maintain your ties with Canada, your corporation will remain a CCPC. You can have your Canadian corporation bill customers and deposit the funds in the Canadian corporate bank account, even if you are outside India.
Please let me know if you have any questions.
Thanks,
Allan Madan, CPA, CA
Madan Chartered Accountant P.C.
Phone: 905-268-0150 Fax 905-507-9193
Thanks Allan for your reply. I do not own any property in Canada, How do I maintain residential ties ? Also, being abroad how do I manage the book keeping and CRA tax withholding related issues. All I want to do it is do it the right way!
Thanks Again 🙂
Hi Vinay,
You should ensure that you do not severe your ties to Canada. Major ties are listed here: http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/lvng-eng.html#b although they are not meant to be comprehensive.
If you feel that the company is small enough, you can consider doing your own bookkeeping using Wave accounting which is a free, online-based bookkeeping software. If your company has activities, then it is best advised to obtain a professional bookkeeper.
– Allan
Hi
I have been offered a contract with a UK employer meaning they would page my wages in to a UK bank account that I had before I left UK for Canada. I am resident of Canada and the would work from home in Canada for the UK company. Are they ok to carry on paying me in to the UK account . I then file a Canadian tax return and ask for the UK tax to be credited towards my Canadian tax owing? How about CPP, would they need to pay that?
Thanks!
Hi
I have been transferred to the US for my job for an indefinite amount of time. I currently have 15 years of saved up RRSPs. I was wondering what will happen to it once I move to the states. Does it remain in Canada or will I have to take all the money out?
Hi Pat
Unfortunately your RRSP is not transferable to the States. Your options are to either leave it in place in Canada or close it and pay a large one-time tax bill. You may want to think about opening a TFSA account where you can transfer your RRSP funds to it and withdraw tax free. However you will only be able to transfer up to $5,500 a year or risk penalty.
hope this helps
Thanks
This article was very helpful I am transferring to the States permanently this coming year and needed to know what steps to take before leaving Canada so I won’t have to pay taxes.
We left Canada 15 years ago and have moves to Belgium. 18 months ago, my son (a Canadian Citizen) returned to Canada to finish high school. We are concerned that applying for financial assistance for his post secondary education will be an issue as everything is based on your parents tax return.
1. Should he be filing an income tax return? He has a SIN but has not worked. Would he be eligible for a Child tax credit?
2. How can we declare our Belgian income? I worry he will not be treated fairly, comparing a Canadian and Belgian income is a bit apples and oranges!
“. As a Canadian, if I was to return to Canada for a few months (thinking of taking a leave of absence and joining my son for the last part of his schooling) will I get taxed in Canada?
Thanks
Hi Leslie,
Thanks for contacting me. My answers to your questions are as follows:
1. When your son returns to Canada, he will establish residential ties (by virtue of him living in Canada), economic ties (if he finds employment) and social ties (he will be a member of the University, and possibly student clubs / associations). His ties to Canada will likely cause him to become a tax resident of Canada. If he does not have any income, he is not required to file a Canadian personal tax return. However, I recommend that he file a Canadian tax return to claim tuition and education tax credits, as well as the refundable GST/HST credits offered by the Federal Government. Note: Only parents are able to claim the child tax credit. Since his parents are non-residents of Canada (i.e. you and your spouse), they will not be able to claim the child tax credit.
2. You can return to Canada for a short duration of time, so long as the total days that you are present in Canada does not exceed 183 days. Non residents who are present in Canada for more than 183 days are deemed to be tax residents of Canada. Tax residents of Canada are liable for tax on their world wide income. You should also be careful to not create any ties to Canada (economic, personal, social, residential, etc), since you do not want to become a tax resident of Canada.
DO NOT file a tax return in Canada and declare your Belgium income. By doing so, you are inviting the Canada Revenue Agency to tax you on your world wide income. For additional information on international tax for Canadians, please see my article http://madanca.com/blog/international-tax-accountant-in-canada
Kind Regards,
Allan Madan and Team
Hi Allan ,
I am thinking of migrating back to Philippines. I am aware about deemed disposition rules for Departure Tax which exempts Canadian Real estate. However, what about my small house in Philippines. Does, I have to pay departure tax on that house also. Is it not covered under Tax Treaty between Philippines & Canada.? If I pay departure tax on that house, what will be new adjusted cost base when I will ultimately sell it in Philippines.
Dear Sandy,
When you leave Canada, you are deemed to dispose of all of your assets at their fair market value as of the date of departure. Certain property is excepted, such as Canadian real estate. For more information on these exceptions, please see Exemptions from Canadian Departure Tax
The property located in the Philippines is not exempt from departure tax. Any accrued gains must be realized when you leave Canada, and reported on your Departure Tax Return. Half of the gain is taxable, and you will pay tax on this gain according to your marginal tax rate.
The tax treaty between the Philippines and Canada stipulates that real estate is taxable in the country in which the real estate is located. In your case, the Philippines will have the first right of taxation on gains realized from the sale of the property. However, your country of residence (Canada) has the right to tax you on your world wide income, including gains from the sale (deemed or real) of foreign real estate. As such, you will have to pay tax in Canada on the deemed sale of your property in the Philippines. Furthermore, you will be deemed to reacquire the property in the Philippines at its fair market value on the date of departure.
For example, assume that your bought the property in the Philippines for $100,000 CDN (based on the exchange rate at the time of purchase). Let’s further assume that the fair market value of the Philippines property is $400,000 CDN (based on the exchange rate at the time of departure) when you leave Canada. The taxable capital gain is therefore $150,000 [($400,000 – $100,000) x 50%]. You will include this capital gain on your departure tax return. Your new adjusted cost base of the property becomes $400,000 for Canadian tax purposes only. Your ACB in the Philippines will remain as $100,000, and you will pay tax in the Philippines on the gain realized when you eventually sell the property. This cause ‘double taxation’.
To prevent double taxation, I recommend that you sell the property prior to leaving Canada.
Note: You can elect to defer paying the departure tax until you sell the property. See Deferring Departure Tax For more information on the International Tax Services that I offer, please see International Tax Services Canada.
Thank You,
Allan Madan, CPA, CA & Team
Hi Allan
I have been a Canadian resident for a number of years. My brother and I were bequeathed my parents’ house in England in 1995. My brother lived in this house (my permanent house is in Canada) This year we sold the house in England and shared the proceeds. Must I declare the sale as a capital gain on my 2013 tax return in Canada? I do not pay tax in England
Hi Peter,
Capital gains tax depends on whether the house remained in the estate. In 1995 if the house remained in the estate and it was sold now in 2013, the estate would be liable to pay the capital gains tax. However it seems that your brother has been living in the house which means the estate sold the house. Thus in 1995 the house would have been deemed to be sold at Fair market value and all taxes related to the sale would be paid by the estate. After that the house is transferred to both you and your brother and becomes your tax burden. Therefore when you sold the house in 2013 you would have to pay capital gains on the portion of proceeds given to you from the sale. The adjusted cost base would be the 1995 estate sale and that would be subtracted from your proceeds not the original purchase price.
Thanks Allan
This year I invested in a US company and was payed a dividend. I chose to keep the dividend rather than re-invest it. Does this mean I have to file a US tax return this year?
No you are not required to file a return when getting a US dividend. Dividend from the US are subject to a 15% withholding tax Dividends will not cause a US tax filing liability to Canadians as long as the proper amount of withholding taxes were applied to the dividend (15%). As such, you do not have to file a US tax return.
Allan
Hello,
I have been living outside of Canada for about 10 years now in China. I telephoned the CRA I believe, way back when to tell them I was a non resident. I haven’t filed returns and have only travelled back for a maximum of 30 days in any given year.
The only assets in Canada I have are Drivers Licence, Bank Account, 2 Credit Cards and my wife has a Permanent Residence card that will expire that we were using instead of a Tourist Visa as it was simpler at the time. We have bank accounts here in China as well.
I have a daughter now and may return for her benefit but I do not want to be in a limbo state always fearing CRA.
What would you assess my status to be?
Hi Jonha,
Thanks for contacting me. So long as you severed your primary ties with Canada, you will likely be considered a non-resident of Canada for tax purposes. Primary ties to Canada are:
1) Spouse in Canada
2) Home in Canada
3) Dependent children in Canada
The secondary ties that you mentioned will not by themselves cause you to remain a resident of Canada. When you left Canada, you should have filed a departure tax return. My advice to you is that you first contact the CRA at 1-800-959-8281 to ensure that they have classified you as a non resident. Should this not be the case, that you will need to complete form NR73 to obtain a determination from the CRA on your residency status.
Please feel free to contact me at amadan@madanca.com for further assistance.
Kind Regards,
Allan and Team
When I leave Canada if I have RRSP’s can I still keep them in Canada or do I have to withdraw them upon leaving the country?
You can continue to posses your RRSP’s in Canada. However you will no longer be able to contribute to them.
Thanks
Allan
Hi,
I have a question I’m hoping you can answer. We are currently Canadian residents looking to relocate to the US or abroad. We have a corporation with assets (mostly financial), a house, cars, kids, RSPs, etc. We would like to know the best strategy to move our family without being penalized with taxes or having to pay deemed disposition on our corporate assets or at least paying as little as possible. We’re open to different options such as keeping our Canadian residency (please let me know if possible) by keeping certain ties such as the house. Although I’m not sure if it would be financially beneficial in the long run since Canadian taxes are so much higher than US taxes. Perhaps there’s a way to move corporate assets in a Holding company and park the assets for a while? I’m just looking at the best tax option in order to make the right decision.
Also, can you tell me how long we can work and live in the US before the government starts to ask questions.
Thank you
Hi Genevieve,
Thanks for contacting me. You can elect to defer up to $14,500 of departure tax until the time that you sell the properties. If your departure tax is in excess of $14,500, you will be required to post security with the Canada Revenue Agency. Security can include real estate or a letter of credit from your bank.
You could consider paying a large dividend prior to leaving Canada in order to reduce to value of your business. This dividend received will be taxable to you.
Should you keep your primary ties with Canada (such as a home that is available for your use), you could still be considered as a resident of Canada. However, the downside to this approach is that your worldwide earnings will become taxable in Canada.
You will become a tax resident of the US once you meet the Substantial Presence Test. This test is a ‘days’ test and counts the number of days that you were physically present in the US. The Test is as follows:
(1) 31 days during the current year, and
(2) 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
– All the days you were present in the current year, and
– 1/3 of the days you were present in the first year before the current year, and
– 1/6 of the days you were present in the second year before the current year.
Thank You,
Allan Madan, CPA, CA & Team
Hi Allan,
I have a unique technical skill set that is in high demand abroad. I am interested in becoming an international contractor but I’m not sure how to do this. I am a Canadian citizen and my wife is from Mexico and we are interested in living at least part of the year in Mexico.
What many people do in Canada is create a numbered corporation and pay themselves dividends and a salary. Contract work could be in international locations in the americas including Canada/latin america and may come from Canadian companies sending me to work abroad or in Canada.
Am I better off severing ties with Canada and moving to Mexico or should I remain a Canadian resident? Does it matter where I become incorporated?
What are my tax obligations if I work a contract in Mexico for a Canadian company as a Mexican resident?
What are my tax obligation if I work a contract in Mexico for a Canadian company as a Canadian resident?
What are my tax obligations if I work in Canada as a Mexican resident (with Canadian citizenship)?
What are my tax obligations if I work in a foreign country (Dominican Republic for example) for a canadian or american company as a Candian vs Mexican resident?
I realize this isn’t a typical situation but any insight you can provide would be helpful.
Thanks,
Hi Aaron,
My responses to your questions are as follows:
1) If you sever your ties with Canada, you will not be required to pay Canadian income tax on profits / income earned outside Canada. However, if you have significant Canadian assets, then you could be subject to ‘departure tax’ when leaving Canada. Yes, it does matter where you become incorporated. If your business is incorporated in Canada, it will be required to pay Canadian income tax on its worldwide profits.
2) As a Mexican resident who has a contract with a Canadian company to do work in Mexico, you will be responsible for paying Mexican income tax on your income.
3) As a Canadian resident who has a contract with a Canadian company to do work in Mexico, you will be responsible for paying Canadian income tax on your income.
4) As a Mexican resident and Canadian citizen who works in Canada, a 15% withholding tax will apply on payments made to you for services rendered in Canada. This is assuming that you are an independent contractor. However, if you are an employee, then Canadian payroll taxes will be deducted from the employment income you earned in Canada.
5) If you work in a foreign country (e.g. Dominican Republic) for a Canadian company as a Canadian resident, then you will be responsible for paying Canadian income tax on your worldwide income. On the other hand, if you work in a foreign country (e.g. Dominican Republic) for a Canadian company as a Mexican resident, then you will be responsible for paying Mexican income tax on your income. In both cases, you will likely be responsible for paying income tax in the foreign country in which you physically worked.
Thank You,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hello
I am a permanent resident of Canada with Chinese citizenship and have been working in China for the past several years, my husband lives in China with me and is a Canadian citizen, and our daughter lives in Canada (also Canadian citizen). I only go back to Canada for two weeks max every year to visit our daughter, but I do have a Canadian bank account (which I don’t use), a drivers license, an expired health card, but no properties under my name. Would I be considered a non-resident of Canada for tax purposes? And does my residency status have to be determined by CRA prior to filing/not filing my income taxes for previous year? Thank you so much.
Hi Shelly,
Thanks for contacting me. If your daughter is under 18 years of age and lives in Canada, then you will have a strong primary tie to Canada. This primary tie coupled with your secondary ties (driver’s license, bank account) will cause you to become a resident of Canada.
You can ask the CRA to provide you with a residency determination by completing form NR73. Filing form NR73 is not mandatory. In order to properly assess your residency status for Canadian tax purposes, I will require further information.
Thank You,
Allan Madan, CPA, CA
Tel: 905-268-0150
I work for a Canadian subsidiary that is located in Massachusetts. I am paid through the Canadian corporations payroll not the Americans. If I spend fewer than 183 days in the U.S. am I exempt from tax in the U.S? Also must I file a U.S. tax return?
Thanks
Hi Garrett,
Yes a US return is required to be filed if you are working in the US regardless of the 183 day rule. The purpose is to establish your claim for protections under the US Canada Tax Treaty. You will not be required to pay taxes in the United states as the income earned is through the Canadian corporation. However a return must be filed to inform the IRS you will be protected under the Treaty.
Thanks
Allan
Hi Allan,
I purchased foreign stocks through Bank of America in Florida in 2005. In 2012 the value of the stock went down but I did not sell. I was wondering If I can use this loss to reduce my taxable income this year?
Hi Scott,
Sadly you won’t be able to claim a capital loss due to your stock decreasing in value. Capital losses will only apply if you happened to sell the stocks at a loss. Then this loss can only be used to reduce your capital gains. If you currently do not have a capital gain in the current year the loss can be carry forward or back on your return.
Thanks
Allan
Hi Allan,
I’ve lived in Canada from 1996 to 2001 and I moved from Canada to US around May 2001 on TN work status and worked/lived/got married/kids in the US on TN status until December 2012. I didn’t file departure tax return for my 2001 Canadian return with Revenue Canada(back then). However, I did the regular 2001 Canadian return. My ignorance for not knowing the departure tax process back then. I have filed only my US taxes from 2001 till 2012 and didn’t file any Canadian taxes during that period. I moved back to Ontario on Jan 1, 2013. This year, I’m planning to file my 2013 taxes with CRA after gap of 12 years. Will I encounter issues since, I didn’t file my departure return back in 2001? To the CRA, Can I show my US tax returns(for 12 years) as my proof that I’ve been living in U.S until 2012?
I didn’t have any primary ties when I left canada in 2001. Only secondary tie, I had is a joint bank account I’ve had with my father. I’d appreciate your feedback.
Thanks,
Shahul.
Hi Mr. Khan,
Thanks for contacting me. In your situation, you should complete and submit form NR73 to the International Tax Services Office. The Canada Revenue Agency will respond by providing their opinion on when you ceased your residency with Canada.
To support your claim for non-residency, ensure that you provide proof of your US address (e.g. US driver’s license), proof of marriage in the US (e.g. marriage certificate) and proof of residency of children (e.g. birth certificate, social security card), along with copies of previously filed US tax returns.
If you don’t take any action, and simply file your 2013 return, you will likely be questioned by the Canada Revenue Agency as to the missing Canadian tax filings since 2001.
Thank You,
Allan Madan, CPA, CA
Tel: 905-268-0150
Thanks a bunch, Sir!!!
Hi! I am a Canadian/Slovenian citizen, who has permanently relocated to the UK (approximately 5 months ago). I own no property, and have neither spouse nor children. I have cancelled my OHIP, but maintain a driver’s licence, a bank account with almost nothing in it, and an RRSP, but nothing else. I will file a Canadian tax return this year, as I was earning an income until September of 2013. Am I then required to submit any future returns. This is a permanent relocation, as I live in the UK with my fiancée. Thank you for any assistance you may be able to offer me!
Hi Val,
Thank you for your question. From the facts that you provided, it appears that you will have ‘zero’ primary ties to Canada after departing, and only three secondary ties (driver’s license, bank account, RRSP). When determining the impact of secondary ties on your Canadian residency status, the Canada Revenue Agency will evaluate the secondary ties as a whole. In your case, I believe that your secondary ties to Canada, as a whole, should not cause you to remain a resident of Canada for tax purposes.
You should file a departure tax return for the 2013 year and specify the date that you left Canada and relinquished your primary ties. You will not be responsible for filing Canadian tax returns going forward, unless you:
1) Earned Canadian employment income in the year
2) Carried on a business in Canada in the year
3) Sold Canadian real estate in the year
Thank You,
Allan Madan, CPA, CA
Tel: 905-268-0150
I am a non-resident of Canada, do I still need to pay CPP/EI?
Hi Gai,
You will have to pay EI. For CPP you will have to pay unless you have been relocated to Canada by your foreign employer on a temporary basis. Your country and Canada must also have a social security agreement.
Regards
Allan Madan
Hi there,
My husband and I have severed ties with Canada. Therefore, we are non-residents. We still have a bank account and credit card but hold no other ties.
We will be working abroad for a few years. We are paying off Canadian student loans and visa debt. In a short while these will be paid
off and we wish to put our money earned into our Canadian bank accounts via wire transfer.
Will we be taxed on this income we wire to our Canadian bank even though we earned it overseas and maintain a non-resident
status?
Thank you for you help
Hi Katie,
Money transferred by non-residents of Canada from overseas bank accounts to a Canadian bank account will not be taxed in Canada, so long as that money is not derived from income or profits earned in Canada. However, any Canadian income earned by investing that money in Canada will be subject to Canadian taxes.
For example, assume that you transferred $50,000 from an overseas bank account to a Canadian bank account. Further assume that you purchased Canadian investments with the transferred money, and you earned Canadian investment income of $4,000 in the year. In this case, only the $4,000 of investment income will be subject to Canadian income tax.
Allan Madan, CPA, CA
Tel: 905-268-0150
Email: amadan@madanca.com
I am a Canadian citizen but lived in Singapore all my life. I went to undergrad university in Singapore from 2005 to 2008 and only relocated back to Canada in 2008. I started filing my income taxes for 2008 onwards but then just realized that I should be claiming the tuition fees I had paid overseas in Singapore from 2005 to 2008. Is it too late to file income tax returns for those periods (assuming the university I went to is recognized and accredited by the CRA)?
Hi Joyce,
Yes, you can go back up to 10 years. Make sure that you claim the tuition fees and applicable credits for the 2005 to 2007 years that you missed. Unused tuition credits can be carried forward to future years.
Allan
Hi,
I am a Canadian Citizen working temporary abroad and filing my taxes for all previous years. I own a property in Canada. I filed the NR73 form to determine my residency status having in mind that I am considered a factual resident since all residential ties to Canada are kept (property, bank accounts, driver’s licence) except the physical presence requirement for me and my family. I was expecting to get an answer that I am resident but it was the contrary. Did they make a mistake? and what consequences are there for me and my family? One last thing to ask, is it a good idea to ask for a second review or appeal on my case. Thank you
Hi Abdo,
Based on your email, I presume that you terminated all primary ties to Canada:
1) House in Canada
2) Spouse in Canada
3) Dependents in Canada
It’s interesting that the CRA took the viewpoint that your secondary ties to Canada were not sufficient to keep your Canadian residency for tax purposes. If you want to maintain your Canadian residency, then ask for a review of the CRA’s decision.
When you terminate your Canadian residency, you will be subject to departure tax. Departure tax is a type of Capital Gains Tax that is applied to any unrealized gains / profits on property owned by you as of your departure date. You must also list your assets remaining in Canada on your departure tax return.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
ello,
I am planning to work in Saudi Arabia for 1 year. I’m a Canadian citizen. I have a student loan, bank loan and credit cards. I don’t own any property, only a car that I can sell before moving. I would like to keep my drivers license but can severe OHIP. As far as I understand these are considered secondary ties. Would I need to file income taxes? Also, I’m a little confused about departure taxes. How is it calculated? Will I be paying it? If I never owned any assets except a car in Canada.
Thank you
Hi Val,
Thanks for your question. The ties you mentioned (student loan, bank loan, credit card, driver’s license) are secondary ties to Canada. When you leave Canada, you will be required to file a departure tax return for that year. This return is due on April 30.
Departure tax is a type of capital gains tax that is applied to accrued gains on property that you own. Departure tax becomes payable when you leave Canada. Since you don’t own any property, it’s not likely that you will incur any departure tax.
For example, assume that you own shares in a public company that you bought for $10,000. Further assume, that on the date you sever your ties with Canada, the value of those shares is $40,000. In this situation, you would be liable for paying departure tax on the accrued gain of $30,000.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan,
Thanks for replying. Since I would only have secondary ties to Canada. Does that mean I wouldn’t need to show my income I earned there when I file taxes next year?
Thanks again,
Val
Hi Val,
A single secondary tie by itself cannot determine your Canadian residency status. Secondary ties must be evaluated as a whole when assessing your status. Unfortunately, the CRA does not tell the public the specific number of secondary ties that will push you over the ‘residency cliff.’ Therefore, it’s best to eliminate as many secondary ties as possible, if you want to terminate your Canadian residency for tax purposes.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hello there just wonder if you can please help me few question about file tax in this case:
I m Canadian but married american and have children I found tax return but do I need to file spouse income who is American .?
I also have been resident card in USA but I have house n banking in Canada I also live on and off in Canada, most the time in USA . I also file tax and have been received child benefit. I just wonder should I do not be able not receive any because I am most time in USA even not working but my spouse is working.
What do I need to do for my situation to be able legal for tax file and tax benefit. Thank you so much .
Hi Tra,
Thanks for your questions. My answers are as follows:
1) It appears that you will be a resident of both Canada and the US. Your US residency is a result of your ‘Green Card.’ Your Canadian residency is a result of your house in Canada, which could be considered your ordinary residence. As a dual resident, you will be liable for taxes to both Canada and the US on your worldwide income. To reduce double taxation, you can claim foreign tax credits for foreign taxes paid.
2) If you are living with your child, are responsible for their care, and are a tax resident of Canada, you can still receive the Canada Child Tax Benefit.
3) You need to file both a US return (either separately or jointly with your spouse) and you need to file a Canadian tax return.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan,
I am Canadian citizen, living in Canada for 14 years and having OCI status as well. I am going to be 60 year old soon will apply and start getting CPP in couple of months. Not working at this point
I am thinking to move to India for about 10 – 12 months because of some family issues and to spend some time on vacation as well, will not be working in India. Will have my income from CPP and some RRSP contribution ( around $ 85,000 ) and little bit of savings. Not getting any GST credit.
I would like to maintain a situation wherein I have the option to come back to Canada anytime in my life or stay in India for longer term or permanently . Keeping that in mind what is the best way to deal:
– DO I have to inform CRA before moving or I can file income tax as a Canadian resident
– Can I go as a “non resident for Tax purposes “ . In that case Do I need to give departure tax ? Can I file income tax from India under Elect 217? will I be eligible for personal exemption as being entertained as a resident Canadian. Any other thing I need to do before departure
– Any other option which would be best under the circumstances
Regards
Dev
Hi Dev,
My responses to your questions are as follows:
1) If you sever your ties with Canada and become a non-resident for tax purposes, you should immediately call the CRA and ask them to update their records. Withholding tax will apply to CPP, OAS, and RRSPs payments to you. You should also call Service Canada, your banks, and investment adviser, so they can ensure NR4 slips are prepared for payments made to you.
2) You need to file a departure tax return for the year in which you become a non resident of Canada. If your income is low, you should calculate your tax liability pursuant to Section 217. If your liability is lower that the withholding tax paid, then file a return for your pension income pursuant to Section 217.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan,
I am a Canadian citizen currently living in France. I left for France the end of 2011 to work as an English language assistant for 7 months. I returned to Canada the following summer for a month, and then left for Malaysia for 3 months (where I also hold citizenship) and then went on to stay in France to live with my partner. I only returned to Canada for a month on holiday in December 2012. I have been living in France ever since without earning an income.
I do not have a bank account in Canada anymore, any properties what so ever nor do I have a drivers license in Canada. However, I still hold my health card which is currently expired.
I am planning to open an e-boutique and was wondering if those earnings will need to be taxed?
I have not filed for my residency status yet, would I most likely be considered a NR?
I plan to live in France for the next few years and might possibly just stay on. If I do decide to move back in the future, to re-establish my residential ties, what would that entail?
Thank you so much for your feedback.
Hi Lsie,
My responses to your questions are as follows:
1. If you are a non resident of Canada, then Canada cannot tax the profits of your e-boutique earned outside of Canada. Sales made to Canadian customers (whether or not you are a resident of Canada) will be subject to Canadian sales tax and may also be subject to Canadian income taxes.
2. It appears that you will be considered a non resident of Canada.
3. You should file a ‘departure tax return’ for the 2011 year since this is the year you left Canada. On the first page of the return specify the date that you became a non-resident.
4. If you move back to Canada in the future, you will become a part year resident in the year of entry. As a part year resident you will be liable for Canadian taxes on your world wide income starting from the date you returned to Canada. Furthermore, your foreign assets will be deemed to have an adjusted cost base for Canadian tax purposes equal to the fair market value of those assets on the date of entry into Canada.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Dear Madan,
Your article on Canadian taxation is very nice and interesting.
Few days back, I received a notice from CRA regarding review of GST/HST credit, Canada Child Benefit etc.
Actually in my case, I landed as Permanent Resident in Toronto on Aug 10, 2010 along with my family like my wife & one daughter. I got the job within days. I worked in Canada upto Jun 12, 2011 i.e. approx. 300 days. Then due to some family problem I have to go my home Country, India. I left my all furniture etc at my sister’s house and went to India along with my wife & daughter. I stayed there upto Jan 16, 2012 and come back on Jan 17, 2012. During my stay in India, CRA paid me Canada child benefit in my bank account.
After this date I never went to my home country and is working here.
During my 300 days stay in India, I earned some Interest on Fixed deposit and also have some self employment income, which I reported in my Tax return for the year 2011 as foreign income and investment income.
My question is
1. Whether I have to pay back Child benefits & HST to CRA, which I received, while I was in India (for approx. six months.)
2. Whether I have to pay back income tax refund, which I received on filing 2011 tax return as i was absent from Canada
for nearly six months.
Before Going to India, I stayed in canada for approx. 300 days. Was I Resident in canada as per Income Tax Act.
Please reply to my inquiries. I shall be very thankful to you.
Thanks in Advance.
With regard
Rajesh
Hi Rajesh,
Thanks for your questions. My responses are as follows:
1) If you remained a tax resident of Canada while you lived in India, then the CCTB will not be repayable to the CRA. However, if you relinquished your primary ties to Canada, and most of your secondary ties, then you would have become a non resident. Non residents are not eligible to receive the CCTB.
2) Most refundable government tax credits (e.g. GST/HST credit) require that you be a tax resident of Canada. If you received a refundable tax credit while you were a non resident of Canada, then it’s likely that you will have to repay this amount to the CRA.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hello, i have worked in Japan for the past 6 years. I still maintain bank accounts, credit cards, drivers licence and have paid for health insurance. Would those ties deem me to be a factual resident or non-resident?
Thank yo
Hi Alian,
The connections that you have to Canada (drivers license, bank account, credit cards, health insurance) are considered secondary ties.
The CRA’s position is that a single secondary tie to Canada by itself cannot cause you to become or remain a resident of Canada for tax purposes. Secondary ties must be examined as a whole when assessing your tax residency status with Canada. Unfortunately, the CRA does not specify the number of secondary ties that will cause you to become or remain a tax resident of Canada.
To reduce your risk of being a tax resident of Canada, you should consider eliminating all or most of your secondary ties to Canada.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Dear Madan
Very great video and nice tips !
I am planning probably to move to Mexico within the next 6 months to live there for the next few years.
I am a security consultant and I am financially independent and all my asset are just cash in my canadian bank account that I will transfer to the Mexican bank.
Then i will be a non-resident of Canada and will sever all my primary ties.
But for my secondary ties, I will sever almost everything except 2 which are my car (a luxury car) and my driver license.
I would like to keep my car because when I will come back to Canada for vacations (less than 6 week by year) that will be my transportation drive its a very a nice car.
My question is the CRA will considered me as a non resident on tax purpose or a resident if i keep my car and my driver license?
And how many day am i allowed to visit Canada in a year to not be suspicious to the eyes of the CRA ?
Thank you
HI JF,
The CRA’s position is that a single secondary tie to Canada by itself will not make you a resident When assessing a person’s tax residency, the secondary ties must be examined as a ‘whole’. I doubt that two secondary ties (Car and Driver’s license) will cause you to remain a resident of Canada. Nonetheless, it’s better to relinquish all secondary ties if you don’t want to take a risk.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Im canadian living in Peru since 2009. I got married and have a 4 year old daughter. I dont have any properties or bank accounts or family left in Canada. Im not planning on loosing my passport. Do I have to pay taxes? Am I in troubles with the law? Can I go visit for a couple of weeks?
Thank you very much for your article . It’s very good.
Hi Ludo,
It appears that you are a non resident of Canada. If you sever your primary ties to Canada and most of your secondary ties to Canada, you will likely be considered as a non resident of Canada. Non residents of Canada do not pay Canadian income taxes on overseas income. If you broke your Canadian ties in 2009, you should file a departure tax return with the CRA for the 2009 year.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
I live in Canada but work a 35 days on 35 days off rotation based out of the UAE. My employer is a Canadian company but I work directly for the UAE office and I have a UAE residence visa which is required so that I can have a UAE bank account which I am paid into and must transfer my pay back to Canada.
I have read that the Overseas employment tax credit is being reduced and then phased out, I am in the oil and gas business and because the company is Canadian listed and controlled that I qualify for this credit. is this true?
Is there any tax that I would pay in the UAE?
I know that I need to pay income tax in Canada but am I required to pay EI and CPP?
For the days that I am working in the office and not for the customer I am paid a small travel and meal allowance, are these considered taxable?
I am also paid a monthly amount for healthcare insurance for myself and my family in Canada, is this considered taxable as well?
Thanks for your time.
Hi Kurtis,
To qualify for the Overseas Employment Tax Credit, the following conditions must be met:
1. You are a resident of Canada (which is likely the case since you rotate every 35 days, presuming that you have a permanent home in Canada).
2. You are in the oil and gas sector – met
3. Your employer is a Canadian company – met
4. You performed 90% of your employment duties outside of Canada for more than 6 consecutive months in the year. So long as you did not work in Canada while off for 35 days, I believe you should meet this criteria.
You do not have to pay income tax in the UAE. Your employer should withhold payroll taxes, CPP and EI from your pay cheques. The meals paid by your employer are a taxable benefit. Generally speaking, health care insurance paid by your employer as part of a group benefits program for all employees is not a taxable benefit. I do not have enough information to answer your question about travel.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan
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
Hi Saba,
As far as I am aware, if you sever all of your primary ties and most of your secondary ties to Canada, you are more likely to be classified as a non resident of Canada for tax purposes. You should establish ties to the UAE and demonstrate that your ordinary residence is in the UAE. Non residents of Canada do not have to pay Canadian income taxes on overseas income.
For greater clarity, you could fill out form NR73 to ask the CRA for their position on your residency status.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi there!
Your article is great! I really need your help assessing my current situation:
1. I am a Canadian citizen and I have lived and worked in Canada up until May 2013
2. I accepted a permanent job offer in the UK and started living and working in the UK in June 2013.
3. I don’t own any property or a car in Canada. However, I do have multiple Canadian bank accounts, along with investments and RRSP in Canada, a Canadian driver’s license and Canadian health card.
4. I don’t want to sever my residential ties to Canada as I plan on returning to live in Canada in a few years time.
My questions:
1. I know I have to file a Canadian tax return for the income I earned in Canada in 2013. Do I use the T1 general tax form?
2. Schedule A to declare my foreign income?
3. Can I apply for foreign tax credit?
Thank you so much!
Hi Marissa,
So long as you are maintaining your ‘ordinary residence in Canada’, along with your secondary ties, you could be considered as a tax resident of Canada. In this case:
1) You will file a T1 General Return (like other residents of Canada do)
2) Report your foreign income (in Canadian dollars) on line 104 of the T1 General Return
3) Calculate the foreign tax credit for UK taxes paid using the appropriate schedule. You need to have a copy of your UK return to prove the validity of the foreign tax paid.
Thanks,
Allan Madan, CPA, CA
Tel; 905-168-0150
Hi Allan,
Excellent video!!
I have a few questions that I haven’t been able to find the answer for anywhere else. I do hope you can help.
I am a non resident living in South Korea for the past 15 years, but plan to return to Canada this summer.
I will return to Canada with approximately $100,000 Cdn. After 6 months my wife and children will be arriving with $300,000Cdn.
( All money we will be bringing into Canada will have already been taxed by the Korean government i.e. my job and the sale of our house)
My question is will we be taxed on this money by the Canadian Government the following year?
If the money is taxable how can I get it into Canada without the Government milking it?
Thank you very much for any assistance you can offer on this matter.
Hi Ken,
So long as you were a non resident of Canada when you earned the money, you will not be taxed on it by the CRA when you come to Canada. Note: When you immigrate to Canada, all of your assets are deemed to have a ‘cost basis’ equal to the fair market value of those assets on the date of entry into Canada. This is important when calculating capital gains on the eventual sale of those assets.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Great article thank you. I plan to use tax software to do my son’s taxes, but I fear I may have some problems, here is the situation; he finished full time studies at McGill in Montreal in Mai 2013, earned about 12K last summer, and departed for Oxford U in the UK last September. To complicate matters, he received a scholarship from Oxford for his Masters over there. I know I have to file a tax return here but must he declare the scholarship funds and can he claim the UK tuition fees, or can those simply be ignored as they are not earned income per se? After checking on the UK tax site, he doesn’t appear to require to declare the scholarship money since the amount barely cover his tuition fees and living costs. Thank you.
Hi Robert,
To answer your question, you must understand the meaning of “Designated Educational Institution.” A designated educational institution includes a university outside of Canada where the student was enrolled for at least 3 consecutive weeks in a course (or courses) in respect of earning a bachelor degree or equivalent degree.” Designated Educational Institutions generally include universities outside of Canada that provide master’s degrees, in addition to bachelor’s degrees.
The CRA maintains a list of designated educational institutions. You can call them to verify that Oxford University is on the list.
So long as Oxford University is a Designated Educational Institution, then the scholarship received by your son will not be taxable. In addition, he would qualify for the education amount tax credit and tuition fees tax credit. He must have completed form TL11D in order to claim the tuition fees paid to Oxford University and this form should be attached with his return.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan,
I did a working holiday to New Zealand for 2011 (from July 2011 to March 2012). I did my taxes last year for 2011 with H&R Block and they counted the foreign tax (I owed like $300, first time ever). I have now been reassessed and asked to send in info showing how much I made and paid in tax in NZ. I sent in the form from Inland Revenue showing all this broke down. And now 2 months later they say this doesn’t count and I need a copy of the tax return (which I’m unable to get, I asked Inland Revenue they have given a copy of my notice of assessment for the tax return but don’t give a copy of the tax return.) Are you aware of how I can dispute this as I did work there and pay taxes? Also they reassesd my 2012 and asked for the proof of working in NZ and for 2012 they accepted the page that they won’t accept for 2011. Not overly happy with CRA right now any assistance is apprecatied. Thank you.
Hi Carol,
It can be very frustrating when dealing with the CRA, especially when they do not apply the rules consistently or fairly. I suggest that you file a Notice of Objection (due within 90 days of the notice of reassessment date). Along with the objection, include a copy of the NZ tax return for the year in which you claimed the foreign tax credit. Without a copy of the tax return, the CRA may reject the foreign tax credit claim. Can you have an accountant in NZ prepare the NZ tax returns for 2011 and 2012, which match with the Notice of Assessment?
In any case, please do file a Notice of Objection and explain your situation. As a last resort, you could consider filing a Taxpayer Relief Request.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
I landed with my family including two children in September 2010 and stayed almost a month in Canada, and moved back to home country to wrap up and sort out some other issues which required me to be there. Since then i have been filling my tax returns and receiving child tax benefits and i have maintained bank account/credit cards/ health card.
I have moved back to Canada on permanent basis in May 2013 (almost after three years).
Recently i have received enquiry from CRA in relation to child tax benefits etc asking information about kids school etc. i only have these records from May 2013 onwards, my wife is home maker and is not employed however i am employed and getting tax deduction from salary.
Can please advise what is my status is there any negligence on my side and how can i tackle this issue and set things straight. Furthermore if there was negligence/mistake on my side will this issue impact my immigration status.
Hi Ali,
I have dealt with similar situations in the past. If you moved back to your home country with your family (spouse and children), and did not maintain a home in Canada while abroad, you will likely be considered a non resident of Canada for tax purposes, as will your wife. Non residents of Canada are not eligible to receive the Canada Child Tax Benefit. As a result, you may have to pay back the CCTB amounts you received, plus interest and penalties.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan:
My ex-wife and I decided to take our daughter to our original country for medical treatment of a serious illness. We did so because of bad experiences with the health care system here. My ex-wife and my daughter left Canada in June 2011 and they’ve been there since then while I’ve been staying here in Canada. My ex-wife and I were still married at the time she left (June 2011) until recently, January 2014. She still has her car, a bank account and credit cards here. She does not have any property (house, condo, apartment, etc). She continued receiving CCTB and UCCB while abroad and now we’ve have realized that we should have informed the CRA before they left Canada. After our divorce, she sent the RN73 to CRA and they told her she is considered non-resident and they are asking again for the date she left Canada. My question to you is if she was regarded as resident for income tax purposes while I was her spouse and thus still entitled for CCTB and UCCB until January 2014. She and my daughter are planing to come back to Canada in around a year. I’m wondering if we will have to pay back the CCTB since she left, taking into account I was her spouse during that time or if we will have to pay back that money since our divorce. I’m also wondering if we can eventually appeal in case they ask us to pay back taking into account my daughter’s medical issue and the expenses we have incurred. I would really appreciate any advice from you.
Thanks very much
Hi Juan,
She should be regarded as a resident of Canada while you were her spouse. She severed her last primary tie with Canada upon separation. So long as she did not receive CCTB payments while you were legally separated, she should not have to pay them back. When responding to the CRA, please inform them about the change in your marital status. Note: CRA’s ruling on your ex-wife’s residency status will be crucial in determining her eligibility to receive the CCTB.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan,
I read through all the replies but couldn’t find anything on unused tuition credits after you become non-resident. I have been a non-resident since 2012 and filed my 2012 return last year with the date of emigration. For this year, I am wondering if unused credits can be carried forward for when/if I return to Canada in the future (I have no Canadian based income/capital gains, and no property). I see on the CRA website that as a non-resident you can file a tax return if “you want to carry forward or transfer the unused part of your tuition, education, and textbook amounts”. Tried to google and some people are saying when you file your last return you lose all your credits, some others say you are able to carry forward indefinitely. Appreciate it if you could point me in the right direction.
Thank you!
Hi Derrick,
As far as I know, you will not lose the ability to carry-forward tuition credits when you become a non resident of Canada. If you return to Canada and have Canadian taxes payable, you can use the carried forward tuition credits to reduce your taxes payable.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan,
Thanks for the awesome info and video! I’ll be sharing it with my Canadian expat friends here in Taiwan.
I have a weird situation. I effectively became a non-resident of Canada way back in 1999 when I moved to Taiwan, but I was told to file as a resident because I still had a bank account and drivers license in Canada, and (especially) because I was still on a kind of visitor visa here in Taiwan. In 2004, I became an official resident of Taiwan and gave up my Canadian drivers license, but kept the bank account to facilitate student loan payments. I haven’t filed since. Can I still file a “final departure tax return” for 2004? Should I bother? If so, what do I indicate as my departure date? I may have visited Canada during 2004, would that work as a date of departure?
Thanks again!!
Hi Eric,
You should file form NR73 with the CRA and ask them for a determination of your residency status as of the date you left. Once received, you should write a letter to the International Tax Services Office (or the appropriate department) to ask them to correct your final return (i.e. 2004), including a T1 Adjustment for the 2004 year with the appropriate departure schedules enclosed.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan
I left Canada Permanently on July 12, 2013 and have not ties except bank account and one visa card, so i lived in Canada more than 183 days and living now in Saudia Arabia ever since. Would I be considered non resident or deemed resident because i exceeded 183 days???
and do I have to pay tax for my overseas income?
can I file my taxes for 2013 via NETFILE or I have to mail them?
thanks
Hi Mohamed,
The 183 day rule applies to individuals who are already non residents of Canada, which is not your case. If you broke all of your primary ties (house in Canada, spouse in Canada, and children in Canada) with Canada and most of your secondary ties with Canada, you will likely be considered a non resident for tax purposes, starting from the date the ties were broken.
You can electronically file your departure return. However, I recommend that you hire a professional accountant.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hello Allan Madan,
Thank you for posting a video giving Canadians living abroad some Tax Info. My husband and I with our children are living in Switzerland since 2013.
I read on the CRA website that my husband doesn’t need to file an income tax as there is a Tax Treaty between Canada and Switzerland so he works for a Swiss company and pays taxes here as well (Also he is Swiss and therefore holds a Swiss Passport). He has been abroad for a year now however the kids and I lived in Canada in 2013 for over 183 days.
I had Canadian Income and I know I need to report my income and file my taxes. Here are our questions:
. Can I use turbo Tax to file?
. Can I file as a Canadian Citizen even though I lived in Switzerland as of December 31? Or should I file as a Deemed Canadian since I lived in Canada for over 183 days?
. we have our house up for sale however it has not sold yet. Can I just do rental income under my Canadian income tax and not my husbands? We rented part of the house for a few months in 2013.
. Should we close our saving bank account? We plan to retire in Canada and will keep our Mutual Funds however I believe we will pay higher fees to hold bank accounts as long as we are non residents. We must keep one account to pay for our mortgage.
. Should I close the kids bank accounts?
. I realize that as long as we cannot sale our house we would have to file rental income in Canada, do I need a NR account?
Thank you for reading my message and look forward to reading your reply.
Hi Lori,
Thanks for contacting me.
1. Although I recommend hiring a professional accountant, you can file the tax return yourself using tax software such as Turbo Tax.
2. Your citizenship is only one factor in determining your residency status at the end of 2013. If you broke all of your primary ties (house in Canada, spouse in Canada, children in Canada) as of December 31, and most of your secondary ties as of December 31, then you will likley be treated as a non resident effective December 31. In this case you would file a departure return for the year, and indicate your date of departure from Canada as December 31, 2013.
3. The 183 day rule applies to non residents of Canada, not residents.
4. If your husband is a non resident, then he will have to file a section 216 Tax Return for his share of the rental income and expenses. On the other hand, you would file form T776, Statement of Real Estate Rentals, for your share of the rental income and expenses.
5. You can keep one bank account. It’s best to close the kids accounts, and break as many secondary ties as you can. When examining the impact of secondary ties on your residency status in Canada, the secondary ties are viewed as a whole.
6. You will need a NR account # and remit withholding tax on 25% of the gross rents collected if you are a non resident of Canada. Same for your husband.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan,
Thank you so much for you kind advice in advance . I just have a simple question for you.
I am a dual citizen ( Mexican& Canadian) and after having a really hard time finding a permanent job in Canada, two year ago I have decided to take a break from Canada and be back in Mexico for a while so I started working in my own business in Mexico. I haven’t had Canadian income in two years only Mexican one from the business that I own but I still having secondary ties to Canada such as Canadian bank accountant and provincial health care card (no spouse,no childrens ) and I event received WITB in 2012. Also as far as I know I’am not owing any taxes for previous years.
After all, my decision is not yet made on staying in Mexico. I may be back in one more year o two from now.
So my question to you is , should I file or not event if it is “0” from Canadian sources ? And if I should, what kind of Package should i file?..or should I declare my self a non resident of Canada …this is something I don’t want to decide or do at list this year.
Thank you for you kind respond.
Rick
Hi Rick,
If you no longer have any primary ties to Canada (house in Canada, children in Canada, or spouse in Canada), then you will likely be considered a non resident of Canada. However, you must also evaluate the impact of your secondary ties to Canada on your residency status.
If you do come back to Canada in 1 or 2 years, your stay abroad may be considered as temporary, and this lends support to treating you as a resident of Canada even while you lived abroad. When you leave Canada and sever your ties, you must file a departure tax return. For further details, please contact me at amadan@madanca.com
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi there,
I have dual citizenship in the UK and Canada, My question is i have been living back in UK for 4 years now not working just looking after elderly parents. Am i still entitled to my GST cheques?
Thank you
Hi Tony,
If you severed your primary ties to Canada (house in Canada, spouse in Canada and children in Canada) and most of your secondary ties to Canada, then you would have become a non resident of Canada. Non residents of Canada are not entitled to the GST Credit cheques.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi there,
my mother (a naturalized canadian citizen) thought that by leaving Canada and not living here, she would be considered a non-resident. she did not file a departure tax. When she left more than five years ago, she left her condo (where my sister lived until last year, since then it’s been empty), along with some mutual funds which earned not a whole lot. She has been earning a steady foreign employment income abroad, which got taxed in that country, and every year she also filed her Canadian tax because she received statements for her Canadian mutual funds and other investments (income amounting to less than 10k).
She told me all this recently and I fear she has filed her taxes wrong for the past several years or so, and I am afraid she is most likely still a deemed resident of Canada, although her husband (foreign citizen) lives abroad and she no longer has dependents in Canada (mainly due to property under her name though she doesn’t live there and has visited Canada only for a month or so ever year). I am trying to file her tax return properly this year by May 05th, but I am afraid that once I include her foreign employment income, it might trigger an audit before I can get all the necessary information to submit a full voluntary disclosure for the past years where she had foreign employment income but did not report it. – do you perhaps know what the best course of action would be for someone in her situation? Thanks in advance.
Hi JMK,
Thanks for contacting me. If you’re mother severed her primary ties to Canada (which appears to be the case) and most of her secondary ties, then she will be considered to be a non resident of Canada. To rectify the situation, she should file form NR73 to ask the CRA to make a determination on her Canadian tax residency status. Should the CRA determine that your Mom became a non resident several years ago (when she left Canada), then she will not be liable for Canadian income taxes on her overseas income. In addition, resident returns filed by your Mom in error should be revoked. For further details, please contact me at amadan@madanca.com
Thank You,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi,
I work in Saudi Arabia as a teacher, so I only go to Canada in the summer.
a) We rent a house in Canada, I pay heat, hydro, water, and phone bills.
b) I have a bank account, and credit cards.
c) We have a car that we pay for monthly.
d) I pay my taxes under foreign income.
e) I still have my health card and driver’s license.
f) We have furniture, appliances, and clothing all at our residence in Canada.
g) We pay for lawn care and maintenance for our home.
h) I have an RESP for my children which I pay for monthly.
I have my wife and 2 children living with me in Saudi Arabia, we all go to Canada in the summer and sometimes twice a year. My children go to American/British school here.
To us our permanent home is Canada, that is where we have everything set up.
The question is since I declare my taxes and we pay all our utilities and everything else in Canada. Are our children allowed to receive the CCTB? And are we eligible for the GST returns?
Are we still considered residents or not?
Thank you.
Hi Nick,
To qualify for the Canada Child Tax Benefit (CCTB) you must meet all of the following 4 conditions:
1. Live with your child (under 18)
2. Responsible for raising and supporting child
3. You must be a tax resident of Canada
4. You or your spouse must be a Canadian citizen or permanent resident of Canada.
Since you have a home available for your use in Canada, which you and your family stay at while in Canada, you still may be considered as a resident of Canada. Having a home in Canada, where you live, is a significant residential tie to Canada. To provide you with a more detailed answer, I will require further information.
Thank You,
Allan Madan, CPA, CA
Tel: 905-268-0150
Great video and information!
I am a Canadian citizen who attended university in the UK and US and then got a job in the UK following graduation. I have now been out of the country for 8 years with no Canadian bank account, Canadian property or any secondary ties. I believe I qualify as a non-resident for those years. However, I have been thinking of moving back to Canada in the next few years. If I move back, does that disqualify those years I was a non-resident and will I therefore have to pay back taxes? Or can I return, re-estabish residency and not owe tax for the years I was non-resident.
Hi Justin,
Thanks for your question. When you move back to Canada and establish ties to Canada again, you will become a resident of Canada upon entry. This will not affect your non-residency status for the years when you lived outside Canada.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan:
In 2004 I received an offer to work in Algeria. At the same time my wife and I decided to move out of Canada and we move to Mexico. I was working on rotational system between Algeria an d Mexico. At this time we had two houses in Canada.
On 2006 we decided to sell the houses and we do it. During 2004, 5 and 6 I submeted my tax return form and I payd the tax difference between Algerian and Canadian.
After 2006 we don´t have any primary ties. (No dependent, no house, no wife in Canada. The only thing hat I conserve is a bank a ccount shared with my soon who lives in Canada and two crdit cards. On 2009 CRA send me a letter to my old house and the propetiary resend it back to me. In this letter they were asking me for the Tax return declaration for the previous 3 years. i was ignorant about the form for the declaration of non residence. I answer them in a letter and I explain them that I did not have any ties with Canada different than the bank account and the credit cards. They never replyed.
I did not cancelled the cards because It is hard to get credit in a new contry. I use the cards often and I sent the payment through my bank account, but the money remining all the time is very low. I also have a life insurance which I pay on monthly bases and I did not canceled because I lost all the yeas payed before. I don´t have a valid Driving Canadian licence. During the last 10 years I visied Canada only wo times for a short periods of 10 days tio visit my son and my gran daugther.
Do I have to fill the form for determination of residency status?
Hi Efrain,
Thanks for your question. Since you didn’t complete a departure tax return (which informs the CRA of the date you became a non resident), you should fill out and submit form NR73 to the CRA. The CRA will then make an assessment on your Canadian residency status for tax purposes.
Your credit cards and Canadian bank accounts are both secondary ties to Canada, and these two ties by themselves should not affect your residency status in Canada for tax purposes.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan, I found your information to be quite clean, specific and great! after 14 years of living in south Africa, Indonesia, Australia and Brazil, I am now tired of the traveling and aiming to return to Canada. I kept my bank accounts open with RBC as I wanted to continue paying my OSAP. I didn’t own >$25K in assets when I left, but I never declared that I was living Canada.
Now with my last job I have received income in Canada for the past 3 years, and I have paid taxes here in Brazil. I would like to enter the country making sure that all my taxes and moneys to the government are in order. can you email me your cost for your professional assessment?
Looking forward to catching up with you.
Thank you,
Alberto
Hello Allan,
I will be moving to the US to marry my fiancé later this year. I will be selling my house before I leave the country and declare non-residency. As a result, I will likely have about $200k in cash when I’m ready to move. Can I simply transfer that money to my US account or are there any tax implications I should be aware of?
Thank you
I currently live in Canada and work for a company in the United States. I work from home in Canada, and travel to the US for 3 days a month. Also, I pay US federal taxes, but not state taxes. When I filed my taxes in Canada last year, I claimed the foreign tax credit for the federal US taxes I paid. However, I am concerned that I should have applied to the US to refund most of the taxes I paid since most of the service I performed were in Canada. Should I do this, or should I just claim all taxes I paid to the US on my Canadian return?
Hello Gregoire,
You are an employee of an American company, and therefore earn income outside of Canada. You may do most of your work in Canada, but only because you work from home. Canada and the US have a tax treaty, which means that you file your return here. The taxes that you pay in the United States count towards the taxes you pay for Canada.
When reporting, make sure you convert all income and taxes to Canadian dollars. You use the Bank of Canada rate that was effective on the day you received the money. It is important that you do not reduce your foreign income by the amount of tax the foreign country withheld. You report your gross income (amount before taxes and income). Then you receive a tax credit for the US federal tax that was paid.
Regards,
Allan Madan and Team
Hello Allan,
I am about to start a job in the US with a TN visa. I have no property, or any significant ties to Canada, except my driver’s license and a credit card + bank account.
I don’t want to do the NR73. Other than the Departure Tax Return, is there a form that says you’re leaving permanently. Or is that just the departure tax return?
Thanks,
M
Hi Marc,
You should inform the CRA that you are leaving Canada by calling 1-800-959-8281. This is to stop certain government benefits from being to you in error, while you are a non resident. In addition, you should inform your financial institutions when you have become a non resident so that taxes are properly withheld on interest and dividends payments made to you while you are a non resident.
On page 1 of the departure tax return, indicate the date you emigrated from Canada.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Marc,
On page 1 of the departure tax return, indicate the date of emigration. Also, make sure you immediately call the CRA to stop payment of government credits to you such as the GST/HST credit. Finally, contact your financial institutions and investment advisers to ensure that they know of your non residency status, since withholding tax is applicable on payments of dividends and interest made to non residents.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Sir, my question is, can my Aunt who is leaving in Alberta. A canadian citizen acquired by law (a former Filipino and residents in the Philippines) can own real properties like house and lots, 2 apartments and agricultural lands? Despite of being alrady a Canadian Citizen?
Hi Jason,
Yes, your aunt can purchase Canadian real estate.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan,
I am turning 65 soon, and will receive the Canada Pension Plan benefit from Canada. I worked for the U.S. government for a number of years, so I will start to receive social security at age 66. Will the U.S. social security benefit paid to me decrease because of the CPP?
Hello
There is something in the American social security called the Windfall Elimination Provision (WEP). This affects the calculation of your U.S. retirement or disability benefit. If your employer in the U.S. did not withhold social security taxes, the social security benefits that you get from the U.S. government may be reduced up to 60% as a result of receiving CPP.
Often times, the cost of challenging WEP is greater than the benefits lost. Therefore, it may not always be cost-effective to challenge it. If the Social Security Administration tells you that you are affected by WEP and you wish to dispute it, my suggestion is to read the Canada -US Agreement on Social Security carefully and appeal your own case. You can find more information about this at Service Canada: www.servicecanada.gc.ca. The agreement itself can be found at
http://www.socialsecurity.gov/international/Agreement_Texts/canada.html.
Regards,
Allan Madan and Team
Hi Allan, How does the U.S. determine residency status of its “aliens”? What are the responsibilities of each?
Hello,
You are consider a resident alien in America if you meet what’s known as the substantial presence test. This is based on your location during the current and past two years, over a period of at least 183 days.
Here is how you calculate the time: each day in the current year counts as one day, each day in the previous year counts as one third, and a year before that each day counts as one-sixth of a day. So if you were in the U.S. for 34 days this year, 23 days last year, and 50 days before that your total would be 50 days (34+ (23X.33) + (50X.16)). In this case, you would not meet the substantial presence test.
If you do meet the presence test above, there is a provision known as the “closer connection exception”. This will prevent you from being considered a U.S. tax resident and being taxed on your worldwide income. If you can prove that you were more closely connected with Canada than with the U.S. because of your significant personal and business ties. If you maintained a permanent place of residence in Canada and fill out a form 8840, you may be able to apply for the exception.
Resident aliens are taxed in the United States on worldwide income, and as such must file an income tax return there. A non-resident alien must file IRS form 1040NR when they have US employment income, has a tax liability on a US source income, or is engaged in business that can produce income that is connected with the U.S.
Regards,
Allan Madan and Team
Hello Allan,
I will work as an independent contractor for a U.S. company for the next couple months. Currently, I am still
living and working in Canada. This is my first time being self-employed. I have heard about charging GST/HST once your revenue passes $30,000, but I do not expect passing this threshold over the course of working for the US company.
Does charging HST/GST still apply to me, given the fact that I’m working for a US company? Since the billing rate is stated in the contract, does the HST/GST come out of my own pocket? Or is it acceptable to bill them beyond the contracted rate due to taxes? For example, if the agreed rate is $50/hr is it okay to bill them for $55 due to taxes?
Hello Alice,
You will need to register for GST/HST if you have taxable services. For example, if you were to make sales to someone in Canada you would charge them GST/HST. For your US client, you will not charge them GST/HST. Also, you will be able to claim your GST/HST paid on purchases as a refund on your return. Therefore, do not bill your client extra for taxes.
If your sales do not exceed $30K in any given year, then you don’t have to register. I would recommend you do sign up, since you can claim GST/HST paid on expenses.
Regards,
Allan Madan and Team
Hey Allan.
I’m currently working in the US on a J-1 Visa. I don’t have a green card, and I am not a US citizen. I had a brokerage account at Sharebuilder, but they have been giving me a hard time because I am not a citizen. Today, they removed approval for activities and want me to transfer to another brokerage. I may move back to Canada at some point, and would like an account I can keep once I return. Is this possible, or should I just transfer the shares to a Canadian broker? Or, should I just take the tax hit and move the money back to Canada?
Hello Danielle.
I would suggest to get clear on your residency status as soon as possible. It has huge effect on taxes, and there are potential fines you may have to pay under the Fair and Accurate Credit Transactions Act (FACTA). I would probably estimate that you are a non-resident US alien and likely a resident of Canada. If you are a Canadian resident, I would suggest only to deal with a Canadian brokerage.
Never make assumptions about US tax rules. The IRS is very aggressive, and their penalties are quite steep with regards to failing to file proper disclosure. As this is a somewhat complex matter, I would encourage you to contact me. My firm specializes in cross-border tax and will be able to help you with this matter.
Regards,
Allan Madan and Team
Hello Allan,
Thank you for all the informative articles and I apologize for my poor English in advance. I hope you understand what I’m saying hehe
I’m Korean and I lived in Canada for an year in 2012-2013. I applied for a tax refund before I left and I got total three cheques. When I got the cheque, I was in Australia so I’d kept the cheque until I came back to Korea.
Yesterday I went to bank for cashing my cheque but they set 1 year expiration date from the date the cheque issued for foreign currency cheque. so there was no way that I could cash my cheque through bank.
So What I want to ask is that is there any method that I can cash this cheque by myself without bank except visiting Canada?
Thanks,
Hyeran
The Government of Canada cheques have no expiry dates. If the Korean banks are hesitant to deposit the money, you will have to contact a Canadian bank to get it deposited over here and then transferred to Korea.
Regards,
Hello.
My sister is working in the US as a resident alien on a L1A1 Visa. If she opens a TFSA here in Canada, would the growth be tax-free in the US as well? We don’t want to open an account if it’s not going to be completely sheltered.
Hello Flilippo,
Only residents can contribute to TFSA’s. If your sister is already living and working in America, she cannot contribute to her TFSA until she comes back. She also does not accumulate contribution room while she is away. There are special conditions that allow you to declare yourself to be a resident even if living abroad, but you are then also subject to Canadian income tax. Please see http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/lgbl-eng.html for more information.
If you sister had already opened the TFSA, she would be able to keep the TFSA. She would not be able to make any further contributions as a non-resident, but the TFSA would not be taxable in Canada. However, the US does tax income earned in TFSA on a yearly basis. Therefore, I would not recommend that you sister open a TFSA as a nonresident. If you have any other questions about cross border tax, please let me know.
Regards,
Allan Madan and Team
Good morning,
I am a federal government employee, was posted overseas for 6 years, kept my house and bank account, CRA internaitonal stated as I kept my house and bank account I was not a deemed resident. I was under the impression that 250(1)(e) was an automatic deemed resident. Sent the NR73 before I left Quebec, did not get clear explanation why they did not find me deemed resident.
Thanking you in advance,
Hello Jasmine,
There are specific criteria under section 250 to see if you are a deemed resident including if you were a member of the Canadian Forces, an ambassador, minister or officer of Canada, or if you performed services under a prescribed international development assistance program. If you were deemed non resident based on section (1)(e), this subsection has been repealed and the situation may be reconsidered. As a government employee on contract and with residential ties to Canada, I am surprised you were deemed non resident. Factual residents keep their residential ties and are considered to be working outside of Canada temporarily. Therefore the initial residency decision could have been made on the (now repealed) section (1)(e), or perhaps the length of being out of country established this.
Allan Madan
Hi There,
I am planning to move to Saudi Arabia for prob 5yrs, what are my tax implications. I do not have any assets in Canada; only a student loan, LIRA, bank account. My wife and kids will accompany me. my wife still has a car loan with a bank but does not have a vehicle registered in her name. And she has credit cards with no balance.
Do we still have to file Canadian Taxes? any ideas on a rough calculation guide to help me explore and evaluate my future plans?
Hi Umair,
the CRA looks are your significant ties such as your primary home and family as well as secondary ties (collectively)to determine if you are a Canadian resident for tax purposes. Based on the information provided, it is likely that the CRA will assess you as non-resident when you depart Canada. With that said, you may have sufficient secondary ties for the CRA to treat you as resident. You’ll need to know what they look for in secondary ties and ensure sufficient amount of them are broken. These could include – multiple bank accounts, driver’s license, newspaper/magazine subscriptions, Provincial health plan, registration to religious organization/community organization, etc.
If you break enough of these ties and are considered non-resident, you must also pay departure tax on your assets’ accrued gains since you purchased them. As there are several items that are exempt from departure tax, I highly encourage you to consult a tax professional to look at all of your options.
Best Regards,
Hi Allan.
I landed in Ontario on August 13th, 2010 as a permanent resident and left two months later. Right now, I am working as an English teacher in Japan. Do I need to pay taxes to the CRA while I am working abroad? I have filed the tax form 2010 by showing my monthly income from Japan, but I have not paid the CRA anything. Does filing a tax return keep my permanent resident status alive?
Celestino,
Canada normally taxes you by physical presence, intent, and personal ties to both Canada and countries abroad. In your situation, you would most likely not be liable for taxes in Canada unless you left family or permanent home behind to go work in Japan.
Filing a tax return will not keep your permanent resident status. To retain the right to return to Canada, you have to pass a physical presence test after your date of arrival. Alternatively, you have to have been transferred out of Canada and be working for a Canadian company. You could also be living outside of Canada with a spouse who is a citizen.
Regards,
Allan Madan and Team
Hi,
I have left Canada for good in 2013 March and now I am permanent resident of USA and will never go back in Canada. I have no asset or bank account in Canada anymore. I have closed all. What should I do now? How can I file departure tax return and close everything?
Hi Dil,
You are correct. As you’ve severed ties to Canada and become a non-resident of Canada, you will have to file a departure return for the year your departed. For instance, if you left Canada in 2014, you will have to file the 2014 departure tax return by April 30, 2015. You may choose to file an NR73 – determination of residency status to get an official opinion on your residency status but this is unnecessary and not advised.
The departure return is a T1 personal tax return that reports your departure date and also calculates any departure tax. On departure, you are deemed to have disposed of taxable Canadian property, which will trigger a capital gain. Note that capital gains are 50% taxable.
Once the departure return is processed, the CRA will designate you a non-resident of Canada. You will have no annual tax obligations to Canada other that to report income earned in Canada. In this case, you will have to file non-resident returns to do so.
If you have any further questions, please contact Madan CA. We’ve assisted countless clients in the departure process.
Hi Allan,
Great article.
My wife and I are Canadian citizens. I have accepted a teaching position in Abu Dhabi for 2 years. We will be severing all primary and secondary ties to Canada. I have 2 questions:
1. In regards to the stocks that I own (less than 20k). Should I have them transferred to an institution in the UAE or can I continue to use my online Canadian brokerage? The stocks are all american but it is a CAD account.
2. I was granted a 1 year leave of absence work in Canada in case things don’t work out for us overseas. Does this have any bearing on residency status?
Thanks.
Hi Joe,
Canada and Abu Dhabi do not have a tax treaty in place. As such, the only way to become a non-resident is to sever your residential ties to Canada in order to be considered a non-resident for tax purposes. You have to successfully sever all primary ties and most secondary ties. Primary ties include a dwelling place, spouse, and dependents in Canada. Secondary ties include economic ties (i.e.: investment accounts), social ties, properties, driver’s license, passport, etc.
Assuming the only residential tie you have is the investment account, this will likely not be enough to deem you a resident of Canada. You do not have to transfer the funds. However, upon departure, you will incur a deemed disposition on such assets, which will trigger a capital gains tax on your departure return.
Re: the absence from work, this will help your case as you will have one less economic tie to Canada. However, the fact that you may have an intent to return to Canada may lead the CRA to deem you a resident of Canada.
Best Regards,
I am planning to take a job in Saudia Arabia. Currently my kids aged 22 and 21 and my wife will stay in Cananda. I have a mortgage and OSAP loan and credit card debt, car loan. I will be coming on leave but saty will be less than a year. What is the chance of my becoming a non resident. Thanks
Hi Adeel,
Canada and Saudi Arabia do not have a tax treaty in place. As such, the only way to become a non-resident is to sever your residential ties to Canada in order to be considered a non-resident for tax purposes. You have to successfully sever all primary ties and most secondary ties. Primary ties include a dwelling place, spouse, and dependents in Canada. Secondary ties include economic ties, social ties, properties, driver’s license, passport, etc.
As you have a home in Canada, this will be considered a primary tie to Canada. If you rent out the property while away from Canada this will sever this tie. Further, you must ensure your wife does not remain in Canada as this is also a primary tie. Note that your kids will not be considered dependents as they are over 18 years of age.
In addition to severing primary ties, you must get rid of as many secondary ties as possible prior to your departure. Holding a single secondary tie such as a license or bank account will not deem you a resident but many such ties will lead the CRA to believe you are a resident of Canada.
Hi Allan
I have worked full time in China for 19 straight years and have never filed NR73 Form before my departure from Canada. I have opened my own construction consultancy business 5 years ago in China.
In Canada I did purchase a home last year as a non-resident with a mortgage from my bank as a non-resident, my home is not being rented out, i own a vehicle just purchased this year, a valid driver’s license, no other investments nor medical coverage etc.
1) Do you think I classify as non-resident of Canada.
2) When I return to Canada to live full time I believe I will need to bring back all my company records, monthly banking statements, tax payment receipts etc.
Thank you.
Kirk
Tax residency in Canada is based on primary and secondary ties. The new home in Canada may be considered a dwelling place (primary tie) and may force you to be resident of Canada.
However, where there is a tax treaty in place, the treaty tax precedence. According to the Canada-China tax treaty, your residency will be determined based on the following criteria (in order of importance):
1. where you have a permanent home;
2. where you closer economic and social ties;
3. where you have a habitual abode; and
4. where you are a national
Based on the tax treaty and your information, you seem to be a resident of China. You can file an NR73 to get an official opinion from the CRA but this is not required or recommended.
Regards,
Hi there,
I will be establishing myself somewhere overseas to teach English and ” live there defacto permanently” and give up any and all canadian residency status. I will have no canadian address, rrsp, license, credit card, or medical care, nor will I have any familial ties/responsibilities. I will withdrawl my 49000 from tfsa and deposit it into a foreign account. My only problem, and it is a good problem to have, is that I receive a 50,000/ year government of canada pension. My question is where can I set up where I will not be obliged to pay taxes on this amount or is there an area where I can limit any withholding taxes? Also is there any problem in moving my tfsa offshore? Kind regards, jet
Hi Jeff,
Non-resident withholding tax is 25%. However, you may be eligible for treaty reduced tax rates depending on where you reside. The following link shows the treaty rates on pension income for the countries that have a tax treaty in place with Canada. http://www.servicecanada.gc.ca/eng/services/pensions/international/nrtax.shtml
You can choose to file a Section 217 election to recover over withholding of non-resident tax.
Regards,
Hi Allan,
I’m a Canadian citizen that has lived in the US for the last 10 years. I got married earlier this year to a fellow Canadian who’s also based in the US. Next year my husband will be returning to Canada to complete a graduate degree. I will be doing a year-long consulting assignment in Hong Kong beginning January, 2015. I was planning on visiting him in Canada every other month for about a week at a time. As you mention above, one of the primary factors when determining your Canadian residency status is where your spouse lives (I have no other primary or secondary ties to Canada). Do you think my husband living in Canada combined with my visiting him 6 times in 2015 will result in the CRA considering me to be a Canadian tax resident?
Hi Grace,
Under domestic legislation, you will be considered a factual resident of Canada because you will have two primary ties to Canada: a spouse living in Canada and a home available for use in Canada. You also have a home available for use in Hong Kong so you could also be considered a resident of Hong Kong. If you have a home available in both countries, you must examine the treaty between Canada and Hong Kong to apply ‘tie breaker’ rules. According to these rules, where you have a home in both countries, you are deemed to be a resident in the country where the individual’s economic and personal relations are closer. These include spouse, family, job, bank account, credit card, licenses, clubs and memberships, health insurance, retirement accounts/ pensions etc. If you are a resident of Canada, you will be liable for Canadian income tax on the worldwide income including Hong Kong; however, you will receive a foreign tax credit for Hong Kong taxes paid to reduce double taxation.
Allan Madan
Hi,
My name is Matt and I’m a private chef on a motor yacht.
Our boat is registered in the martial Islands.
Ill be working at this for a another 2 years or so and, yes I do own house on Ottawa.
What are my choices for not to pay taxes.
Thanks you
Hi Matt,
Sorry for taking so long to respond to your question. To answer your questions you will be taxed on all your world wide income in Canada. Since you own a house in Canada it is seen as a significant tie to Canada. By having even 1 significant tie you will be taxed on all your worldwide income in Canada. Unfortunately unless you sell your house and break ties with Canada you will have to pay tax here.
thanks
Hi Allan,
I might have an opportunity to work overseas for about one to two years through my firm. I will not be giving up my Canadian residency. My question is, who will I pay taxes to? Will I owe anything to Canada, like EI and CPP?
Hello.
Since you will not be giving up your Canadian residency, you might have to pay taxes to both countries. Depending on the country, Canada may have a foreign tax treaty. This would enable you to get a credit on your return for at least a part of the foreign taxes you paid. Some companies actually pay the taxes on your behalf and give you the T4 in Canadian dollars. They would also give you a letter stating how much foreign tax you paid, to use on your Canadian return. I would recommend asking your HR department how this would work. Also, look to see if your employment would be eligible for the Overseas Tax Credit.
Regards,
Allan Madan and Team
?
Allan,
Thanks so much for all the valuable details on your website. I need your advice on what I should do.
I left Canada 10 years ago. I work in HK and live there permenatly. I have ties in HK such as health benefits, credit cards, investments & bank accounts.
I plan mortgage a house in canada this year but I won’t be moving back to canada for a few more years.
I come back to canada to I visit my parents yearly. 10 years ago when I filed my taxes, I deemed I am Non-resident. I did not file a NR 73. I have no primary ties in canada other than 2 secondary ties, such as my AB drivers license & a bank account.
Will I be regarded as non resident when I mortgage a house? Will it be best that I file NR 73 this year to ensure that I am a non resident before mortgaging?
Looking forward to your advice.
Thanks so much.
Dianne
Hi Dianne,
No, establishing a mortgage under your name won’t the sole reason why you lose your non-resident status. As long as you don’t own the property that you are mortgaging so that you can live in it, you should be safe.
It never hurts to file a NR73.
Based on the information provided, and a very rough idea, it does not seem that your non-resident status would change if you took the mortgage.
Hi Allan,
I have landed in BC and received my PR card four months ago. Now I am planning to live and work in Dubai for the next three years. I might visit Canada only once a year. I have only Canadian mobile number, bank account, and driving license. I am single and have been unemployed for the last four months in Canada. Do I have to pay tax to Canadian government while I will be working in Dubai? Before I leave Canada, do I need to file departure tax return, or any other forms? Thank you.
Hi Marjan,
Based on the information provided, you:
1) Stayed in Canada for less than 183 days, and
2) did not establish significant ties to Canada (i.e. you only had minor ties like license, accounts, etc.)
As such, you were not a resident of Canada for tax purposes and do not have any tax reporting and/or payment obligations. You will not need to file any returns/forms.
I have a complicated question. My family resides in Europe 6-8 months out of the year and we have home in Canada, cars, ,etc. The kids go to private school in while Europe from Sep – June. The wife has started a small business importing products from Europe and reselling in Canada/Northeast US which requires some visits to Europe (training, etc). In total, we spend about 4-5 months in Canada off and on and 6-8 months in Europe (i.e. come home for extended holidays around Christmas, Easter, etc). All income will be generated in Canada.
What expenses can we deduct on Canadian Income Tax return with respect to to 1) Kids private tuition expense in Europe, 2) flights, travel, accommodation, meals, etc expenses while in Europe (Cdn return?) because of the overseas corporate head office visits 3) any other expenses?
Thanks
Hi Sermo,
1) the tuition fees paid may be deductible, if certain criteria is met. More information on the criteria is available in the link provided.
2) if flights, travel, accommodation, and meals are with respect to conducting business, then those expenses can be deducted from the income. You should be able to support as to how the expenses are for business-purposes.
3) Advertisement, salaries/wages, rent (home office – including mortgage interest, security, cleaning, property tax, insurance), office, supplies, etc. See link below for more details.
Tuition fees: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/323/lgbl-eng.html
Expenses: see page 3 of http://www.cra-arc.gc.ca/E/pbg/tf/t2125/t2125-13e.pdf
dear Allan
at first thank you so much for all your information
i am permanent residence in Canada
i landed in Toronto in 06/2010 and leave Canada for more than 3 years
i worked in Saudi in this 3 years
i come back again to Canada in 02/2014 and i will still in Canada
i never did any Tax in Canada
my question now i will do my first time tax in Canada
if i don’t say my correct salary in the last 3 years in Saudi will i have any problems in the future especially
when i go to renew my PR or to become a Canadian citizenship
( sorry if my English is not good )
regards
Hi Ahmed,
You may not have to file tax returns in 2010 to 2013 because you may not have been a resident of Canada for tax purposes. You were not a resident if you did not have a home, dependants and a spouse in Canada in those years.
In 2010, if you stayed in Canada for less than 183 days and did not establish ties (spouse, home, dependants) then you may be a non-resident.
In 2014, since you arrived in Canada, and have stayed for a while, you will file in 2014.
If you are a non-resident for those years then you will not have to report and pay tax on the Saudi salary.
Best Regards,
good day! i am a filipino citizen working in qatar. my ex-wife (she divorced me) and my 3 children are living in canada as permanent residents. I have a 13 year old son that I am supporting right now. does canada and qatar have reciprocity agreement? I am presently supporting my child regularly on a monthly basis but my ex-wife is insisting that my support is not enough and she’s always bothering of suing me. can he sue me for that?
Hi Jerry,
No Canada and Qatar does not have reciprocity agreement. Regarding your second point we are not family lawyers to comment on such a matter, unfortunately. You should consult a family lawyer for information on this. We have a few recommendations we can make as to which lawyers you can consult.
Hello Allan,
I have a watch repair company in Canada and I would like to send my son to Switzerland for 2.5 years to be trained as a watchmaker. Watchmaking is a dieing art and I am having extreme difficulty hiring talented watchmakers. My question is, can my company pay the tuition and living expenses while my son is in Switzerland and how would this affect his personal taxes. He is currently 18 years old.
Hi Chris,
Any expenses that the corporation pays for your personal purposes (i.e. not for business purposes) will have to be included in your personal income.
Sure, you can try and argue that the tuition and living expenses are for the business. But these expenses have to be incurred in pursuit of a profit, and since these expenses don’t directly and immediately result in revenues for your company, they can get rejected.
Best Regards,
Hi there,
My husband has been temporarily relocated to Germany and brought the family along. We are both Canadian citizens by birth. I do not work, although I hold assets in Canada that yield an income. I file annual tax returns with CCRA/ pay if required. My husband is not on these investment accounts.
We have retained our home/health insurance/ bank accounts/credit cards etc. as we fully intend on returning.
I also hold significant assets with Canadian banks and brokerages jointly with a family member.
Rumour has it that the Germans may be looking to benefit from my temporary relocation.
Can you confirm that this is possible? :S
Hi Violet,
As you hold a number of residential ties to Canada and intend on returning to Canada, you both will be considered residents of Canada for tax purposes. As such, you will be required to report worldwide income (including income from Germany) on your Canadian tax returns. You will certainly have to file German tax returns to report income earned there. To avoid double tax, you will receive a foreign tax credit in Canada for any foreign taxes paid.
I’m not familiar with the tax laws in Germany regarding temporary relocation. You should talk to a German tax accountant. However, the foreign tax credit in Canada can be claimed on all foreign tax paid so you will not be subject to double tax.
Hi There,
I am a Canadian Resident that worked and lived in the London England from September 2007 to December 2008 as a dual citizen of Canada & UK (on work using my UK passport) and was taxed from my new employer where I also had a UK pension plan. During that time, I still had many secondary ties in Canada (e.g bank accounts, health card, DL, RRSPs), and was even on a leave without pay from my Canadian employment (where I had also put my employer pension plan on hiatus). Upon my return to Canada in 2009 I started back with my employer and I did not file a tax return in Canada for the foreign income I made in tax year that I was in the UK. We have no remaining ties with the UK other than the funds still within the company pension plan through Scottish Widows (about 5000 pounds), which I would now like to transfer over to Canada. What are the tax implications if I try and transfer the UK pension funds over to a bank here (through a QROPS arrangement), since I didn’t file a tax return? Will they (the bank here or Scottish Widows) know (or contact CRA) during the course of the fund transfer that I didn’t file a claim? What is the penalty ? Will they just take more tax away from the transfer amount or will they make me fill out a tax return for that tax year prior to a transfer? Please advise.
Hi Astrid,
We need to get this corrected, but it can be done. You and your husband should have filed Canadian departure tax returns for the year that you left Canada. This is because you and your husband did not maintain any primary ties to Canada. [A rented home is not longer a primary tie to Canada]. As non residents of Canada, you are not taxable on your UK income in Canada.
Then, we need to file T1 adjustments for the incorrectly filed returns, removing the UK income for the period of non-residency. We also need to file the applicable departure forms.
Third, we need to file a Section 216 Non Resident Rental Return for the years that you were non-residents of Canada. This return reports the rents collected and the associated expenses.
Finally, we need to complete the NR73 form to prove that you and your husband were non residents. I recommend that we file all tax returns and related departure forms pursuant to the Voluntary Disclosure Program, so that you can avoid penalties, and reduce interest levies (if any).
If you cash out your UK pension, you will likely be subject to UK withholding taxes. The gross amount of the pension (before withholding taxes) must be reported on your Canadian returns. You can claim a FTC for withholding taxes paid. If you don’t report it, you will be subject to gross negligence penalties of 50% of the unreported income.
Please let me know if you have any questions.
Hello there,
I am Canadian citizen, we recently moved to US because my husband found a job, he is in a working visa and my children & I are his dependents here. We still have our drivers licenses, bank accounts, credit cards, RRSP of our children and life insurance, we sold our condo. I am still receiving UCCB …etc…Are we considered residents of Canada still? Temporary residents? We didn’t do the 6 steps you mentioned. What do we need to do?
Thanks,
Maria
Hi Maria,
It seems you still hold a number of secondary ties to Canada. The CRA will evaluate these ties in aggregate and likely deem you a resident of Canada.
However, as you’ve relocated to the US, the tax treaty between Canada and the US may deem you a resident of US and not Canada based on closer ties to the US. I cannot comment further without more information.
To ensure you are non-residents going forward, we would recommend severing as many ties to Canada as possible (i.e.: bank accounts, credit cards). Upon doing this, you will file a departure tax return for the year of departure and notify the CRA that you are no longer a resident for tax purposes. They will then stop the UCCB payments and any other Canadian benefits you currently receive (i.e: GST credits).
If you’d like an official opinion from the CRA on your residency status, you can file an NR73 form. The CRA will then issue an opinion on your residency status for tax purposes. This is not necessary but it’s available.
If you have any further questions do not hesitate to contact us. Happy holidays!
Hello Allan,
I am a Canadian citizen. I hold a Canadian bank account/visa card and driver’s license, have no property or memberships in Canada, am unmarried and have no children. I left Canada after university to travel for three years during which time I did not work abroad and made no income. Then I settled in Afghanistan and have worked low salary jobs (under 2500USD per month, split into 1500USD salary and 1000USD housing allowance) and paid Afghan taxes of approximately 20% for nearly two years. I have returned to Canada less than once per year for under a month at a time, although there was one four month period when I was in Canada, yet I did not work at this time (this was before settling in Afghanistan). Would I be considered a non-resident? I have not filed any tax returns since leaving Canada originally. Would I have needed to file a departure tax return when I left? What else would I need to file to correct this? What would be the penalties if I did not file anything? I plan to return to Canada to complete another university degree next year. Thank you for your help.
Hello Alyssah,
You are considered a non resident for tax purposes. A departure tax return should have been filed when you left. Form NR73 (Determination of Residency Status) should be filed to decide your status as a Non Resident. Form 1161 (List of Properties by an Emigrant of Canada) states that because you have not filed these forms in more than 100 days, there is a penalty of $2500. Otherwise, because you didn’t collect any income in Canada, there will be no taxes to pay.
If you submit a form NR73 to CRA:
1) How long does it take for CRA to make a determination?
2) What do they send if you are deemed a non-resident? A certificate or letter or something? What exactly does it say and can it be relied upon or used to NOT file Income Tax and for how long? Does it need to be renewed?
Thanks.
Hi Jose,
In my experience, it takes 12 to 16 weeks for the CRA to make a determination. Once they do, you will receive a letter from the CRA that states that you are deemed a resident or a non resident. If you are deemed a non resident, you do not file tax in Canada. This lasts however long you are not residing in Canada or however long you do not have dependants in Canada.
Hi,
I’ve accepted an offer to work in san francisco and plan to work there for 2-3 years. I’ve been contemplating changing my resident status, but unsure if its in my favour to do. I also own my condo (primary residence) in Toronto. I would love your input on what you think I should do. Here are some things I’m contemplating:
– presumably if i dont sever my ties, ill be taxed on my US income, but san francisco (i think) has a comparable income tax rate to Toronto, so doesn’t make a difference there (correct me if I’m wrong) and I’ll be able to save the hassle of severing my ties
– i dont mind renting out my condo, but I’m not sure how i should go about it properly. I want to avoid paying capital gains tax on it since it is my primary residence as of right now, but when i move to san francisco, it wont be.
Thanks for you advice, looking forward to your reply.
Hi Raymond,
Thanks for contacting me. You are correct in that California imposes a heavy income tax on earnings. The combined federal and California income tax rate is comparable to income tax rates in Canada (Federal + Provincial).
Without a detailed calculation, I won’t be able to tell you how much taxes (if any) you would be saving by becoming a non-resident of Canada.
If you rent your home, you will need to file a Non-Resident Rental Return (know as a section 216 return) annually with the CRA. I can prepare this return for you. In addition, if you rent your home while away, and then decide to move back into your home when you return to Canada, you will be liable for capital gains tax. This is because your home will be deemed to be sold when it changes from a rental property to a principal residence.
However, if your Canadian home is left vacant while you live in the US, there will be no capital gain realized when you move back in.
Thanks,
Allan Madan
Hi Allan,
Background: I am a Canadian resident, married with 2 children in British Columbia. My wife is a stay-at-home mom. I have been offered a job to work a rotational 21/21 schedule out of Norway. I will be out of the country for more than half the year and my family will remain in Canada. The company I am to work for is based in Geneva, Switzerland and my salary will be in Swiss Marks CHF. All local taxes in Norway will be paid by my company. The Geneva-based company will pay all of the taxes owed in Norway.
Question: If I pay tax in Norway (but live in Canada), will I be required to pay any provincial or Federal taxes in Canada? Will I be entitled to any tax deductions in Canada even if I am not required to pay any further taxes? In other words, could I receive a tax rebate if my taxes in Norway exceed those of Canada? Would it make any sense to make RRSP contributions on my wife’s behalf?
Thank you for your help.
JJ
Hi JJ,
Yes, as Canadian resident, you will report the wages you’ve earned during the year. You will be responsible for federal & BC tax.
No. If your Norway tax exceeds Canadian tax, Canada won’t give you more credits than needed to reduce Canadian tax to zero (It wouldn’t be fair for Canada to give you money back for taxes you paid to another country!)
It would make sense if Canadian tax is higher than Norway. In any case, you should know that at the end of the day, you will end up paying the tax rate of the country with the higher rate between the two.
Best Regards,
Hi Allan,
You mentioned that if I moved to the U.S. and withdrew money from my RRSP, there is a withholding tax of 25%. What if I moved to Mexico? What would the withholding tax be?
I understand that there is little to no personal income tax in Mexico. Am I correct to assume that I would still need to file a Canadian income tax return and pay Canadian income tax because of the money I withdraw from my RRSP, even if I’m living in Mexico?
Hi Juan,
Thanks for contacting me. Withholding tax of 25% will apply on withdrawals made from a RRSP. When you withdraw RRSP funds while you are a resident of Canada, your financial institution will issue a T4RSP slip to you; this slip will disclose the amount withdrawn during the year and the taxes withheld.
If you leave Canada and become a non resident, you should inform your financial institution (e.g. bank) right away. By February of the following year, the bank will issue a NR4-RRSP slip to you; this slip will disclose the taxes withheld (25%) and the withdrawals made. Non residents of Canada are not required to file a tax return to report RRSP income / withdrawals.
The treaty between Mexico and Canada may reduce the withholding tax on RRSP withdrawals. In addition, you should consider filing a Section 217 Tax Return to recover some (or all) of the taxes withheld by the CRA.
Thanks,
Allan Madan, CPA, CA
Hi,
I am a canadian Citizen working for a canadian company, I work from home office every other month in states. I get my salary half in us founds and have in canadian founds. I pay taxes to both country but my tax residence is united state. I file for canadian part of my salary in canada. I want to buy an apartment in canada to stay for those months that I have to be in Canada. Considering the fat that I am paying tax to canada can I buy this apartment as a canadian resident?
Hi Keyhan,
Since you maintain a permanent home in Canada, you will be considered as a resident of Canada under our domestic tax legislation. If you also maintain a house in the US (or are there for half of the year) you will also be considered a US resident.
To avoid double tax, I need to apply the ‘tie breaker rules’ contained in the Canada-US tax treaty, to determine where your center of vital interest are closer to – US or Canada. If your ties are stronger to Canada, you may be considered a non resident Alien of the US and continue to remain a resident of Canada. Non resident aliens of the US file a 1040NR return each year with the IRS and pay US income tax on US source income. Residents of Canada file a T1 General tax return each year and pay tax to the CRA on worldwide income.
If you would like me to perform this analysis for you, and complete the necessary paperwork, please contact me.
Thanks,
Allan Madan, CPA, CA
Hi there, I am a Canadian citizen, considered non-resident for the last 5 years. In the US I have employment, own property, have a driver’s license i, bank accounts/stocks, and consider it to be my permanent address. In Canada I have some bank and brokerage accounts. I have spent more than 183 days in Canada this year (consulting for Canadian clients) but still am considered a US tax resident by SBT. Am I considered a Canadian tax resident now as well?
Hi Tommy,
Yes, you are considered a deemed resident of Canada, because you stayed in Canada for more than 183 days during the year. Canadian residents are subject to tax on their world wide income.
You may be able to obtain tax relief from the Canada-US Tax Treaty, if you can establish that your permanent home is in the US and your center of vital interests (personal and economic ties) are stronger with the US than with Canada. If you can establish this, then you will be considered a non resident of Canada pursuant to the tax treaty between Canada & the US.
Note that non residents of Canada are still liable for tax on Canadian source income.
The other issue that you need to consider is the taxation on the consulting income earned in Canada. Generally speaking, residents & non residents of Canada must pay tax on employment income earned in Canada, even if it was paid by a foreign employer. On the other hand, if you earned the consulting income as a self employed person, then you will likely be liable for Canadian income tax on business profits earned in Canada.
Thanks,
However, you may be able to claim an exemption from C
Allan Madan, CPA, CA
Hi Allan
I am a Canadian citizen who is considering of taking up a long term assignment in Saudi Arabia. My wife will accompany me, however, my kids who are above 18 years will remain in Canada and complete their University studies. I own a home which I am planning to rent out (an arm’s length transaction). I also intend to severe all secondary ties like health card, bank accounts, driving licence, professional membership, etc. My question is :-
1. Do I have to pay any departure tax on FMV of home as it will now be considered as investment property instead of principal residence ? OR do I have to pay the capital gain tax at the time when I will return and convert this property from Investment status to principal residence ?
2. Do I have to withdraw all my RRSP to be considered as non-resident by CRA.
Thanks for your help.
1) Real estate (land and buildings) are exempt from departure tax. Capital gains are applicable when you sell the rental property or if you move back into it. Your tax obligations in respect of the rental property are as follows:
– Non-resident Rental Return each year
– NR6 Waiver to reduce withholding tax from 25% of the estimated monthly gross rents to only 25% of the estimated monthly net profit
– NR4 Slip and Summary to report rents collected and withholding taxes paid
2) No
Hi Allen, Thank you for the article on this subject, very helpful.
I’m a Canadian citizen, and just received a local offer from Singapore with a starting date of 1/1/2015. I’m wondering if my situation can be considered as non-resident for Canadian tax purpose for 2015 and future years
1) no spouse, no kids
2) will move to Singapore for LT career goal
3) will rent or buy property over there
4) the unique situation I have is that I sponsed my parents immigrate to Canada a few years ago, and they live with me right now. I hope I can keep my current property in Canada for them to live there (as they donot much income to rent a nice property by themselves), and may rent a room or two to cover some expenses;
5) may need to keep one bank account for mortgage/rental income/expense, etc
6) plan to convert my canadian driver license to Singapore one
7) plan to keep current accumulated RRSP, TFSA, Optional Pension (ER sponsored), Employee profit sharing plan (ER sponsored), no future contribution of course;
8) no plan to keep other ties, like health card, memberships, etc.
Can my situation be considered as non-resident? Your article helps me quite a lot, but I’m sure if my parent thing would cause any issue here. Thanks a lot!
Rene
Hi Rene,
I have gone through the tax treaty between Canada and the Republic of Singapore. I used it to determine you residency based on information you gave us.
According to the treaty, you are a resident of:
• whichever country you have a permanent home in (and if you have a home in both Canada and Singapore, then the country in which you have stronger personal and economic relations to),
• whichever country you have spent the most time in, or
• whichever country you are a national of
If it cannot be determined still with these rules, then the authorities settle the question through mutual agreement. You have to apply the rules in order, starting from the first.
Since you have a house in Canada and a place to reside in Singapore, we would then decide your residency based on your personal and economic relationships.
For Canada, you have personal ties since your parents are here and they are your dependants.
As for the economic ties, you will still have your RRSP, TSFA and bank account in Canada which reinforce them.
For Singapore, you have a personal tie there since you are single with no kids. In other words, you have much options moving forward. You are also pursuing a long term career goal in Singapore, as well that you are converting your Canadian license to a Singapore one.
Since you’re thinking of renting a room in your house in Canada, you will have to file a section 216 personal tax return.
Based on the information given to us, we cannot conclude exactly which country you have the most significant ties. We would need more information on your personal and economic ties to conclude.
Hi,
Thank you for the article. It is very informative.
My husband has been working for the UN in New York as a consultant (he is not required to pay taxes) since Feb 2014. My daughter and I are still in Canada but will be moving to New York next summer. I understand that my husband will have to pay tax for the year 2014.
When my daughter and I move to New York permanently to join my husband next August, we’ll rent out our current home and keep bank and investment a/c, RRSP and RESP. Will we become non-resident for Canadian tax purposes starting August and just pay taxes from earnings from Jan to July 2015?
For my husband’s tax return for 2014, are his rent, public transportation monthly passes, health insurance premium in New York tax deductible?
Thanks in advance for your time.
Hi Allan.
I permanently left Canada for US in Jan 2013 after filing my tax returns for 2012 but at that time I had not declared my intention to permanently leave Canada. Prior to my departure, I had closed my bank accounts and withdrew all the assets (US $5000) and never really bothered cancelling my OHIP, CC or DL but they all have expired now. I did not have an TFSA or RRSP.
Last week I received a letter from CRA asking me to file tax returns for 2013. I am confused if I should file the returns even though I did not have any income for year 2013 while I was in Canada. If I do file the returns, do I HAVE to disclose my income earned in US ? Also, during this time I got married. In this case, do I also have to disclose my wife’s (US Citizen) income even though she has no connection with Canada what so ever ?
Hi Sean,
When you left Canada, you should have filed a departure tax return for that year (2013). That way, the Canada Revenue Agency will be informed of your exit from Canada. Otherwise, they will assume that you are still a resident of Canada, and will expect you to file a tax return in Canada each year.
Once you become a Non Resident of Canada, you are only required to file a Canadian tax return if you:
– Carried on a business in Canada
– Earned employment income in Canada
– Sold Canadian real estate
Thanks,
Allan Madan, CPA, CA
Hi Allan, I really liked what article said and while I should always seek professional aid rather than relying completely on online source, I was hoping to see if my train of thought is at least on the right track.
I am a Canadian resident for the foreseeable future, but my main business taps on foreign market, specifically in internet business. Due to the regulation on how much money can move in and out in that country (this country has tax treaty with Canada), I often rely on my private network (friends, families, etc) to wire the money to my bank account in Canada (through international wiring), and I simply report taxes based on the statements of wired money. (So for instance, if I bring $100,000 bacon through international wiring… I report just that in accordance to the Canadian tax laws.
The problem is that there’s not that much of documentations involved due to low digital footprint of this business (my business bank account says it’s online game consulting and internet services), and I know CRA can’t accuse me for tax evasion when my income is easy to track down from bank statements. What I’m worried is if they try to come at me and say unless I can provide classic pin-point business documents that Canada can use…. they will freeze my account and go after me for something seriously sinister… like sex trafficking or drug trafficking. As long as I pay taxes and they don’t see dead bodies/drugs and all that stuff, I should be good right?
Hi Mistral,
You must keep sufficient documentation to support the income you are making overseas. This includes invoices, contracts, and bank statements. If you are using a Paypal account (or another online payment account), then print the transaction history so an auditor can track the movement of money.
Please note that your company’s profits must be computed on the accrual basis, and not cash basis, for accounting purposes. So you have to do more than simply record cash received as income.
Hope this helps.
Allan Madan, CPA, CA
Hi ,
I am a Canadian citizen who is considering of taking one year contract assignment in Saudi Arabia. and contract renew after year further one more years . My wife and children remain living in Canada.
Every month send money my bank account for family experiences, And also file the residence tax . some friend who are working with me in Saudi Arabia .. they advise me to open company in Canada and send money in to company account and draw monthly salary
I want to know what is correct method to file file tax
Thanks
Asif
Hi Asif,
If your dependents remain in Canada, it is highly likely that you will be considered a resident of Canada. Resident of Canada will be subject to tax on their worldwide income. NR73 form is used by CRA to determine your residency status. We can review and fill that form out for you.
Alternately, we can perform an in-depth analysis and outline which ties you have to Canada and recommend a plan to severe your ties with Canada.
I left Canada in 1998 but never took care of filing a departure return. Now I am eligible to receive OAS/CPP but will the lack of a non-resident closure affect my access to these benefits? I have no ties to Canada ever since 1998 (no Canadian passport, driver licence, property, insurance, etc.), but I do have some Canadian segregated funds I’ve kept all these years.
Hi Rob,
It’s very, very important that the CRA be informed of your status as a NR of Canada. The CRA may continue to pay CPP and OAS benefits to you, without withholding taxes in error. Pension payments made to non-residents of Canada are subject to withholding tax of 25%. You would then be liable for taxes not withheld, plus interest and penalties.
To solve this problem, contact the CRA to find out how they have recorded you on their system – as a resident or non resident of Canada. If they have classified you as a resident, then you must submit form NR74 (leaving Canada) to the CRA. The information contained on this inform will allow the CRA to make a determination on your residency status.
Thank You,
Allan Madan, CPA, CA
Hi Allan,
I’m hoping you can help answer a few questions for me?
I moved to China last year for 17 months. I was working/ volunteering. I was invited by a private school who paid for all my housing and supply’s. I would receive some money for food, personal things. However I was paid in cash and have no record of the exact amount I was given. What do you recommencement I do? Will I have to pay a ton of money now?
Thanks,
Meg
Hi,
Thanks for your question. Your residency status would need to be determined to figure out your tax implications. If you were a resident of Canada, you will be subject tax on your worldwide income. If you are a non-resident of Canada, you will subject to your Canadian sourced income.
Please refer to the link http://madanca.com/blog/canadians-working-abroad-overseas-outside-canada-tax-implications/. The article covers tax implications for Canadians working abroad.
Hi
Thanks for your question. Your residency status would need to be determined to figure out your tax implications. If you were a resident of Canada, you will be subject tax on your worldwide income. If you are a non-resident of Canada, you will subject to your Canadian sourced income.
Please refer to the link http://madanca.com/blog/canadians-working-abroad-overseas-outside-canada-tax-implications/. The article covers tax implications for Canadians working abroad.
Hi Allan, I heard that the overseas employment tax credit is getting phased out. Will I still be able to claim the credit next year? I will be going overseas next summer for an engineering job that will last a year, will I be qualified for the credit?
Hi Mitch, yes you will be able to claim the overseas employment tax credit because you will be overseas for over six consecutive months while performing engineering duties. The credit will be phased out in 2016, however, you will only get a percentage of the credit compared to previous years. The qualifying foreign employment income (QFEI) and the maximum QFEI used in the calculation of the OETC for 2015 is 20% of QFEI to a maximum QFEI of $20,000.
To request you OETC, attach Form T626, Overseas Employment Tax Credit fully completed on your tax return. Before you can complete Part 2 of Form T626, your employer has to complete Part 1. If you had work contracts with more than one employer or more than one contract in a period, have a separate form completed by each employer or contract. On line 426 of your Schedule 1, enter the amount from line 17 of Form T626.
Allan Madan
Hi, I will be working in two different foreign countries next year. What is the protocol for claiming a foreign tax credit while working in two different countries in a year? Is it even possible to do this? Thanks for any help you can provide.
Hi Connor, yes you are able to claim a foreign tax credit if you will be working in more than one foreign country during the year. To do this, you must submit a separate foreign tax credit form for each country. If you have business income and non-business income from foreign countries, you will need to submit it using separate forms as well. You will also need to report the income, profits, losses and gains on each form for each country.
The amount of foreign income tax you can claim is equal to the lesser of the foreign income or profits tax you paid or the amount of Canadian income tax you would otherwise pay on the foreign income.
HI,
I have recetely got PR of canada and settled in saskatchwen with my family-working overseas on roatation basis and maintaing 183days in canada to retain my PR.My question is how much tax I would have to pay on my overseas earning(for i:e:If I earn 180000/years),
Please help me out as I dont have any idea about tax.
Regards,
Ali
Hi Ali,
Based on an income of $180,000, your approximate income tax liability will be $62,000. You can claim a foreign tax credit for taxes paid overseas; this will reduce your Canadian tax liability.
Have you considered incorporating a business, and operating as an independent contractor? This may be a better option, but requires further discussion. Please let me know if you would like to speak with me about this.
Hi Ali,
Based on an income of $180,000, your approximate income tax liability will be $62,000. You can claim a foreign tax credit for taxes paid overseas; this will reduce your Canadian tax liability.
Have you considered incorporating a business, and operating as an independent contractor? This may be a better option, but requires further discussion. Please let me know if you would like to speak with me about this.
Allan Madan, CPA, CA
Hi Allan
I am a citizen of Canada and deciding to move to US for employment reasons on a permanent basis. I would have a personal home that I would be renting out before I leave. I do understand that this would be considered as a primary tie and I might be considered as a resident of Canada even though my spouse and dependent children will be leaving with me. Now that I would be taxed at my world wide income – is there a Canadian US tax treaty that would provide any relief in this case or would I be paying double taxation on both my employment income and rental income? Thanks
Hi Ahmed,
Thanks for contacting me. When you rent your house in Canada, you have broken the ‘permanent home’ tie to Canada. This means, a rental property (that was a former principal residence) is not a primary tie to Canada, and will not cause you to remain a tax resident of Canada.
The US-Canada tax treaty also says that you are a resident of the country where your permanent home is located. A rental property is not considered a permanent home. As such, you will be taxable in Canada on your world-wide income up to the time that you have not severed all 3 primary ties and most secondary ties.
For a fee of $300 + HST, I can provide the following services to you:
1. Review of residency analysis
2. Recommendations on how to break ties with Canada
3. Departure tax
4. Identify departure forms
5. Tax impact on your house, RESPs, RRSPs, investments, etc.
6. Answer your questions
7. Written memorandum in respect of the items above
Please let me know if you have any questions.
Allan Madan, CPA, CA
Hi,
I might consider getting a job in Saudi Arabia for 2 years. If I do, I would go with my wife and daughter. I’m a Canadian citizen for more than 6 years and I own a house. I intend to keep the house and rent it. I do not intend to give up my driving licence nor close my bank accounts. I understand that my status will be Canadian resident living and working abroad and I will have to declare my oversees income. I’m not very clear on what exact taxes I would be paying. For a salary of lets say 200k, would I pay federal and provincial taxes (added up to ~47%) as I would work in Ontario?
Hi Cristian,
You may not get a tax relief due to a tax treaty not being in force between Canada and Saudi Arabia. However, you may still be able to claim a foreign tax credit that would be the lesser of the income tax you paid in Saudi Arabia and Canadian tax payable on the foreign income.
Yes, you would still have to pay both the Federal and Provincial tax on your world-wide income. You would owe roughly about $72,541 in taxes ($45,648 federal; $26,893 provincial). This would leave you with $127,459 in income after-tax. The average tax rate would be about 36.3% (72,541/200,000) and marginal tax rate, as you mentioned, 48%.
CPP is payable on Canadian earnings but CPP contributions can be made if Canada has a Social Security Agreement with the other country. In this case, Canada does not have an agreement with Saudi Arabia and so therefore you would not be able to contribute to your CPP. You must apply for your foreign benefits directly to Saudi Arabia’s social security authorities.
The foreign income tax rate in Saudi Arabia is 20% but personal income tax is 0%.
Very insightful article Allan thank you.
I was wondering if you had much knowledge of the “special work site provision”. Here’s our situation. My husband and I and our 5 year old are canadian citizens and have always been resident of Canada. My husband applied for and was awarded a 2 year contract with a company in Brunei (no tax treaty with Canada) and so he accepted the job and we thought we could make it work with him coming home to visit a few times a year and us going to visit him. I had a job that I loved and did not want to leave Canada so when he accepted the job it was to be temporary though the contract did say he had the option to renew for another 2 years if both parties were agreeable. The company provided him with a living allowance and travel allowance for him to go home or us to visit. The travel was too much for us all and my daughter really wanted us under one roof. My husband really wanted us to move to Brunei and so I gave up my senior executive job to move here as a “housewife ” in September. I should say my husband moved in February. We sold our home in Canada, cancelled our drivers license and provincial medical health card and closed all of our bank accounts except one as I had payments coming out for life insurance. After all that my question is do you think he would qualify for the special work site provision from February to September so that we can minimize the tax we have to pay in Canada. He maintained a residence in Brunei and we had our permanent house At home until it sold the end of August. It seems he meets all of the criteria but I don’t know if it applicable when the employer is non Canadian. Cra says that a TD4 has to be filled out but it appears that form is for canadian companies and the company here does not even provide a T4. There is no doubt we are non residents from September onward and that my husband was still a resident of Canada while we were living there but I’m just trying to determine if I can reduce the tax payable on the housing and travel benefits as they are quite significant in amount. Thank you for your time. Charlene
my wife (canadian citizen) and i (permanent resident) of canada live since 2013 in Switzerland.we both live and work here. I have no other family member in canada but my wife has her family members still in canada.we still have our bank accounts and some credit cards and there is a condo under my wife’s name which is being rented.we are planning to stay for another 4 years and i know there is a taxation treaty between canada and Switzerland in order to avoid double taxation.I just wanted to know in case we go back to Canada in 4 year time then do we have to pay taxes?I havent filed the departure tax return as well.Please let me know what is the best for us.Thanks in advance.
Hi Ajmal,
Thanks for contacting me. Since your permanent home is in Switzerland, you and your wife will be tax residents of Switzerland according to the Canada-Swiss tax treaty. I can render the following services for you:
1. File Canadian departure tax returns for the 2014 year
2. Prepare non-resident rental return (Section 216) for your Canadian rental property
3. Prepare NR6 waiver to reduce withholding taxes from 25% of gross monthly rents to 25% of estimated monthly profit from rental property
4. Prepare NR4 slip (discloses rents collected and taxes remitted to CRA)
When you return to Canada permanently, you will become tax-residents again of Canada, and will be liable for Canadian income taxes on your worldwide income starting from when you return.
Allan Madan, CPA, CA
Hi,
I’m considering moving to united states for a 6 months (possibly more) contract at 35$/hour, i have no income in canada, and live in my parent’s home.
I don’t own anything worth more than 1000$ in canada (sum of possessions <10k$).
I do however have a bank account, credit card and line of credit.
I intend on renting an "apartment home" in the USA (arizona), and if possible getting a bank account there.
What taxes would i have to pay, do i have to file non resident form and do i still get to keep and use my drivers license and health cards?
Thank you, great article.
Hi Steve,
Pursuant to the Canada-US tax treaty, you will be considered a resident of the US because your permanent home (even if rented) will be in the US. As such, you will become a non-resident of Canada upon your departure.
If you require, I can prepare and file your departure tax return with the CRA.
Thanks,
Allan Madan, CPA, CA
Hello superAmin,
I am a member of the Canadian forces. Posted to the USA for 3 yrs. As such, I am considered a factual resident of Canada. However, my question is about my spouse. She will not be working in the USA, but only has our bank/investment accounts to tie her to Canada. Would she be considered a resident??? The CRA website only mentions child dependants, not spouses!
Thanks
Hi there,
Very informative website, thank you.
I have a bit of an unusual set of circumstance that I’m hoping you can point me in the right direction on in terms of research/treatment:
– canadian passport holder who emigrated from Canada in 2007 to a non-treaty country
– returning 2015, mid year, for a period of 365 continuous days, with anticipated departure date of mid-year 2016
– spouse and child returning with me for this period
– departing back to the non-treaty country at that time with no plans to return to Canada on a temporary or permanent basis thereafter.
– while in Canada (Ontario or Alberta) for that 365 day period, I will work remotely from my home office for my overseas employer, receiving salary and bonus payments into my offshore account.
I can’t find any guidance for this type of temporary stay in Canada. It “appears” like I would be ordinarily residing in Canada and subject to full income tax for the period I’ll be in Canada for. My income is substantial so the thought of paying a ridiculous sum of money to CRA while not receiving any health/education/social services benefits seems obscene.
Are there any relief provisions? Working holiday type conditions that would see the tax burden significantly reduced?
Thanks in advance.
John
Hi John,
Hello John,
As most people on from the CRA would say, this can only be speculated with little certainty unless filing a NR74 to get a written response from the CRA for this determination.
Based off the information given, there is little flexibility in regards to your residency. It is clear that your economic ties are with the country you have been residing in since 2007. Residential ties, economic ties and social ties are used to determine your status. Because of the extended duration of your proposed stay being longer than 183 days in a whole year, it is likely you will be deemed a resident and taxed on your worldwide income. This would not be the case if there were a tax treaty that recognizes your economic ties with this country. Do you have a permanent place of residence where you are now?
My only recommendation if you want to avoid tax implications is to limit your stay for less than half a year though with a child and spouse I understand this may be difficult. The length of your stay makes it not possible to consider this a work holiday situation. Also, because there is no tax treaty, you will not qualify for a foreign tax credit.
This is a unique situation and though your circumstances could be tied to a non resident working abroad, because of the length of time and the lack of tax treaty, this will result in taxed income.
Thank you for the informative response Allan.
As a quick follow up query though – my planned dates of arrival and departure will see me in Canada for <183 days in calendar 2015 and <183 days in Calendar 2016. My research into the Act and available/relevant case law points to the sojourning rule being strictly evaluated on a calendar year basis – with no consideration given to time spent in country in a previous or subsequent year (ie: no issues with back to back, consecutive <183 sojourns across tax years).
Are you aware of any guidance that contradicts my understanding/interpretation of the sojourning rule?
Again, many thanks.
Best,
John
Hi,
It has not been confirmed however, I was wondering if I were to accept a job in the USA which is geared toward it being a permanent resident, what should I do with my home? My idea is to rent it out while away in the US, so if there is a chance I come back to Canada I have a home. What are the tax implications? I would cancel everything else but keep the property. Thoughts on this? I really need advice. I want to keep the property.
I live in the USA.
My home was turned into a rental property when I left. And other strong ties severed as well as most secondary ties.
Can I make payments towards the mortgage, would doing so constitute as a strong tie to Canada?
You can continue making payments on your mortgage without affecting your residency status for tax purposes.
If you became a non resident of Canada, then you will need to file a departure tax return, withhold taxes on rents collected, and file a Section 216 Non-Resident Rental Return each year.
Hi, very consistent in replying to questions, fair play!
I am Irish and am on a 2 year working holiday visa in BC. I have been paying CPP in all my jobs and am planning on moving back to Ireland shortly (4/5 months before my 2 years expire). Can I reclaim all of that CPP when I leave or does it get held until the age of retirement?
Thanks in advance!
Hi,
My situation is a bit complicated. I left Canada with my then husband to the states at the beginning of 2008. I worked in the states for a year and filed my taxes only in the states and was supporting my spouse. We moved to Asia where I continued to support him till we got divorced in 2012. I never once filed for taxes as I was ignorant of the laws.
I have no primary ties.
Secondary ties:
Bank accounts that got closed due to inactivity
Two credit cards that have not been used since i left and one is now closed.
A car that I took to the states and sold there when I left.
Drivers license that expired in 2011
Provincial health care that I was only been able to retroactively cancel for 2013 and 2014.
I obtained an American drivers license in 2008.
I have made three trips back to Canada since I left. Once to obtain the TN visa, once to exit upon expiration of the TN visa and once as a trip with my ex to visit family and friends.
I cashed in one GST at the beginning of 2008 but have not received or done so since that one check.
I plan on returning to Canada end of this year and I am wondering what I should do. I did file for my last year in Canada (2007) but honestly cannot recall if I said never returning or the address that was entered.
I am working on getting my tax information from the IRS but it will take a couple of months.
In addition, I do not have my spouse’s information and will not be able to get it from it.
Just wondering what to expect and what to do with this situation. Would I be considered a non resident or is it unclear especially for the years where I had health coverage? How would I be able to claim credit for supporting my spouse without his information? I did not make a whole lot of money, around 25k with the exchange rate.
I work and live in Algeria for over half the year, I work in the oil and gas industry, I am not working for a Canadian firm, I have my wife and young kids in Canada; I also have a mortgage and car loan. I know I am a resident of Canada, and Algeria and Canada has a tax treaty. After all deductible expenses, I pay more taxes in Algeria than required in Canada but this is only applied as a federal foreign tax credit, I have not been able to apply this to the provincial (Alberta), I was given the impression that the tax treaty only applies to federal. Every year , I end up having unused federal tax credit and still pay provincial taxes on my income from Algeria .
Can I use taxes paid in Algeria as credit on my provincial taxes? if so , how can this be done ?
Yes, you can claim a Foreign Tax Credit against Albertan Income Taxes for taxes paid in Algeria. Complete form T2036 and carry the result to line 44 of Form AB428.
Allan Madan, CPA, CA
Hi,
Thanks for posting this information. I am a Canadian resident working in Hong Kong. My question is, if I declare non-residency and remain in Hong Kong for the next few years, and then move back to Canada afterwards and reclaim my Canadian residency, will my financial assets that I plan to transfer back to British Columbia (income earned in HK, profits from investments, sale of property in HK, etc.) be taxable? If so, how will it be taxed?
Also, since there is an income tax treaty with Hong Kong, are there certain requirements that I must meet in order to be eligible for the Foreign Tax Credit?
Thanks for your help!
Hi Chris,
The financial assets that you accumulate in Hong Kong, while you are a non resident of Canada, can be brought back to Canada without having to pay Canadian tax. However, any increase in the value of your assets in Hong Kong while you are a resident of Canada will be taxable to you in Canada when those assets are sold.
When you return to Canada, the adjusted cost base of your foreign assets for Canadian tax purposes is equal to the fair market value of those assets upon your return.
Thanks,
Allan Madan, CPA, CA
Hello,
Great article and your comments sections had a lot of info that I needed. I have a question, which I hope you can help.
I am from Indonesia and am a permanent resident of Canada. I plan to contribute to my RRSP,and would like to understand the implications if I emigrate from Canada.If i take out the funds from my RRSP, I understand that I will have to pay withholding tax on the funds of 25% (world wide tax), but will I have to pay income tax too on the funds that I withdraw? What if I severe all ties? Also, could I remove all the funds in a lump sum?
Thank you
Hi,
Thank you in advance.
I’m a Canadian living in Germany. I don’t have any ties to Canada, except I receive T4A funding for a postdoc position at a German institution. I have received this funding from fall 2014 on after moving to Germany in spring. Stipend incomes are not taxable in Germany – if I file a German tax return, does that mean I don’t have to file a Canadian tax return, or will I still have to pay Canadian tax for the T4A income although I haven’t lived in Canada for most of 2014?
Thanks again!
Hi Tris,
Residence for Tax
As a first step, you must determine your residence for tax. As a non-resident for tax in Canada, you would only be taxed on Canadian source income, whereas as a resident you would be liable for tax on world-wide income.
As you have mentioned that you do not have any ties to Canada, it is likely that you would be assessed as a non-resident for tax in Canada, as Canadian residence is determined with respect to the maintenance of “primary residential 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;
In the absence of the above ties, receiving Canadian T4A income while living in Germany is not sufficient for you to be considered a Canadian resident for tax.
Filing a 2014 Canadian T1
Please note, however, that you would still have to file a Canadian personal tax return for 2014, even if you are no longer considered to be a Canadian resident for tax purposes at the end of 2014. The reasons for this are as follows:
• You mentioned that you moved to Germany in the spring – as such, you would likely still be considered to be a Canadian resident for tax prior to your departure.
• Assuming that the T4A income is Canadian source income, you would still have to report and pay taxes on this income as a non-resident of Canada.
The following CRA income tax folio, S1-F2-C3: Scholarships, Research Grants and Other Education Assistance, may be helpful to review regarding your pos t-doc T4A income:
http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s1/f2/s1-f2-c3-eng.html
Please note the discussion of Post-doc fellowships at paragraphs 3.36 to 3.38 . Compensation received as a post-doc fellow is generally considered taxable in Canada, although the nature and characterization of amounts received are determined on a case-by –case basis.
Please let us know if you have any further questions, and we would be happy to help!
Hi Sir,
My sister employer is a US based company in Retail and just asked my sister to take an opportunity in their US Head Office (based in Ohio). She is a canadian citizen and has been working here since the age of 17. She has been working for the US based company here in Montreal as they had an office here..however, we are not 100% sure what is required from her if she does decide to work in the US…she will still have her family here in Montreal, she has her RRSP, TFSA, etc…accounts. Our biggest questions is what would be expected in terms of Taxes from a canadian citizen who would work in the US.We dont know how to go about these processes and she wants to do the right steps without loosing her advantages here in canada as well.
Any info and help will be much appreciated.
Thank you.
Hi Skip,
First, we need to determine her residency status for tax purposes. Based on the facts provided, if her family (spouse and dependents) remains in Canada, she is likely to be considered a resident of Canada as she has significant personal ties. However, we may need to consider other factors such as length of her employment, does she have a place of dwelling in Canada, etc. to clearly determine her residency for tax purposes.
If she remains a resident of Canada and a nonresident of the US, she will first report the employment income in the US and pay US tax. She will then file her Canadian tax return to report the same employment income as well as any other income she may earn (example.. investments). To avoid double taxation, Canada will provide foreign tax credits for the amount of US taxes she pays on her employment income earned in the US.
If she will be employed in the US for a long period of time, it may be advantageous to cut enough ties to Canada to become a nonresident of Canada. The reason is because Canada has a higher tax rate, she will most likely end up paying the Canadian tax rate on her employment income. If she cuts enough ties to Canada and becomes a nonresident of Canada, she will only be responsible for paying US taxes. However, other areas of her tax situation must be factored in before making this determination.
Hi Allan,
Thank you so much for your excellent article. I have a question, if you have time. I am working for the United Nations in Africa from Dec. 2014 until May 2015, on a temporary consultancy contract. Do I need to declare my income to CRA? And will the income be taxed? This UN agency is based in Italy and I have no affiliation to a Canadian recruiter or employer. I am also not taxed in my duty country.
Thank you,
Alina
Hi Alina,
Hi Alina,
Thank you for your question!
The first step is to determine your country of residence for tax purposes. You have not indicated whether you were originally a Canadian resident prior to moving to Africa, but I am going to assume that was the case in answering your question. The CRA will look at whether enough ties have been maintained with Canada, or whether you have severed all significant ties to Canada. Key items to look at would be family members and a dwelling place left in Canada.
The following CRA link outlines some factors used by the CRA in determining your tax status with respect to Canada:
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html
It would also be cautious to carefully review the tax treaty in place between Canada, Africa and Italy to figure out your residence for tax.
Tax treaties between Canada and various countries can be found at the following link:
http://www.fin.gc.ca/treaties-conventions/in_force–eng.asp
Please note that tax treaties are in place between both Canada and Italy and Canada and South Africa.
Once your residence has been determined, the tax legislation of the country of residence will dictate how your UN income is reported for tax purposes.
Should you be considered a Canadian resident for tax, you will need to declare your income to the CRA. Note, however, that the Canadian Income Tax Act allows UN employment income to be earned on a tax free basis by allowing for any income earned from employment with a prescribed international organization to be deducted under subparagraph 110(1)(f)(iii).
In order to qualify for the full deduction under Canadian tax law, two key conditions must be met:
1. Employment has to be either with the UN proper, or with a specialized agency of the UN under Article 63 of the Charter of the United Nations
2. The individual must be an Employee, as the deduction is only available for employment income.
Your employment contract should be reviewed carefully to ensure that the above two conditions are met. As you have indicated that you are currently on a “temporary consultancy contract”, determining whether you have been earning “employment income” rather than income from self-employment will be critical.
Please do not hesitate to contact us should you have more questions about your case, we would be happy to help.
My husband is on a TN visa in the US and me and my son are living in Canada. I have resigned my job as of Dec 31st 2014, my husband intends on taking me on a TD status to US, however I would be coming back every alternate 4 months to live with my son who is in engg school here. I ahve two questions:
1. Can i work part-time in Canada if I have a TD visa status in US in the 4 months that I am here.
2. If we sell our home (both primary and rental) while I am on a TD visa status in the US what are the tax implications?
Hi Allan,
I’m thinking of moving to France for a year and I have a few questions regarding taxation that I would like to ask you about:
1. Before leaving Canada I am required to file a NR73 with the CRA to determine my residency status?
2. I work remotely for a company based in Vancouver and I will continue to work for this company while I’m over in France. Am I correct that this, along with the fact that I’m going to be renting out the house I own here in Canada while I’m away, still makes me a Canadian Resident?
3. Since I’m going to be in France for more than 183 days, I will be considered a “tax resident” in France and they will want to tax my worldwide income. Due to the Canada-France Income Tax Convention I can avoid being taxed twice on this income (having already paid Canadian Income Tax on the work done for a Canadian company), and I can offset some/most/all of the French taxes with a tax credit?
4. After converting my primary residence in Canada to a rental property any rent collected will be taxed by the CRA as income?
Any insight/advice you may have regarding these questions would be greatly appreciated.
Thanks in advance!
Hi DS,
1. It’s optional. Filing form NR73 is beneficial if you want a definite ruling regarding your residency status. From our experience, severing all of your primary and most of your secondary ties to Canada, AND establishing new ties with your new country of residence, is sufficient to become a non resident of Canada. You will still have to file a departure tax return, in either case.
2. If you rent out your house in Canada, it will no longer be considered one of your primary ties to Canada since it will be unavailable for your personal use. Keep in mind that you are required to remit taxes to the CRA equal to 25% of the gross rents collected on a monthly basis. You have the option of filing a Section 216 Return to have any excess withholding tax refunded back to you. For more information on this, please contact us.
3. Under the Canada – France tax treaty, you will be considered a resident of the country in which you have a permanent home. If your family and the home in which you are residing are both in France, then you will be considered a resident of France pursuant to the Treaty, and a Non-Resident of Canada.
4. You will be responsible for remitting a monthly tax to the CRA equal to 25% of the gross monthly rents collected.
Hello,
I am canadian resident. I left the Canada last month to live with my husband in Singapore. He has been working in Singapore since March 2013. We are planning to come back in Canada in 2 or 3 years. I was wondering if I am taking a contract with a Canadian company, what would happen. The total income would be around $1000 and would be paid in Canada (working from Singapore). Will my husband will need to declare his revenue in Canada and have to pay taxes in Canada because I got a small income in Canada? I guess I will need to declare that small income and pay taxes if it applies (I already have an income to declare from January 2015-March 2015). I do not if I am clear (it is already confusing for me), but thank you in advance.
Hi Allan,
I have a question for you. (So glad I found your site!) I am a Canadian citizen who has been married to an US citizen for 20 years. We have been living in the US during that time. Two years ago I came back to Canada to take care of some family business. During that time I inherited some money in Canadian funds and now have it invested in mutual funds. Can I continue to hold any kind of mutual funds in Canada when I return to the US? If I do, must I pay taxes on them in Canada and in the US? I am now retired and do not plan an earning income in either country. The taxes I will pay here will only be on the earnings from my investments.
Dazed and Confused….
Hi Allan,
Thank you for your generous information and advice.
I am a Canadian citizen who has returned after working abroad full time for 5 years. I did not have any “primary factor” ties in Canada during this time, but I did (a) visit once per year (for less than 185 days) and (b) maintained a Canadian bank account (which was necessary for paying my student loans), but did not maintain any signficant assets or earn any interest income.
I returned to Canada permanently at the beginning of December 2014. Upon filing my 2014 income taxes with an accountant, I was told that according to the tax treaty I would be given a tax credit for the taxes paid on the 11 months of income abroad, but that as a new Canadian resident I would owe the difference in income tax to the Canadian government (since the foreign country has the lower tax rate). Does it make sense to be considered a Canadian resident for 2014 and taxed in this way, given that I lived in Canada for only one month? In case it matters, I did not end up filing a departure return when I left Canada 5 years ago.
Thanks in advance!
Hello Mr Madan,
thank you for this important information!
I will be leaving Canada to work abroad starting June 1st 2015 and am in the process of submitting the NR73 form. So I don’t know yet whether the CRA will consider me as a resident or non-resident of Canada.
However, you mentioned in Step 3. “Stop Receiving Tax Credits” that “Canadians working abroad, overseas, outside Canada must tell the CRA that they no longer want to receive payments or credits for GST, etc”.
The thing I’m concerned about is the CRA sending me the GST/HST sales tax credit benefit for the 2014 tax year (during which I was a resident of Canada) in 2015 (during which I *might* be considered a non-resident of Canada). If the CRA determines I’m a non-resident of Canada as of June 1st 2015, will they then ask for the GST/HST sales tax credit benefit back, plus interest, plus penalties?
Thanks!
Rebecca
Hi Rebecca,
Yes, the CRA will ask you to payback the GST/HST credits that you received while you were a non resident. Interest and penalties will also be charged.
Hello,
I am an European Citizen who came to work in Canada from January 2014 till November 2014. I moved back permanently mid November 2014. I started working again in Belgium in December. Should I declare my european income as foregin income in my 2014 return.
Thanks
Hi DV,
According to the CRA, you will become a factual resident of Canada if you maintained any one of 3 primary ties to Canada from January 2014 to November 2014. The CRA considers primary ties to Canada to be: (A) House in Canada – rented or owned; (B) Spouse in Canada; and (C) Dependents in Canada.
From the facts provided to us, you were living in Canada from January to November 2014, which would make you a factual resident for that time period. Residents of Canada are responsible for paying Canadian income taxes on their worldwide income. However, non-residents of Canada only pay Canadian income taxes on income earned in Canada (e.g. employment income).
You may seek relief pursuant to the Belgium-Canada tax treaty:
http://www.fin.gc.ca/treaties-conventions/Belgium_-eng.asp
According to this treaty:
1. You are resident of the country where you have a permanent home
2. If you have a home in both countries, then you are a resident of the country where your center of vital interests are closer to (i.e. economic and personal ties)
We do not have enough information to determine your residency status pursuant to the treaty. For additional help, please contact us.
Hello,
I am a Canadian citizen working for an oil& gas American construction company assigned to work in Indonesia as international expat from May 2015 for an estimated period of two years.
I own a condo in Toronto and other associated items like credit cards, bank accounts, RRSP, TFSA and non registered investments.
Considering the above what is your recommendations in the income tax savings perspective:
1) Become a non resident Canadian or
2) Continue to be a Canadian resident
Do I have any tax exemptions under these circumstances?
Appreciate your prompt reply.
Regards
Gorapalli
Hi Gorapalli,
The only way to free yourself from Canadian income taxes is to completely sever ties with Canada. In your situation, expatriates who maintain close ties with Canada must file tax forms annually and pay Canadian taxes on their worldwide income. In your situation, you will be considered a factual resident of Canada for tax purposes if you keep significant residential ties in Canada while travelling outside the country. Since you are working temporarily in Indonesia, you are considered a factual resident. Also, you are maintaining ties with Canada because you have a Canadian bank accounts and investments which will not make you a non-resident for tax purposes.
There are incentives in place for people in your situation though. Credit is given for any taxes paid to the countries that have tax treaties with Canada to prevent double taxation. Indonesia and Canada have a treaty in place and more information could be found at the following link:
http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/tmprry-eng.html
You can claim the foreign tax credit on your Canadian tax return if you paid tax on the income from Indonesia to Indonesian government. Also, in your situation you may be able to claim an overseas employment tax credit as you meet the requirements listed in the following article:
http://www.fin.gc.ca/treaties-conventions/Indonesia_-eng.asp
Even though you are going to be living in Indonesia for the two years for work purposes, there is no way to get around the tax burden in Canada unless you sever all ties here.
Hi Allan,
Very useful post. Thanks for all of the information. My question is regarding my residency status/previous tax implications.
I moved to the UK in August 2013 on a visa to the UK that expires July of this year (but pending a new visa I may be staying). In any event, after having previously thought I was a ‘factual resident’ due to many secondary ties (driver’s license, bank accounts etc.) I filed a tax return as normal for 2013 . I claimed my Canadian income and EI etc.and as I was originally an au pair which isn’t taxable by HMRC in the UK I didn’t indicate any foreign income (which meant I didn’t do any further digging on the CRA website). I also claimed GST/HST tax credits as usual (as Factual Residents are eligible).
For 2014, I am earning taxable income only in the UK and now I read and understand that I am actually a ‘deemed non resident’ due to the tax treaty between the UK and Canada. From what I can tell the CRA doesn’t make this entirely clear unless you go digging for this information. This is great as this means I don’t have to fill out a tax return but I am concerned about the 2013 tax year and credits and any implications upon my eventual return to Canada as I never filled out the NR37 form.
Many thanks!
Karen
Hi Karen,
Based on the information you provided, you said that Canada considers you a factual resident of Canada for 2013. This would also mean you are a factual resident going into 2014. The Canada-UK tax treaty says that the income earned in the UK is only taxed in the UK. That is correct but you need to first know if you are considered a resident of Canada. If you are, you need to file a tax return.
If you do not plan to return to Canada and unless you mentioned on your 2013 tax return that you are emigrating from Canada, it will be better to file an NR 73. The CRA will then assess based on the information if you are a deemed resident or non resident of Canada.
If you are planning to return to Canada, then it will be better to keep filing a Canadian return. The UK income will be reported as foreign income but eventually it will not be taxed based on the treaty between Canada and the UK.
Best Regards
Hi,
My wife and I have been working in Hong Kong for the past 3 years and have been filing our income tax returns to the CRA. We are both Canadian citizens but I believe we are both considered Canadian residents still. She hasn’t declared Non-residency in Canada, but there’s a chance that I may move back to Canada for work and she will remain in Hong Kong for the time being. Is it possible for her to become a Non-Resident of Canada while working in Hong Kong, while I (her spouse) remain a Canadian-resident?
If so, what are the tax implications for a spouse that is a Non-Resident of Canada and the other who is a Canadian citizen and resident of Canada? (If that is even possible)
Hi Chris,
If one spouse lives in Canada, it is considered as a primary tie and it is likely that the CRA will determine you as a resident for tax purposes.
As you are considered both, a resident of Canada, you will be required to report worldwide income on your Canadian tax return.
Dear Super accountants,
Thank you for this site,
I will be leaving Toronto to teach in a UAE school in August
I do not own any property
Do not have a spouse /dependents only one grown son here in Toronto
as well I stopped contributing my RRSP since one year / when I lost my job in Toronto..what can I do for this
I have a health card and a drivers license ..what should I do for these two
as well I have a regular , NOT tax free savings bank account which i wanted to keep and for ease, wanted to make it a joint account with my son….
please advise as I dont want to pay taxes on my not too great earnings in UAE
Hi Mr. Madan,
Thank you for your website explanation. Very informative.
My question would be If I have $15,000 in RRSPs and I’m already a non-resident, how much withholding tax will be deducted when I live in the Philippines? Will it be 25% of $15,000? Is there a tax treaty relief to do this without getting hit with 25% withholding tax? Can I withdraw the amount first and file my non-residency at a later year?
Thanks.
I am a canadian citizen working on a 21/21 day rota on a drilling rig in the UK , I get paid in pounds and pay national insurance in the UK , am I able to receive a refund for the amounts of national insurance I paid here in the UK ? Also The amount of tax I paid in the UK was around 16500£ converted to CAN was around 32000CAN but my foreign tax credit was only 24000 CAN , why am I’m not receiving a tax credit for the full amount of tax I paid in the UK ?
Hi Jason,
Thanks for your question. You cannot claim a tax deduction on your Canadian tax return for UK insurance premiums paid. However, you can claim a foreign tax credit for the UK taxes paid on your Canadian tax return. The foreign tax credit cannot be more than the Canadian taxes payable (before the application of a foreign tax credit) on the UK income earned. In your case, it’s very likely that the UK taxes were higher than the Canadian taxes payable, which is why you did not get the whole $32,000 back.
Hi there,
I’m thinking of going to work in Saudi Arabia. Obviously the tax-free income is a draw. I don’t own any property or have any dependants (rent an apartment/single). I am willing to cancel my bank accounts, OHIP, etc. However, I am wondering if subletting my apartment would prevent me from being a non-resident, and also if it would count against me if I take a Leave of Absence from work (rather than outright quit my job since I’ll want it back when I’m back in Canada and seniority counts for something in my field……and rent rises so rapidly in Toronto). I would not have earned any money after going on the LOA, but I suppose my work would still make a T4.
Thanks for your advice!
Hi Katie,
Canada will view your apartment as a primary tie to Canada if it is readily available for your personal use and enjoyment. If someone else is living there and you don’t have personal access to the property, then it won’t constitute a primary tie for you.
You should be aware that as a non-resident of Canada, you are required to remit 25% tax on the gross monthly rents collected from your tenant to the CRA, should you decide to sublet your apartment. This tax can be recovered by filing a Section 216 Non Resident Rental Return.
In terms of your employment, it is a strong secondary ties. However, the CRA looks at the numerous secondary ties in totality to determine whether you have enough secondary ties or not to be a factual resident of Canada. As such, we do not believe that your future employment in Canada will cause you to become a resident of Canada by itself.
With that said if you want a definitive ruling, you could file Form NR73 with the CRA to determine whether the CRA will treat you as resident or not after your move to Saudi Arabia.
Best Regards,
Hello,
I am planning on going to work in Saudi for a year. I don’t own any property (real estate or car) or have any dependents or a spouse left behind. I would also cancel my Visa, OHIP, etc. However I would keep my TFSA I suppose. I would also like to know if I could be considered a non-resident if I went on LOA from my Canadian job. Would the CRA know? If my T4 from that year (say I leave the country at the beginning of 2016) had no earnings…I wouldn’t have any of the primary qualifications that make a person a resident vs non resident, but I might have 1 or 2 secondary qualifications. I just wouldn’t want to give up my job here because it’s in a company where seniority matters so as long as I don’t terminate but just do a leave of absence my seniority is unaffected.
Thanks!
I’m a Canadian citizen have worked in Singapore for the past 8 years with no assets in Canada. What is my tax liability if I bring assets into Canada? Is there a timeframe to bring money into the country and are these assets taxable? (The sale of my appartment in Singapore & Central Provident Funds). I’m a single parent with 3 kids.
Your advise much appreciated.
Charmaine
Hello, I’m a permanent resident here in canada and I just bought a piece of land in my country of origin. My question is, where I should pay the property tax? Here where I leave (Canada) or in my country of origin? Your response is highly appreciated! Thank you!
Hi Geraldine,
Property taxes should be paid in the country where the property is situated. If the cost of the property is more than $100,000 CDN, it must be disclosed on form T1135, Foreign Income Verification Statement. Any income earned from the foreign property must be included on your Canadian Tax Return and will be subject to Canadian income taxes.
Best Regards,
I have been living in the States for 10 years plus. I do not own property, etc. My husband is American and owns half a house, his brother owns the other half. How do I make the transition back home to Ontario, Canada. How long will I have to wait to have my health care reinstated. Where would my husband file to move to Canada. How long would it take. He plans on paying off all of our debt before he moves. I would be going back home while he gets everything in order in the States.
Hi Lawrie,
Hi Lawrie,
When you and your husband move to Canada, you both will become factual residents of Canada. This means that both you and your husband will be taxable in Canada on your worldwide incomes after you move back to Canada. To re-establish your tax residency with the Canada Revenue Agency, you must file a part-year resident tax return by April 30 of the following year. Your husband will do the same.
If you and your husband are both US citizens, then you both must continue to file tax returns in the US and pay US taxes on worldwide income. Since the US has a tax treaty with Canada, a foreign tax credit can be claimed on your and your husband’s US returns for Canadian taxes paid on Canadian-source income.
Best Regards,
Hi Allan,
Regarding the global taxation system in Canada, what happen if my company transfers me to Canada from Asia. And my employer pays me under the payroll in Asia. After a period of time, I get the Canadian residency. How should I file the income tax in Canada? Is the overseas tax “tax deductible” from the Canadian taxation?
Thanks,
June
Good afternoon,
My wife (girlfriend at the time) and I left Toronto in July 2000, and we are now approaching our 15th Anniversary of living in Bermuda. I retained an RRSP in Canada, but closed my bank accounts, my drivers license expired over a decade ago, and I returned my OHIP when I left. I opened a new bank account about in Canada about 3 years ago. We have never owned property in Canada or Bermuda. We now have 3 kids who were born outside Canada, but have Canadian Passports. For educational reasons, this September my wife will return to Toronto with the 3 children, where they will attend a Public School. They will all live with my wifes father, who has a big house, and he requires assistance, which she will be able to provide, as she is not working. I will stay in Bermuda where I am employed. Are their any potential income tax implications for me?
Perhaps its a separate issue, but I did not file a tax return for 2000, the year I left Canada.
Hi Jonathan,
By having your wife and children return to Canada, you will become a tax resident of Canada again. As a tax resident of Canada, you must pay tax in Canada on your worldwide income. Since Canada does not have a double taxation treaty with Bermuda, you cannot rely on a treaty for tax relief. You can, however, claim a foreign tax credit on your Canadian personal tax return for the taxes (if any) paid in Bermuda.
You should also call the CRA to see if they have you classified as a resident or non resident of Canada on their system. If they have you classified as a non resident, then you don’t have to do anything in respect of the 2000 tax year. Otherwise, you will need to fill out form NR73 and file a departure tax return for the 2000 year, both of which my office can prepare for you.
Best Regards,
Dear Sir,
Self is an Canadian citizen having OCI and living in India. I got my Canada passport in august 2014. and my OCI in Nov 2014.
I lived in canada from May 2009 to Jan 2014.
I have filed taxes in canada in 2010; 2011; 2012 and 2013. I have no canada income for 2014. I own a condo (flat) which is occupied by my son. He is a student in college. My wife and daughter live in india. My wife is Indian passport holder while myself; son and daughter are canada citizens.
I am paying mortgage for the condo; maintenance for the condo and supporting my sons education and living expenses.
My tax status in India is NRI as my job is a seafarer employed with various shipping companies. I have been sailing on merchant ships and maintaining NRI status since 1988. I have been filing my taxes as NRI in india continously till FY 2013~14.
My status is peculiar as I am non resident for canada and non-resident for india.
In addition to my mortgage. I have money invested in RRSP; I am getting company pension (just 170/month); I have bank accounts a credit card; driving license
My questions
Is my status in canada for 2014 that of deemed non- resident? My CA in canada advised me not to file returns for 2014 as I have no income and I have been out of canada for 183 days. Is this correct?
Appreciate you detailed reply to my questions and any advise would be welcome.
Thanks
Phillips
Hi Phillips,
You cannot be a non-resident of both India and Canada. According to the tax treaty between Indian and Canada, you are a resident of the country where you have a permanent home. If you have a permanent home in both countries, then you are a resident of the country where your personal and economic ties are stronger to.
Since you have a home in both India and Canada, we must look to your personal and economic ties to determine your residency. It appears that your personal ties and economic ties are strong to India, as the majority of your family lives in India and you are working in India. As such, you are likely a tax resident of India and a non-resident of Canada.
You should file a departure tax return, which my office can prepare for you, for the 2014 tax year with the CRA. This will be your last Canadian tax filing.
Please let me know if you have any questions for me.
Hi,
I left Canada in 2009 after filling a tax return for 2008, after that I went to UAE and still there, and never filled a tax return since 2009, not filling the ‘check residency status form’, what I have to do? and when I returned back what the issues I may face??? FYI, I don’t have any primary nor secondary tie in Canada since 2009,
Thanks
Hi Rafael,
First, call the CRA to see if they have classified you as a non resident or resident of Canada since 2009. If they have classified you as a non resident, then there is nothing further that you have to do. If they have classified you as a resident, then I will file form NR73 (fee of $350) and a departure tax return (fee of $200) for the 2009 year on your behalf.
I work in the Aviation industry in Canada. Married with children 24, 20 and 16. I am 49 almost 50. Considering a move to the UAE(Abu Dhabi). Looking taking the value of my pension out before 50 and moving. Or is there a way I can take my pension and deposit it directly into a bank and still minimize tax implications in Ontario?
If you withdraw the full value (or a portion) of the pension before you leave, the amount withdrawn will be included in your taxable income. If you withdraw after you leave Canada, then 25% taxes will be deducted from the amount withdrawn.
hi
i would like please to ask you;
1) i am naturalized citizenchip
2) i do have registered business in quebec and my my work is online consulting in administrations
3) i live in my home country for almost 1 year and half outside quebec
4) i do have ties such as bank acc-driver license etc…
can i keep going that way without doing a non resident declaration – Do i need to declare a non resident
as being outside temporary and or permanently – pls a reply would be appreciate for both
ramzi
regards
Hi Ramzi,
To determine your residency status with Canada, we must examine your primary and secondary ties to Canada. Primary ties include (a) House in Canada; (b) Spouse in Canada; and (c) Dependents in Canada. A single primary tie can cause you to remain a resident of Canada for tax purposes. Secondary ties (economic and personal) must be examined as a whole in order to determine their impact on your residency status with Canada.
It’s also important to review the tax treaty between Canada and your home country. The treaty will spell out the tests to apply when assessing the residency of a taxpayer, and the treaty will override domestic legislation.
Should you become a non resident of Canada, you could be liable for departure tax on your business assets. If you require additional information, please contact me.
hi amine
thks for the first reply nice
i would like pls to continue with you; i want to keep my business in canada as well driving license etc.. or personal as mentioned – my question is as for my registered business which is in canada – rather making profit or not – and for the time living outside canada more then a year – should i keep paying taxes normally and not going to non resident case – can i do that ? will have any impact on citizenchip ?
thks as well for second question
regards
Hi Ramzi,
To determine your residency status with Canada, we must examine your primary and secondary ties to Canada. Primary ties include (a) House in Canada; (b) Spouse in Canada; and (c) Dependents in Canada. A single primary tie can cause you to remain a resident of Canada for tax purposes. Secondary ties (economic and personal) must be examined as a whole in order to determine their impact on your residency status with Canada.
It’s also important to review the tax treaty between Canada and your home country. The treaty will spell out the tests to apply when assessing the residency of a taxpayer, and the treaty will override domestic legislation.
Should you become a non resident of Canada, you could be liable for departure tax on your business assets. If you require additional information, please contact me.
Hello!
I am a permanent resident of Canada, French citizen. I am moving back to France this month but will continue working for a Canadian company. I am an employee but planning on becoming contractor (declared in France).
I receive a universal child care benefit and have a canadian bank account.
Do I have to contact CRA and let them know I will no longer leaving in Canada?
Can I send an invoice to my company each month so they transfer the payment to my personal canadian bank account and then transfer the money to a business account in France or does this need to be transferred directly to my business French account?
Thanks in advance.
Hi Delphine,
The first step is to determine whether you will remain a resident or non resident of Canada pursuant to the tax treaty between France and Canada. If you are determined to be a non-resident of Canada upon your departure, form T1161 must be filed along with a departure tax return for the year in which you left. You may also have to pay departure tax to the CRA.
The second step is to determine how to treat your self employment income. According to the France-Canada tax treaty, business income is taxed in the country where you have a ‘permanent establishment’. From your email below, it appears that your business is based in France, and so France will have the right to tax you on your business profits. You still have to charge GST/HST to Canadian customers, and file the GST/HST return annually. You can maintain a bank account in Canada or France for your business; this will not affect your income tax status.
If you require further information, please contact me.
Thanks,
Allan
Hi Allan,
I was born and raised in Canada, so I’m a Canadian citizen. I have a job offer in Saudi Arabia and want to go at least one year. If I like it, I’d probably stay another year or two. One of the reasons for going, is because I’m being offered a good salary and it’s tax-free. Hopefully I’ll be able to pay off all or at least most of my university student loan.
I’ve been reading up on the non-residency and severing ties things. It still confuses me. The salary I earn in Saudi, I want to keep all of it, I don’t want to pay income tax in Canada. Mainly because I want to pay off my student loans asap (it’s important to me). But in order to not pay Canadian income tax, does this mean I have to declare non-residency in Canada? After doing some reading, it seems as if I would have to “sever ties” in Canada if I declare non-residency. I won’t lie, it sounds a little scary to me, I don’t want to lose my citizenship or ties in Canada. I’m honestly only planning to work overseas a couple of years, my long-term goal is to establish my career and work in Canada.
Secondly, I also have a car that is under my name, I am the owner and primary driver. Its value is under $25,000. Is this going to be a problem for me if I declare non-residency, as it is considered an “asset”? Would I have to give up ownership of this asset? I was going to leave the car with my family and they would take care of the expenses (and I’d leave them with the money to take care of it).
In sum, my concerns are regarding to my citizenship/residency status, not paying income tax on my Saudi salary, and if owning a car might create some problems.
Thank you!
Hi JayJay,
Sell your car and break all secondary and primary ties if you want complete certainty that you will become a non resident of Canada. You can keep your citizenship and passport.
The money that you earn aboard, can be brought back to Canada when you return to pay-off your student loans.
Thanks,
Allan Madan, CPA, CA
Hello Allan,
Educative forum indeed! Question: A question that many intending working abroad but with potential resident status have is this: Does the CRA tax you at the same rate as someone in Canada if your status is resident, or deemed resident ? I currenly make around 117K and pay roughly 34% effective taxes. Would I be paying the same if I worked in Saudi Arabia(tax free) while being considered resident of Canada by CRA?
Hi Ed,
An individual holding a status as a Canadian Resident are subject to the rates as someone who is residing in Canada. Unfortunately you can not reduce tax your burden by working and living abroad. Essentially, you be filing a tax return as a Canadian.
Foreign Income is required to be reported on the Canadian Tax Return.
Some countries have established a tax treaty with Canada. If you hold a duel residence, you can further look into benefits from foreign credits to avoid double taxation.
In order to legally free yourself from Canadian Tax Requirements you must completely sever ties to Canada. For all legal ties considered by the CRA please refer to the following link:
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html
Hi Allan!
I left Canada to work in Europe in 2011. I’ll return in 2018 (contract ends). I bought a house in Canada (BC) last month with the object of retiring in Canada in 2018. I’ll rent it (NOT “arms-length”) until then.
Does the fact of my buying a house in 2015 strengthen the case that I’ve been a Canadian resident (for tax purposes) ever since I left Canada? During that period I’ve kept RRSPs, bank accounts in Canada, and membership of a political party, and monthly standing orders donating to Canadian charities.
Paradoxically – perhaps – I want to be deemed a Canadian resident for tax purposes: I sold my Ontario house in 2012, and didn’t pay any kind of withholding tax (didn’t know I was supposed to – in fact I’m still not sure whether I was supposed to, given that I always intended to return to Canada), and I work for the UN which means my salary is not taxable. So I just don’t want to be hit with a bill for the capital gain I made when I sold my Ontario house…!
Hi Paul,
Having an investment property in Canada is a secondary tie to Canada. A single secondary tie cannot be viewed in isolation when assessing your residency status with Canada for tax purposes. Instead, all secondary ties must be examined as a whole.
Each secondary tie that you maintain with Canada strengthens your case for Canadian tax residency. However, the primary ties (a) House (b) Spouse and (c) Dependents are more important. It’s also essential that the tax treaty between Canada and your new home country be reviewed to help in the determination of your residency status.
Greetings,
My xhusband and I lived abroad from 1999 to 2008, we rented our home during that period – and were considered non residents. I returned alone with our two children in 2008 and he remained abroad, living and working in Oman. We have just finalized our divorce with the understanding that I would buy him out of his share. There is now a possible glitch – it is unclear if there is a tax treaty between Oman and Canada and whether he will need to pay capital gains for the time we rented the house – which I am worried will mean that I too will need to pay the capital gains – what options do I have? is there a tax treaty between the two countries and what would you recommend to avoid paying the capital gains? If I lived in the house from 2008 until now – am I except from paying the capital gains? is there a time limit?
thank you for your insights
Laura
Hi Laura,
When your house is sold, the buyer’s lawyer will hold-back 25% of the selling price for your husband’s share (one half). Your husband can get this money back by filing an application for a Clearance Certificate, which I can prepare. Your husband must also file a section 116 tax return to report the capital gain realized on sale.
You and your husband are also liable for a tax equal to 25% of the gross rents collected from 1999 to 2008. You can elect to file a Section 216 Return (non resident rental tax return) to recover a portion of this tax. The Section 216 Return is due June 30, 2 years after the year in which you collected rents from your tenant. However, you can make a request to file the Section 216 Return past its due-date.
You may not have realized that you became liable for capital gains tax when you moved back into your home in 2008. In 2008, your move back to your home resulted in a change-in-use of your home. This means that your home was deemed to be sold at its market value at the time you reoccupied it, triggering a capital gain.
Please let me know if you would like to discuss further.
Hello,
I am a Canadian Citizen and a Overseas Citizen of India. I am planning to work as a University Professor in Qatar.
My family will be coming with me to Canada.
1. If I severe all ties with Canada, will I be able to become a non-resident of Canada for tax purposes?
The reason for this question is because, someone who has a teaching job is said to be a factual resident of Canada.
Please let me know.
Thanks
Hi Allan,
Thanks for the blog and info on your site. I find it very useful.
I am a Canadian citizen and left Canada to attend grad school in US in 1994.
I have not worked in Canada before and thus never file any tax return before.
I did not file NR73 and did not declare non resident when I left Canada.
I have zero ties in Canada and have lived and worked in US since 1996.
I plan to purchase a house in Canada and move back to Canada in a few years.
Should I file NR73 now?
Will CRA tax on my US income since 1996?
How should I move my money from US to Canada to purchase a house?
Will Canada tax on the money I use to purchase a house in Canada?
After I purchase a house in Canada and rent it out, should the rental income subject to tax in Canada as well as US?
Thanks in advance,
Ken
Hello
Thank you for your blog post.
My boyfriend (i am a foreign national about to cancel immigration sponsorship etc) just got a job in the UAE. He plans to close all bank accounts and sell all our personal assets. We dont own real estate in our name, just a car. We sold our furniture months ago and plan to take our small assets (clothing, bicycles, dogs, a few kitchen bits) with us and be in the UAE in December 2015.
His father passed away a year ago and left a house. This house is still in the estate name and there is an estate bank a count. There is still a mortgage on the house and utilities in his deceased fathers name. The payments come out of the estate account which is funded by the two beneficiaries of the will (my boyfriend and his brother).
We plan to leave and put the house on sale and assume it will still be on the market when we have left. It could take more than a year to sell (its a small hobby farm).
Could you please tell me if the above will be determined as my husband having residency ties to Canada and thus require him to make tax payments?
Also, i read that one should file a non-resedency declaration as opposed to requesting an assessment. Is that a better strategy?
Lastly, i read that it is ok to keep a Canadian credit card (in order that his credit rating still exist as opposed to destroying it) and this wont count as a residency indicator. Is that true?
What happens to his government gov. pension/retirement? Does this freeze and he pays into it if/when he returns and takes up Canadian employment again? Can we request a dispursement?
Thank you very much in advance for you help.
Ann
Hi,
I am a non-resident Canadian and have lived in the UK since December 1995. My husband has dual citizenship from when we were first married in Canada and our son has it, as he was born in Canada. I initially paid tax on my worldwide income after I moved here – I think it was for 1 year only. I was uncertain on where I would live in my retirement and still am, but it could be in the UK. I have had RRSP’s since before I moved, as well as keeping a Canadian bank account to pay our life insurance and to have funds when we visit my mom. She has GIC’s in joint name with me as well. I have been advised by the Canadian company I have had my locked in and non-locked in RRSPs with(BMO NB) that I should liquidate and have to pay 25% tax, due to “legal and compliance policy changes..our firm is subject to restrictions on maintaining client accounts who reside in the UK. ” I do not have the “discretionary portfolio management” account type or “enrolled in a qualified managed account program (no mutual funds permitted). The minimum asset size is $100,000. ” I have about $52,000. I have enquired on whether I can tranfer this into a bank account, but there seems to be some difficulty in finding this out. I am not sure where I will end up living in 10 years when I am 65, but do not want to lose 25% of my savings if I don’t have to. Do you have any advice for me? Thank you. I have looked through the above emails and have not found anything similar. I appreciate your time and may need your services in future!
Hello Allan
i am Canadian employer and we are looking to hire some one in mexico as a sales representative / territory manager. we get one applicant who is Canadian citizen and leaving in mexico since last five year. my question is how much tax do i need to deduct when we pay him salary. do i need to follow Canadian Tax legislation or Mexican Tax legislation.
– If we need to follow Mexican legislation then how i can submit their tax.
– if we need to follow Canadian legislation then how and where he have to file personal tax
Thanks,
Prash
Hi Prash,
It appears that the Canadian you are hiring to work in Mexico is a non resident of Canada, since he’s been living in Mexico for the last 5 years. As a Canadian employer hiring a non resident of Canada who is working outside of Canada, you do not have to worry about Canadian payroll taxes. Instead, you will be responsible for Mexican payroll taxes.
Hello,
I left Canada in September 2011 with only a bank account, license, and credit card to my name in Canada. I became a resident of Mexico in November 2011 as my wife is a Mexican citizen and we own a house here as well. Since 2012 I have worked fulltime in Mexico. I was wondering for the year of 2011, I would still have been considered a resident for tax purposes up until September 2011, therefore I would pay taxes on my Canadian income to that point, though would I need to declare my Mexican income for the remaining two month of 2011?
Also for the years 2012-2014 I would not need to file a Canadian tax return as all my income is from Mexican sources and I am a permanent Mexican resident.
Do you feel I would be subject to any fines?
Hi Seida,
You would be considered a resident of Canada up to September 2011. You will be liable for Canadian income taxes on your worldwide income up to September 2011. You should have filed a departure tax return with the CRA for the 2011 taxation year if you permanently left Canada.
Once you are a non resident of Canada, you do not have to file a tax return with the CRA unless you:
1. Carried on a business in Canada
2. Were employed in Canada
3. Sold Canadian real estate
Hi,
My daughter, a Canadian citizen, worked Jan / Feb in Ontario and left for Australia on a Holiday Working Visa for Youth under 30. She spent the first 6 months travelling with no income received. Her Visa allows her to work in Australia and she just started working in Australia this past week. Not sure how long she will keep on working as the idea is to fill the piggy-bank to continue travelling. She is receiving HST credit cheques from Revenue Canada. OHIP has been informed that she is in Australia on this specific VISA. Should she claim Non-Resident Status in Canada??? She has no assets in Canada. Her Visa is for one year with the chance of renewing for a second year. I would guess her total “projected” income for 2015 to be less than 15,000.
Thanks.
Hello,
My girlfriend(common law partner) got transfer in Spain for a 5 year contract last year. She is brazilian and work at the brazilian embassy in Madrid. I decide to follow her but ive been back and forth in Canada since last year. I have the same status as her, a diplomatic status and a diplomatic passport from brazil. I am canadian. I ve been working freelance since then, with various companies especially in Montreal and toronto, so mainly in Canada. I moved my furniture there and my main residence is there. But my parents lives in Canada, my bank account, credit card, savings, rrsp and placement are in canada. I havent make the official move but i was thinking to officlally live there starting next year. Do i stay a canadian resident or i become a non-resident? I just want to know, which is not a problem, if i stay a canadian resident and have to pay my taxes in Canada. I’ve never work with company in Spain.
Hopefully you can help me with my profile, so far i havent been able to find out.
Thanks for your time!
Paul
Hi Paul,
If you move to Spain permanently and do not maintain a residence in Canada, then you will be considered to be a non resident of Canada pursuant to the Canada-Spain tax treaty.
Best Regards,
Hi SuperAdmin 🙂
Slightly different question but same theme. Can international residents who worked in Canada on working holiday visas get access to their RRSPs after leaving Canada? I have no intention on retiring in Canada nor living in Canada in the future – I’m Australian and wish to live in Australia.
I filed tax returns for all my years (2010-12) worked in Canada and at the time was told by my tax guy that I couldn’t access my RRSPs unless i was retiring in Canada but I suspect this isn’t the case and as I have roughly $12k of RRSPs in Canada I would love to access some if not all of this amount. Can I access it? And if so how do I go about accessing my Canadian RRSPs?
Thanks in advance,
Mooke
Hi Mooke,
Yes, you can access your RRSP’s as a non resident of Canada. Withholding taxes of 25% will be applied to any withdrawals made from your RRSP due to your non-residency status. Speak with your financial institution about the forms that they would like you to complete to make a withdrawal(s).
Hi SuperAmin,
Very informative info you got here. I read through everything in preparation for my move out of Canada. I think i should be set except for one hiccup, which i want to ask you about:
What would happen if i do not inform my financial institutions of my non-residency immediately?
I have no interests or dividends from my investment so the non-resident withholding taxes should not affect me. What i do have is stocks in the brokerage and some are under margin. The brokerage says that if i become non-resident, they’d have to close my margin account and deposit/liquidate my stock to cover the leverage account and then finally converting the margin account into a cash-only account.
With the markets the way they are now, i’d suffer heavy losses if i liquidate the stocks on margin… i’d like to delay informing the brokerage of my non-residency for a few months to both see if the market recovers and/or put my next few month’s income to cover the balance of the margin so i don’t have any balance owing such that it will be harmless for them to switch me to a cash account.
My biggest worry is that this omission may be seen as fraud, or may still deem me as a resident until i informed the bank / brokerage.
Thanks for any guidance you can provide!
Mike
Hi Mike,
You should always be honest with your bank about your residency status. Have you considered opening an account with another brokerage that works with non residents of Canada?
Hi superAmin,
Thanks for the reply!
I understand that when it comes to taxes (or in general), it is best to be honest to avoid any problems down the line. However, I’ve explored many options and this seems like the only potentially viable one, the other being liquidating my margined assets before I leave (soon) and realize a very large loss.
As well, I checked with the brokerages in my destination country and found that they either do not deal with north american securities, or ,there are numerous fees for associated transferring and transacting with such securities, or, they would not allow for any / same margin amount. All in all, other non-resident brokerages are not that feasible without taking a large loss as well.
Anyway, I realize it may be difficult to advise on this issue here. I was hoping you may have known on precedent cases and/or perhaps the banks and the CRA won’t be communicating given that I am not moving to the US (so FATCA should not apply) and also I will not be receiving dividends / interests so withholding taxes should not apply either. I figured after my deemed disposition, liquidating my stocks will not create any problems with the banks and the CRA. But that’s just my assumption.
If you can give any further advice on this that’d be greatly appreciated, but I understand if you feel you already offered the best advice you can give already. Thanks so much!
Mike
Can you share the name of such an institution? I have been looking and Disnat and TDWaterhouse will not allow me to buy and sell stocks in a non registered account as a non-resident. Your help is much appreciated.
Thank you.
Hi Deb,
Thanks for your question. I’m not aware of any Canadian financial institutions or brokerages that will allow non residents of Canada to buy or sell stocks / mutual funds through a non registered account in Canada.
Hi SuperAmin – I read through your article and would really appreciate your help understanding how to proceed.
My fiancee and I are teachers who have been teaching outside Canada (in Kuwait) since August 2014. Prior to that, we were unemployed and received no Canadian income from January 2014 onwards.
Neither of us owns a house or have dependents in Canada. Our parents live in Canada, and we have Canadian bank accounts (well below $25000), credit cards, provincial health cards, and driving licences. We have no other assets or ties within the country. In addition, we don’t plan on working in Canada for the foreseeable future (at least the next 10 years), and spend well under 183 days in Canada annually.
I only realised after reading your article that I need to file a departure tax return, request the CRA to stop receiving GST, & possibly fill out a NR73.
– To file tax returns for September-December 2014, do I file them as a factual residents or as non-residents?
– Also, will I be penalised for not filing my taxes before April of this year or requesting the CRA to stop receiving GST?
– Given that we don’t plan on working in Canada for the forseeable future, do we need to file taxes for 2015?
Again, I am grateful for your advice.
Hi Kingsley,
Thanks for your questions. You may be considered a factual resident of Canada because of your remaining secondary ties with Canada: driver’s license, OHIP card, bank accounts and credit cards. You should get rid of these ties immediately if you want to become a NR of Canada.
File the 2014 returns as factual residents of Canada. Eliminate your remaining ties to Canada. Then call Service Canada and the CRA to update them with your new mailing address and to stop any benefits that you are receiving by virtue of your tax residency in Canada. File for a departure return in April 2016, for the period from January 1, 2016 to the date you ceased your tax residency with Canada. After that, you will have no further tax filing obligations with the CRA.
Hello, I am a pr of Canada married to a Canadian citizen since 2006. We lived in the USA where I have citizenship, we moved back to Canada in 2013 shortly before I had to renew my PR for Canada. Since moving to Canada I have taken a job with a oil company in my native home land of Oman, the job hired me as an Omani citizen. I work there for 6 weeks they I return back to Canada for my 4 to 5 weeks off. I do hold a bank account in Canada, drivers license, Provincal health card, I own a car, car insurance, personal property insurance, my two kids are both Canadian citizens who live in Canada with their mom who is Canadian. I took this job in Oman just about a year ago and seeing the years end is soon here I am wondering do I have to file a tax return for Canada with my world income. And what is the rates of taxes would you have to pay. If my Canadian spouse and I were to separate would I still hold enough ties in Canada to file Canada taxes. Thank you…..
Hi Sultan,
Even if you and your wife separate, you will still have dependents in Canada (your children). As such, you will still be considered a resident of Canada for tax purposes. As a tax resident of Canada, you will have have to include your worldwide income on your Canadian tax return and pay Canadian income taxes at graduated tax rates.
Hey superAmin. A question from a Canadian who has lived abroad for 17 years. My wife and I moved to Ecuador in 1998, she served with special missionary visa, I worked teaching English at a local university. We’ve always filed income tax forms, my spouse continued to receive some health care due to her status for 8 years, I retired from the ‘U’ five years ago and now we do voluntary work. We live off our modest savings, but we have been able to build three homes, we lived in one a couple of years, then sold it, and did the same with the next two houses. Thanks to that, we can remenain here. We have sent in our NR73 forms and I will be 65 in 3 years. Will I be eligible to receive any pension from Canada?
Hi Michael,
The Canada Pension Plan is a contribution based system. This means that the amount of CPP benefits that you are eligible for depends on the amount of CPP premiums that you have paid during your lifetime.
To be eligible for Old Age Security Benefits, you must meet 3 conditions:
(1) 65 or older
(2) Citizen or permanent resident on the day before you left Canada
(3) You lived in Canada for a minimum of 20 years after turning 18
Please note that a withholding tax of 25% will be deducted from CPP and OAS payments made to you.
Hello Allan,
My employer has agreed to reimburse tuition fees for my children in attending international school here in Asia. It is my understanding that allowances are taxable but reimbursements are not. Therefore, I don’t need to report the tuition amount as my income. Can you please verify if my understanding is correct?
Thanks
Hi Richard,
Receiving a reimbursement or allowance for tuition for children are both taxable benefits that you must report on your Canadian tax return if you are a tax resident of Canada.
Hi Amin,
Firstly i have to say that the information here is amazing ! Thank you.
I am a UK citizen and hold a Canadian PR card. I have separated from my Canadian spouse who still lives here in Canada, and i also have a home in Canada, bank account, credits cards and bills.
I was terminated from my job in Canada unjustly while on maternity leave and am about to receive a large payout as a result of this.
The payout will allow me to go back to the UK and spend time with my family for 6 months to a year, but during that time i will return to Canada every 2 months so that my child can see her father.
My child holds dual UK and Canadian citizenship.
While in the UK i will be helping out a friend with their business and earning a little money and paying UK takes. This will entitle me to UK child benefits. I currently receive Canadian child benefits. Will i be able to receive both benefits as i am paying tax in both countries ?
HI Allen,
First of all Thanks for posting an article about Canadians living abroad and also answering people questions.
I have a question, If I moved abroad as I know I have to file departure tax return, can I file the departure tax return after I move by few weeks or it has to be the following year, say I moved Dec 2015 can I file the departure tax return in 2015?
Another question, how does CRA send me any important letters, does it send letters to my overseas addresses if someone moves abroad?
Thanks
Hi Alain
I have landed in Canada in 2013 as Permanent resident and left less than a month later. I have been working in Brazil ever since and paid my tax in Brazil.
I have just returned to Canada in Oct 2015 to stay and want to know what years I should declare. I only had a bank account and drivers license during these 2 years outside of Canada but I did not use my account or drivers Licence.
U had no ties with Canada diring the time I worked in Brazil.
Which years I should file for tax in Canada? If I don’t file tax in Canada for 2013 and 2014 and only do that for 2015 onward will it affect my right to renew my permanent residency card in 2018 even if I stay more than 730 days inside canada before my PR card expires.
We landed in 2013 as PR and left within few weeks after fulfilling residency requirements: During our stay we applied following:
1- G1 Driving license
2- Bank Account and credit Card
3- Health Card
We (family) left within few weeks and have no “Significant Ties” in Canada. Now we are planning to return back, Do we need to file tax return for 2013 and 2014 though during our 2013 stay (few weeks) we had no income within Canada and in 2014 we never visited Canada.
Regards
You do not have to file a tax return for the 2013 and 2014 tax years. When you permanently move to Canada, you will have to file a personal tax return as a part-year resident. This means that you must report your worldwide income on your Canadian tax return and pay Canadian income taxes starting from the time that you permanently return.
Hi! If I am self-employed & working outside Canada, will I have to pay cpp at year end when I will file my taxes? Thank you!!
Hi Sam,
You do not have to pay CCP premiums for income earned outside Canada.
Huda – Please update website and send me the link
I, my wife and my 4 kids came to Canada as landed immigrants in Nov 2013. Soon after I applied for CCTB for my kids and opened bank account and we left back to home country in January 2015. We started getting the CCTB for our children. We planned to come back to canada soon but could not. However I left my wife and kids back home and came back to Canada in September 2014. My wife and kids arrived in Aug 2015. My kids are enrolled in school and going now. Received a letter from CRA in my wifes name this week. They asked us to provide the details of residence we stayed from Nov 2013 to present. Also they want the details for my kids schooling. I went to my accountant and he told me that I have to return the entire CCTB amount. I filed the income tax for me and my wife for 2013 and 2014.
I would appreciate your advise as to what my wife should reply to CRA now. I am unemployed and we live on the child benefits and few savings I had from before. Your advise would be highly appreciated.
I, my wife and my 4 kids came to Canada as landed immigrants in Nov 2013. Soon after I applied for CCTB for my kids and opened bank account and we left back to home country in January 2014. We started getting the CCTB for our children. We planned to come back to canada soon but could not. However I left my wife and kids back home and came back to Canada in September 2014. My wife and kids arrived in Aug 2015. My kids are enrolled in school and going now. Received a letter from CRA in my wifes name this week. They asked us to provide the details of residence we stayed from Nov 2013 to present. Also they want the details for my kids schooling. I went to my accountant and he told me that I have to return the entire CCTB amount. I filed the income tax for me and my wife for 2013 and 2014.
I would appreciate your advise as to what my wife should reply to CRA now. I am unemployed and we live on the child benefits and few savings I had from before.
Sir, please reply. if I left Canada in January 2014 and returned back to Canada in September 2014, am I a resident of Canada for tax purposes for the tax year 2014 and my wife who is not present in Canada at that time will have established substantial ties with Canada (her spouse being in Canada) and hence she too becomes the resident of Canada for tax purposes for that year thereby becoming eligible for the CCTB and UCCB? I have not left Canada after September 2014 except for couple of weeks vacation. My wife and kids left Canada in January 2014 and returned to Canada in August 2015.
Please sir, your advise will be highly appreciated.
Hi,
I moved to Dubai at the end of 2014 and severed all my residential ties (house, car, health card, drivers license, bank account, etc.). No wife, no kids. I intended to stay for a long time as I have a permanent job, but things have changed and now I might have to move back in 2016 (less than 2 years after leaving Toronto). I filed my non-resident tax return for 2014 (final tax return). Will I have issues if I return to Canada? Thanks
Hi Samuel,
If you severed all of your ties, the CRA will not classify you as a resident of Canada while you were living outside of the country just because you returned back to Canada within 2 years of leaving.
Hi Madan,
I have been a permanent resident since Nov 2013.I plan to relocate for 3yrs to join my wife in the UK.I would like to keep ties with Canada as I have a rental property here.What are my options.
kind regards
Kenol Emile
Hi Kenol,
Thanks for your question. According to the Canada-UK tax treaty, you are a resident of the country where your permanent home is situated. If you have a permanent home in both Canada and the UK, then you are resident of the country where your personal and economic ties are strongest. Note that a permanent home can either be rented or owned, so long as you live it in for a relatively long period of time (i.e. a hotel room, or short term rental would not qualify).
If you do not plan on maintaining a permanent home in Canada (your rental property does not count), you cannot be classified as a tax resident of Canada as per the tax treaty.
Good Day
I found your video fantasic! However i do have a question regarding a great opportunity working outside of Canada:
I have an offer to work in Bermuda (no income tax a huge benefit) for a 2 year work visa. I will still have my RRSP’s, TFSA’s, drivers licence, canadian passport and a bank account here in Canada. I will not be contributing to these accounts while outside of Canada and I will be receiving no income from these accounts while i am abroad. I am curious if i would have to file taxes in canada during my time in bermuda.
Thanks
Andrew
Hi,
I worked out of Canada in rotational basis(1 month on one month off) for less than one year (total days out of Canada was 151 days ).
I have a Car, Driving license, Bank account, Master card, I am living here in Canada with my wife and my daughter and my daughter also going school. I have paid all my taxes till now, plus when I worked out of Canada under my corporation name (which was registered in Calgary/Canada) I received all my salary in my business account under my incorporation’s name and filed all my tax return for the incorporation income(when worked out of Canada).
My question is: Can I consider myself as present in Canada for my citizenship purposes to receive my Canadian passport? Because my accountant said that when I work under any Canadian company/corporation name, that means you have been transferred as a employee resident in Canada to work out of Canada and as far as your family are here and you pay taxes your days out of Canada can count as days present in Canada to receive passport.
Could you please clarify that if the aforementioned case is correct as residency in Canada?
Thanks and looking forward your response.
Shahriar
Hi, anyone can help on this question:
Canadian will work in U.S. with TN, still regard as Canadian resident for tax filing. Question is for the Health Insurance premium I pay on the W2 form, can this be treated as Medical Expenses when I file my Canadian taxes? What about others like deductibles, copay, etc? Any tax benefits for these expenses ?
Really appreciate anybody’s help.
Gerry
Hi Allan,
I am considering a move to UAE and have been interviewed for few positions. My question is with regards to primary ties and reported world-wide income:
1- My spouse is current on PR status and will only qualify to apply for citizenship in 2016. I am a Canadian citizen and so is our son (1yr old). If I do get a job, I plan to move on my own and my wife will be visiting me regularly while still respecting her residency requirement in Canada. Once she has applied for citizenship, she will move out of Canada permanently. I would like to know that if we don’t own a house, I cut all my credit cards, accounts, licenses, OHIP… Can I still file as a non-resident?
2- For World-wide income: If the above fails, how does the world-wide income get reported? Are there any credits that I can use given that I will be paying rental and living expenses in two countries? My wife doesn’t work and she is studying to be a CPA at this time.
3- What are your charges? If I want to file my tax returns with you and is it possible to meet you in person to discuss my case further?
Thanks!!
Hi Modi,
Thanks for your questions. Even if you sell your home, you will still remain a resident of Canada for tax purposes so long as your wife and child remain in Canada. As a resident of Canada you must report your worldwide income on your Canadian personal tax return and pay Canadian income taxes at regular tax rates. You cannot get a tax deduction or tax credit on your Canadian tax return for rental and living expenses incurred in the UAE.
Thank you SuperAmin. But how does the world income get reported? Does CRA require an official document from the employer or an individual can just enter an amount on their tax return?
Enter the amount on line 104 of the T1 Tax Return. Keep copies of bank statements and an employment letter as proof of the income received in case the CRA asks for more information.
Hello
I provide IT services to Canadian clients and I never spend more than 6 months a year in Canada and some years I do not come to Canada at all. I declared non-residency 10 years ago. I do have 2 debit cards and 1 credit card and a drivers licence – nothing more. Am I required to pay any taxes in Canada even if I do some work in Canada when I am physically in Canada ?
Thank you
AR
My whole family relocated back to HongKong at the end of 2014. We severed all primary ties but secondary ties still remain
like bank account, credit card, RRSP, TSFA, driver license, and life insurances. I was working in HongKong for the entire 2015, do I need to file 2015 income tax to Canada for those income? Also at the same time, being in HongKong, I was providing IT consultation/advisory and charging service fees to a canadian company (for which I am not considered as an employee for this company), do I need to pay Canadian tax for this part of the income? Would it be better (for tax benefit ?) to open/register a company in Hong Kong and continue with my IT consultation/advisory business with the Canadian company?
My whole family relocated back to HongKong at the end of 2014. We severed all primary ties but secondary ties still remain like bank account, credit card, RRSP, TSFA, driver license, and life insurances. I was working in HongKong for the entire 2015, do I need to file 2015 income tax to Canada for those income? Also at the same time, being in HongKong, I was providing IT consultation/advisory and charging service fees to a canadian company (for which I am not considered as an employee for this company), do I need to pay Canadian tax for this part of the income? Would it be better (for tax benefit ?) to open/register a company in Hong Kong and continue with my IT consultation/advisory business with the Canadian company?
I am employed at the World Bank on a tax free salary but am getting ready to repatriate and return to Canada. Will my pension be taxable when I return to Canada? What if I receive a commutation on my pension before I return to Canada. Will I need to declare it?
Hi Allan,
My husband and I have recently moved from Ontario to California. We both are now working in the US on TN Visas. It is my understanding that these visas are “temporary” and we have an intent to return to Canada when our visa expires. Based on these facts, wouldn’t we automatically be considered Canadian residents for tax purposes and NOT non-residents? I know on the NR73 it asks for your intent.
With that being said, I am trying to figure out what that means for investing and tax returns. Can I prepare my US and CAD ones separately, or do I have to report my foreign tax credit on my Canadian return? Which return do I put my moving expenses on? US or CAD? And lastly, if I am a Canadian resident for tax purposes, but I am living in the US, I can still invest in my RRSP and TFSA the same as I would if I never left Canada? Does the US income I earn increase my contribution room in my Canadian RRSP?
Thanks so much for your help!
Lauryn
Sir please reply. I became PR in November 2013 (along with my family) and left Canada in January 2014. My wife and kids too left Canada along with me. I alone returned back to Canada in September 2014 and I am in Canada till now. My family returned to Canada in August 2015. My wife was not present in Canada from January 2014 to August 2015.
My question is : Am I a resident of Canada for tax purposes for the tax year 2014 and 2015. Is my wife too resident of Canada for tax purposes as she will be establishing substantial ties to Canada (as I am in Canada). Will she be entitled to CCTB and UCCB during that period.
Please sir, your advise will be highly appreciated.
Okay, for some reason, I just can’t grasp my residency status for 2015, and maybe you can help. Here was my situation last year.
1. Teaching ESL in China from January 7, 2015 to January 8, 2016 – outside of Canada from January 7, 2015 to January 13, 2016
2. Ties to Canada include: some boxes of household stuff a few pieces of furniture left at my brothers house, a drivers license, a RBC bank account and a couple of credit cards. Health insurance provided by employer, so no MSP. So, was I a factual resident or a deemed non-resident?
Hi,
I am a Canadian citizen, lived in India for many years with my family. In Sept 2014, I moved alone to Canada and found a job in January 2015. There is a plan that will have me continue this job but I’ll be located in India for the next two years starting March 2016. My salary will continue to be paid in Canada in my Canadian bank account. I don’t own any property in Canada and don’t have family here. My wife and son live in India. I don’t have significant ties in Canada other than a bank account, credit card, drivers’ license and provincial health insurance card but I do have significant ties in India. I am trying to find out what I need to do before I leave and also if I need to file tax returns in both countries. I intend to return to Canada after 2 years. Thank you.
Hello SuperAmin,
I have a question regarding income tax/non-resident status .
I am a permanent resident in Canada but may be living in the UAE for a 3 year period with my spouse who is a Canadian citizen.
I know that if I become a non-resident I will not have to pay taxes in Canada, but my question is: if I do chose to become a non resident for tax purposes, will my time spent abroad be counted towards my citizenship?
Thanks
Why users still make use of to read news papers when in this technological globe all is available on net?
my web site
We will be leaving Canada to travel for roughly a couple of years. Should we complete the nr 73 form?
Thanks
Hi LaurieV,
Form NR73 is not mandatory. If you would like CRA’s determination on your residency status, complete it shortly before leaving.
Hello Allan.
I am embarking on self-employment on a cruise line. I fully understand the details of becoming a non-resident of Canada, as I’ve previously worked in Saudi Arabia, and will only have a couple of secondary ties here such as driving license and one bank account. What is not clear to me is, that while I am on international waters for 8-9 months out of the year, if I need to become a resident of another country to not pay Canadian income tax. Or can I be a resident of nowhere while being a non-resident of Canada? I only plan to be back in Canada for very brief periods, as in two weeks a year, for the foreseeable next few years. I am single, no dependants, no primary residence, no major investments other than small RRSP’s. Cruise lines typically pay in cash, or will transfer money to the Canadian bank account.
Thanks for your advice.
Hi Alicia,
You have to be a resident of another country for you to become a nonresident of Canada.
Hello,
I’m currently under a lot of stress because of a situation I created out of my own irresponsibility. I have not filed Canadian taxes since 2004. For the majority of this time I was working overseas?2 years in Japan (September 2004 to September 2006), 2 years and 3 months in South Korea (June 2007 to September 2009) and 3.5 years in China (November 2010 to July 2014). Between these bouts working overseas I worked in Canada, and I as I stated did not file for this work either, but did not make enough to owe money from these earnings. It is now March 2016 and I am wondering what the best course is for me. Is it too late for me to submit form NR73? How else can I determine whether I was a non-resident during the different periods I worked abroad? I know this is a case-by-case thing, but I don’t own property here, I cancelled my health card when I left for Japan, and have never had a driver’s license. I did have a bank account which I used for paying student loans. If it is unlikely that I would be considered a non-resident during this time, what should I do instead? Would it be best to make a voluntary disclosure as soon as possible to avoid penalties and prosecution?
Thank you for our help.
Thanks for contacting me. Complete form NR73, Determination of Residency Status Upon Leaving Canada, and submit this form to the CRA. It appears that you became a NR of Canada when you moved to Japan. As a nonresident of Canada, you are not liable for Canadian income taxes on foreign earnings.
Hi! I am a Canadian living in Quebec. I have a job offer in Michigan, US that I already accepted. I am planning to move there leaving my two still dependent adult sons studying in university and post-graduate studies. I am planning not to sell our house so that they continue to have a place to live. I am planning on renting a small apartment while they finish their studies (4 more years). My wife will commute as much as possible between the two locations. The company is offering relocation program.
What could be the most beneficial setup for me to avoid paying double taxes ?
Thanks in advance.
Hi Carols,
Thanks for your questions. You still have a significant number of ties to Canada, including your house, dependent children, and wife. As a result, you will be liable for Canadian taxes on your worldwide income. You can claim a foreign tax credit for the American taxes paid in order to avoid double taxation.
Note that you will be a US resident for US tax purposes because you will be present in the US for more than 183 days. Residents of the US are liable for American taxes on their worldwide income. Consider filing form 8833 to claim your tax residency as being in Canada pursuant to the Canada-US tax treaty.
Hi Allen,
Is it true that they are going to be phasing out the Overseas Employment Tax Credit? If so when will it be no longer applicable and also would you know what the percentage of the credit is? Thanks!
Hi Geri,
The overseas employment tax credit will be completely eliminated as of January 1, 2016. The maximum amount of the credit is limited to the lower of $20,000 or 20% of your foreign income for the 2015 tax year.
Hi Allan,
Once officially deemed a non-resident of Canada (for tax purposes) how often can one visit for each year? In the US there is a ‘physical presence test’ and the terse are clearly defined. I can’t seem to find the equivalent in Canada. Obviously, a citizen who becomes a non-resident would still have friends and family that they would want to visit sometimes, come back on vacation, etc. Again I can’t seem to find any clarity on this online. Please help? Many, many thanks.
Hi Troy,
As a non resident of Canada, do not stay in Canada for 183 days or more during any 12 month period. Otherwise, you will become a deemed resident of Canada for tax purposes.
Hi Allan
Last year, I worked in Canada until May. Then I had IE for a month and a half.
On August 27, I left the country to work in Saudi where we don’t pay taxes.
Me:
Single and renting a room a place in Toronto. (But, of course, I’m not renting there while I’m working here in Saudi.)
I have no real estate or any property for that matter. My current address in Canada is the last room / house I rented in Toronto—for mail purposes.
I do have a bank accounts / credit cards from a Canadian bank. And I pay RRSP and a life insurance.
Do I have to declare the income I earned from September – December 2016?
Thanks for the help.
Hi David,
Thanks for your questions. It appears that you do not have any primary ties to Canada:
– house or apartment
– spouse
– dependents
BUT, you still have some secondary ties to Canada including:
– RRSP
– Mailing address
– Bank accounts and credit cards
– Life insurance
If you do not want to pay tax in Canada on your Saudi income, then cut as many secondary ties as you can. I do not have enough information about all of your secondary ties to Canada, so I cannot help you make an assessment of your residency status at this time.
Hi , I am Canadian citizen working in US, but my family (wife and two kids) stay in Canada.
I am visiting them every 2nd weekend.
To live in US , I am renting small studio.
My question is: Can I claim rent expenses in US and travel (flights) expenses from US to Canada
for my Canadian taxes, as expenses required to generate income?
Thanks!
Hi Igal,
You cannot claim travel costs or rent expenses.
Hi there,
My husband and I have student visas to study during the school year in Saudi Arabia along with our 2 children. We are Canadian citizens. We do not work there nor do we obtain any money there. My husband works upon our arrival back in Canada and we file our tax returns. The accountant inputs that we are students. We own a house in Canada as well a car and drivers licenses, health cards, furniture, belongings, family, credit cards, banks, my husband contributes to rrsps and has a tfsa.
Are we entitled to continue receiving cctb’s or must we cancel it?
Thank you kindly
Hello Weeza,
Yes, you are eligible for the Canada Child Tax Benefit (now the Canada Child Benefit as of 2016) because you and your husband are still tax residents of Canada.
Hi, Thanks Allan for your help!
I am a Canadian Citizen working on TN since Nov. 2014. My wife and children are in Canada since then and I was travelling frequently between USA and Canada.
1 – We have an offer for our house in Canada for mid July. Am I a non-resident of Canada and should I fill Section 116? I have a bank account, driver licence, credit cards and a car in Canada.
2 – If my family leave Canada on the date of sale, are we non-resident for the purpose of selling the house?
Thanks again for your help.
Hi Peter,
Great question. Since you have a home, spouse and children in Canada, you are a Canadian tax resident. To avoid Section 116 of the Income Tax Act, consider having your wife and children stay back in Canada until the closing date.
Hi Allan
I am working in Saudi Arabia currently.
I got my PR in Aug 2013 and landed first time in October 2013..that time I opened my bank account and made health card stayed in Calgary for 15 days then left Canada .second time I travelled to Calgary in 2015 and stayed there for about 20 days and got my driving license done.because of no jobs I had to leave Canada again now this year I want my family to settle down in Canada from July as our PR will expire in November 2018..my concern is that do I need to pay tax next April as I am still working outside the country. I have Canadian driving license which is never used since last year,but as I am holding it so am I liable to pay tax for last year because I have license made in 2015.
Thanks
Hi Rachi,
When you family settles down in Canada in 2016, you will be liable for Canadian taxes on your worldwide income starting on the date of settlement. The other ties (of which there are only a few) are relatively minor and will not cause you to become a resident of Canada for tax purposes. As a nonresident of Canada, you are not liable for Canadian taxes on your overseas income.
Thank you Allan for a most informative and helpful forum.
I will be moving from Toronto to work in the UK and may stay there permanently. My TFSA is in several mutual funds and I assume I would be taxed on any gains under UK taxation rules. I have been told this may create a complex income reporting situation.
Would you recommend selling all my TFSA investments and transferring them into a non-mutual fund account. Or would it be better to leave the TFSA as is. Should I one day return to Canada, I believe I can recontribute the full amount back into the TFSA.
Thanks
Hi Carolyn,
Close your TFSA, because it’s tax free status will not likely be honored by the UK taxation authorities. Also, you may have to report your foreign accounts to the UK tax authorities, making your tax filings more complex.
Hi Allan,
Just to clarify: If I am deemed a non -resident and live in a tax free country (Turks) being paid by a Canadian company then I do not have to pay income tax?
thanks
Hi Steve,
You do not have to pay income tax in this case, because the employment services are rendered outside Canada and you are a nonresident of Canada.
Hi,
We will be going to Canada in 2 months for the landing process, after which my wife & child will stay back in canada and i will return to UAE where i am employed.
1) Will i have to pay taxes on my income in UAE? I have been told that if i declare being a non-resident, then i do not pay taxes on my income in UAE.
2) Will my wife pay tax in canada (if unemployed). She will pay once she is employed.
3) Will the medical / education benefits be applicable to the spouse / child, while i am in UAE?
Your help will be really appreciated.
Thanks
Amit
Hi Amit,
Thanks for your question. You will be considered as a factual resident of Canada because your spouse and children will be living in Canada. As a result, you have to include your income from the UAE on our Canadian tax return and pay Canadian personal income taxes.
Your wife and children can take advantage of medical and other benefits as they are residents of Canada and are living in Canada.
Hello,
I am non-resifent of Canada (currently have student visa and planning to obtain a working permit soon). I owe a limited liability company outside Canada and am the only shareholder. The company only gets income from operations in Asia. Is such income taxable and do I need to show it any where ?
Will I get in trouble if I do wire bank transfers from the company account to my local Canadian bank account?
Sincerely
Leonard
Hi Leonard,
Thanks for contacting me. You do not have to report the income of the corporation to the Canada Revenue Agency (CRA) as you are a non-resident of Canada. If the transfers to you are in the form of dividends, then they are not taxable in Canada as you are a non-resident of Canada. However, if the transfers to you are for employment services rendered in Canada, then the transfers are taxable to you in Canada.
Hello I work in Television and production field. I recently started doing freelance work in and out of Canada. Lately I’ve been doing more freelance abroad. My wife work and live in Canada, next year we want to buy a home in Canada but I haven’t been able to show income in Canada. How do I set myself or my business to show my income earn? How should I recieve payments from my client?
Hi Uri,
Thanks for contacting me. If you live in Canada, then you must report and pay Canadian tax on your worldwide income.
Hi there,
I recently moved to the Cayman Island with my son ( he has duel citizenship). I also have residency there. I filed my 2015 taxes prior to my move and I am starting to receive the new CCB. I have a bank account here, drivers license, health card that will be expiring and I have no plans to renew it, Tax free savings account and RSP that I do not contribute to. I have an education fund for my son that I do put money into. I have no home here or car or furniture etc and I do not make any money from jobs in Canada. We do not plan to return to Canada other then vacation for years. Do I have to ask for the CCB, GST and other payments to stop for this past tax year? Do you know if there is a tax treaty with the Cayman Islands?
Hi Jennie,
No, we do not have a tax treaty with the Cayman Islands. You should write a letter to the CRA to have them stop paying CTB and GST/HST benefit payments to you. If your desire is to become a non-resident of Canada, cancel as many ties as possible with Canada so that you have a ‘clean break’. Once this is done, you will have to file a departure return for the year that you left with the CRA. I can help you with this. Also, immediately update the CRA with your new address in the Cayman Islands.
Hi Allan,
I have been living outside of Canada for about 7 years now in HongKong. I do not have a spouse, home or dependent children in Canada, but my parents are still living in Toronto. I do not own a house, I have no credit cards, my health card expired, and bank account is inactive. I only kept my driver license and passport with me. Since I have not done the mentioned 6 things when I left the country and I am considering getting a property in HK. May I ask for your recommendation for my current situation so that I do not have to face issue later? Your professional advice is greatly appreciated.
Best Regards, Kara
Hi Kara,
You are very likely a non-resident of Canada. So that I can better help you, I need to know what is the last tax year that you filed a tax return for with the CRA.
“Hi,
I am considering a job offer to work in the US. I would like to keep my owned property in Canada and rent it out. I would also like to maintain bank accounts and take vehicles purchased in Canada with me to the US.
I would be renting a house in the US for 1-2 years.
Would I be liable for 25% withholding tax on my Canadian rental income?
Also, I would be receiving a per diem whilst in the US. Would this be reported as income on my CRA return?
Thank you,
Lenny”
Hi Lenny.
“yes you can. Our fee to file a departure tax return with the CRA is $200 per person plus taxes.
“
“Thank you, Allan,
I do have a wife and two children that would be following me to the US.
So, can I be nonresident in Canada even though I have financial commitments here still I.e. a Mortgage, car finance, etc?
Thank you,
Lenny”
Hi Lenny,
Set aside the HST your company collected, and most of this must be remitted to the CRA. For the profit (e.g. $100,000), set aside 15%, or $15,000 in your case, for paying corporate taxes.
Leaving Canada for good and becoming a non-resident do I have to cash out my investments held in mutual funds with a bank?
Hi Simon,
You don’t have to cash-out your RRSPs. However, if the mutual funds are held outside of an RRSP or TFSA, I suggest that you sell those mutual funds that have unrealized gains in order to avoid paying departure tax.
“Hi,
My daughter is a Canadian PR holder but has lived there only for 6 weeks total period. She has a Bank a/c in Canada and also a Social Insurance No. A Canadian firm shall be appointing her as an employee from Nov 1 2016 but for working in India. They shall be depositing her salary in her Canadian Bank a/c after deducting tax. They shall also deduct and deposit social security items in he SIN a/c.
Since the Canadian FY ends on 31/12, presumably she has to file returns there for which I think the last date would be next April 30. Kindly confirm and be good enough to inform . .the basics for filing returns there, e.g. forms, documents required etc. Also, is income earned in India and assets in India to be mentioned in the returns to be filed there.
I may trouble you again later as our knowledge is zero about Canada tax and returns.
Thank you
DC Bhargava”
DC Bhargava,
“Hi DC Bhargava,
As a resident of Canada, she is liable for Canadian taxes on her worldwide income. Therefore, she should report her Indian earnings on her T1 return and claim a foreign tax credit for part or all of the Indian taxes paid. The CRA will ask for a copy of the Indian tax return filed to validate the foreign tax credit she claimed. Note: An analysis should be preformed to determine if she is a factual resident of Canada, or India.
“
“Hi Allan,
I am Canadian Citizen, I’ve been working and living abroad last 6yrs. I am not resident for Canadian Tax Purpose. I have a property rented, with yearly tax payments for revenue earned. Also a Bank Account to mortgage purposes and credit card. My question is related to Lump Sum mortgage payment. In case, I want to do regular Lump Sum payments to accelerate mortgage payments. I have to deposit the Lump Sum amount in the Bank Account in Canada and set-up the payment. , it will represent a problem from Taxing stand point? – These deposits to pay the mortgage would create any type of Tax implication?”
Hi Pedro,
You can pay-off your mortgage sooner without a negative tax consequence. However, your tax deductible mortgage expense will decrease as a result of the prepayments.
Hi,
I have two questions regarding the definition of “income from Canadian sources” mentioned in the article above.
I am planning to live abroad while working remotely (working from a laptop outside of Canada) for my Canadian employer as an independent contractor. If I sever all ties with Canada (close bank accounts, sell car etc.) and have my employer wire transfer my salary to an oversea account. Would I still be subjected to taxation from Canada?
If I remain a non-resident for tax purposes (sever all other ties) while having a Canadian bank account that receives money from my employer once a month and have it transferred to oversea account. Would I still be subjectd to taxation from Canada?
I really appreciate any feedback.
Sincerely,
Gabe
Hi Gabe,
You are likely carrying on business in Canada. Non-residents that carry on a business in Canada must pay Canadian income tax on the profits earned. However, if your business is based in a country that has a tax treaty with Canada, then the business profits generated are taxable only in the country where your fixed place of business is located. In your case, your fixed place of business is located outside of Canada.
Hi Allan
I am about to leave canada in a couple of months for a 2 year contract with a japanese compagny. I am canadian citizen . My wife and kids will follow me. I own a house here in canada
Do I need to put my house for sale or can I just rent it out without trying to sell it? If i rent it do I need to get a property manager to fill my NR6 NR4 documents?
Hi Jeff,
You can rent your home, sell it, or leave it vacant. If you rent it, you have to pay a monthly tax equal to 25% of the gross rents collected to the Canada Revenue Agency. You can recover part or all of this tax by filing a Section 216 Non-Resident Rental Return each year. If you have an agent in Canada, they can process forms NR4 and NR6 for you. I can also help you with all of these forms and returns.
Hi Jeff,
I reviewed the tax treaty between Canada and Japan. According to the treaty, you are a resident of the country where your domicile / residence is. If you keep a vacant home in Canada, this could be problematic. So if your desire is to be a resident of Japan and a non-resident of Canada, consider selling your home or renting it out.
Hi,
I am a Canadian citizen living in the USA… However I am a dual citizen. (Similar story to Nasser, question #3). I have no assets in Canada, such as a house or car. I do have a health card and my license will soon be expired. I have been out of Canada for 2016 only and working in USA. I do however have student loans from Canada, and a credit card.
What do I do about paying taxes, or do I have to this year?
Am I considered a non-resident?
Or is there someone in which I could call to talk about this in a more in depth way?
Thankyou
Hi Haley,
If you do not plan to return to Canada soon, then you likely became a non-resident of Canada when you left to the US, based on the information you provided to me. You will have to file a departure tax return with the CRA for the 2016 year and a dual-status return with the IRS. I can help you with both filings.
Good day
I am planning to migrate to Canada from Singapore, am a seafarer,
holding Bahamas CDC i wish to know will my salary be taxed in Canada,
even if i sail in international waters like(Dubai, US waters, UK
waters)
If at all taxed what will be the percentage of tax to be paid.
regards
lia
Hi Lia,
If you take up residence in Canada (i.e. live in Canada), then you will be taxable in Canada on your worldwide income. The tax you have to pay depends on how much you make. If you provide me with your total worldwide earnings, I can provide you with a tax estimate.
Hi,
I’m a single no-dependent Canadian citizen considering becoming non-resident with a move to Belize. I would lease an apartment in Belize and use this as a base to live, as well as travel from there. I might come back to Canada for pleasure visits once or twice per year. I have no real estate, no vehicles, and only personal effects which I would bring with me or dispose. I have significant liquid investments held in a couple of bank and brokerage accounts in Canada and I live off the income from these. I would rather keep the bulk of this capital in Canada as I believe it to be safest and I have no problem paying whatever tax Canada would continue to withhold on that investment income. I’m fine with doing the deemed disposition on the assets in the accounts.
I would SEVER these secondary ties: health insurance, BCAA and gym membership, most credit cards (I’d like to keep one or two until I get new ones established and to keep some credit history in case I return one day). I’d have no other memberships, personal effects or assets (no vehicles, furniture, clothes except maybe winter stuff) in Canada.
I’d be left with:
1 or 2 brokerage accounts to hold investments (TD, which I could potentially close the non-registered account (but keep the RRSP and TFSA) and Interactive Brokers which is an international brokerage and I believe I could keep using this, just tell them about my non-residency?). I’d like to keep both for “safety” purposes in the unlikely event of a meltdown.
2 bank accounts (both with TD, CAD and USD)
Drivers license (I want to be able to drive in Belize and other countries I visit!)
Canadian passport (don’t see why I should sever this proof of citizenship document?)
Do you think this would satisfy non-residency following move to Belize or another non-treaty country? Thanks so much in advance!
Hi Craig,
If you get rid of all of your primary and secondary ties to Canada, but for a few investment accounts in Canada, then you will likely be classified as a non-resident of Canada. Departure tax will apply to those investments, plus withholding taxes on dividends and interest payments made to you while you are a non-resident of Canada.
Hi there,
I have been worked abroad in the UK on the youth mobility visa in 2016, and am wondering if I need to file taxes if I worked the entire year overseas?
If so how do I complete this process?
Hi Kristin,
If you do not plan on returning to Canada and do not have any primary ties to Canada, then you should file a departure return with the CRA.
Hello,
I have just returned after living in Korea for 2 years. I didn’t file my taxes the two years I was living abroad but was still receiving my GST cheques. I left my job in Korea on pretty bad terms and I’m almost positive they won’t provide proof of my tax returns that I paid in Korea.
Would I be able to file my taxes here with simply my contract stating how much I would be making before deductions?
Do you have any advice on how to go about this?
And if I were to use your services to file my taxes, how much would it cost?
Thank you
Hi Christina,
If you have no other information, then you can use your contract as a basis for reporting your income. However, to claim a foreign tax credit the CRA will require a copy of the Korean tax returns you filed. The fee to file a tax return is $200 plus disbursements and taxes.
Hi,
I am working in US for one year now and I am on work visa.I claimed my tax in US but I am wondering if I must claim it in Canada and for how many years?Am I double taxed?My family joined me recently and no longer in Canada.We have a house in Canada which we rent it and no plan to sell it as well as RRSP,RESP and Locked-IN .Which documents we should provide to Canadian accountant?What happen to our retirement savings if we decide to stay in US ?What happen to our house which has mortgage on it and earn some rent?should we change our Status in bank and CRA?
Thanks
Hi Ali,
My answers to your questions are as follows:
Hi. I am a Canadian resident. I am just completing 4 years post secondary in the USA and will be starting a job in May in the USA. I will be able to commute to this job from my home in Canada as I live in a border town. I have a significant amount of tuition tax credits that I am carrying forward for the day I will be making $$ again. Are these tax credits at risk in my situation? (Living in Canada but working in the USA.) Thanks in advance for any help!
Hi Yvoone,
I recommend that you maintain your ties with Canada, if you would like to have access to your tuition credits. If you become a non-resident of Canada for tax purposes, then you will lose your tuition tax credits available for carry-forward.
How does CRA know the date of my departure? Can CRA ask airport authority about my departure. or can they ask the photocopy of my passport where they can find my departure date.
How does CRA know what is my total amount of my world income unless there is a treaty between two continues.
Hi JJ,
Your ‘departure date’ for tax purposes is the date by which you have severed all of your primary ties and most of your secondary ties with Canada. This is not necessarily the date when you physically left Canada. If there is an audit, the CRA can ask you for evidence to support your non-residency claim.
If the CRA has an information sharing agreement with your new home country, then they can find out your financial information. You can find a list of a countries that have such agreements on the Department of Finance’s website.
Hi there,
I am putting my girlfriends(common-law) and my tax returns for 2016 and they ask if “Do you intend on filing a return for a prior tax year?” She hasn’t filed one for 2015 but she has not been in Canada from June 2014 until June 2016 (working and living in New Zealand and Australia on Working Holiday Visas). I am German and haven’t been to Canada before June 2016 myself, so clearly not a resident for tax purposes before then.
My/Our understandaing is, that she wasn’t a resident for tax purposes either since she has/had no Significant residential ties to Canada at all and as Secondary residential ties she had “only”:
– a Canadian bank accounts or credit cards;
– a Canadian driver’s licence;
– a Canadian passport.
She had no income etc in Canada at all in 2015.
My question is, am I correct that she wasn’t a resident for tax purposes and if so, does she still have to file a tax return for some reason?
Thanks a lot!
Hannes
PS: she missed to let the CRA know that she was leaving Canada and didn’t fill out any of thoses files that would have been nessecary…
Hi Hannes,
She is a non-resident of Canada for the 2015 tax year and did not earn in any income in Canada during the 2015 tax year. As such, she does not need to file a Canadian tax return for the 2015 tax year.
Hi Madan,
I moved out of Canada on 4-June-2015 and moved to US . I paid taxes in US for the period I was in USA, DO I need to still show my US income. As I think in this cases if I show my US income , they would include that as Taxable income in Canada and I would be double taxed . Please suggest .
Regards
Amit
Hi, Amit. If you severed your primary ties with Canada and became a non-resident, then you must file a departure return with the CRA. In this case, your American earnings will not be taxable in Canada. However, if you did not sever your primary ties and remained a tax resident of Canada, then you will be taxable in Canada on your worldwide income. To reduce / prevent double taxation, claim a foreign tax credit on your Canadian tax return for the American taxes paid.
Hi,
I have an interesting situation. I have a job offer from an employer in India that is tax exempt (since it is a recognized international organization there), but not here. I will not be moving with family, so will be resident of Canada for tax purposes.
In my tax filing should I put my employment income from India as “Income exempt under a tax treaty”. Do I need to file income tax in India to be eligible to do that?
Any pointers in this regard will be very helpful in evaluating my options.
Thanks.
Hi, Abhi. In order for the employment income that you receive to be exempt from Canadian taxation, your employer must be recognized as a prescribed international organization by the CRA, such as the UN. Please contact the CRA to see if your employer qualifies.
Thanks, Allan!
Very helpful topic!
Hi Allan!
I became a PR last June 2016 and did a short landing last August 2016 and stayed for 2 weeks , got my SIN and open a bank account. I went back to Singapore as I am still working there. I went back to Canad last Dec 20176 and stayed for 2 weeks for vacation then return to Singapore until now.
I am planning to settle in Canada in 3 years time.
My concern is do i need to file a tax return now? I will be returning to Canada this August 2017 for vacation for 2 weeks.
Kindly help me out.
Thanks.
Hi, Beverly. No, you do not have to file a tax return in Canada since you do not have any Canadian income and you do not have significant residential ties to Canada.
Hi Madan,
I am a Canadian citizen and working in US on TN-1 for last 10 years. I am filing both of my US and Canadian tax returns every year and pays Canadian Federal and Provincial taxes whatever comes since then. My family lives with me in US, I maintain Canadian mailing address, bank accounts and credit cards. I receive child benefits, GST, and Universal child benefits every month in our bank account in Canada. Me and my family regularly visit Canada to meet friends and relatives.
Someone has told me that I should have stopped child benefits and other amounts once I left Canada, if not I should stop it now. Please guide on this if I have done something wrong or still doing wrong? CRA says on their website that I can be eligible for CCB if I am a resident of Canada for tax purposes. Am I a resident of Canada for tax purposes, as I am filing my Canadian tax returns regularly?
Other question, my tax software does not calculate any CPP contributions when I file my Canadian taxes based on my US foreign income. Will I be eligible of pension benefits in Canada at my retirement age based on my US foreign income and Canadian tax returns?
Thanks
HUR
Hi Hur, It appears that you are a non-resident of Canada, since you have been living and working in the US with your family for 10 years. The ties to Canada that you listed below are ‘secondary ties’ and are not material enough to make you a tax resident of Canada.
I suggest that you fill out form NR73, Determination of Residency Status, and file this form with the CRA. As a non-resident of Canada, you do not have to pay taxes to the CRA on your American income. However, you won’t be eligible to collect Canada Child Benefits and GST credits.
The reason your software is not calculating CPP premiums payable on your American earnings, is because employment income earned outside of Canada is not pensionable. However, you can voluntarily contribute to the CPP by completing form CPT20, which can be downloaded from the CRA’s website.
Hi Allan,
Firstly, thank you for taking the time to reply to all of these questions! I have another one for you!
I left Canada on December 29th 2013 to go work in a school in London. I did not complete any of the paperwork to say I was leaving as originally planned to only stay for 6 months. After loving the UK and getting a full time teaching position, I returned to Canada on June 24th 2016. I did not find work until September 2016 in Canada as a contract worker. When I contacted the CRA, they suggested I submit the NR73 stating that I was a non-resident from December 29th 2013 – June 24th 2016 and that I would not need to file taxes for 2014 or 2015 as I was not living in the country (I had previously filed my 2013 taxes). I have not completed the NR73 and am just getting around to filing my 2016 taxes. Do you recommend that I file the NR73 before I submit my 2016 taxes even though I have been back in Canada for over a year? Or should I not do the NR73 and just complete my 2016 taxes?
Thank you! Rebecca
Hi Rebecca, thanks for your questions. If you did not keep a house in Canada, spouse in Canada, or dependents in Canada, then it’s very likely that you became a non-resident when you left Canada in December 2013 to move to the UK. You should have indicated your departure date and the address of your new residence in the UK on your 2013 tax return. In order to fix this mistake, complete form NR73 and submit it to the CRA for processing.
For the 2016 tax year, file a part-year resident return. On this return, write your new address in Canada, and the date you came back to Canada.
Hi,
Very good information. Thank a lot
I was curious to know if i will have to pay double tax: Im a canadian, (quebecer) that as been working for a full year in New zealand. I wont have work a day in quebec or canda. From January to january. All my income for that year are in New zealand. And i pay tax here around 28 %. But i still have bank account and driving liscence in quebec. ( no house). So im still a recident in quebec. When ill do my tax return, should i expect to pay the different in tax for quebec or canada. Like ill get a credit for that 28% and have to pay the difference. Or considering that i havent work a day, and havent recive any money from canada/quebec. It is going be fine.
Thank for your time
Samuel
Hi Samuel, thank you for your question. You first need to determine if you have become a non-resident of Canada by examining your primary and secondary ties to NZ and to Canada. Assuming that you are a resident of Canada, you will be liable for Canadian income tax (Quebec + Federal) on your worldwide income. As a resident of Canada, you can claim a foreign tax credit for the NZ taxes paid.
Assuming that you are a non-resident of Canada, then you will not be liable for tax in Canada nor Quebec for the income earned in NZ.
Hello!
Hope you can help clarify. I’m a freelancer with 2 long-term freelance contracts – the companies are both from the USA (I get paid hourly, and I just invoice for my work per month). I haven’t lived in Canada for more than 5 – 7 years. I’m constantly traveling and living abroad. My ONLY tie to Canada is my BMO bank account, which my monthly income gets put into. My healthcare is expired, I have no loans, drivers license, credit cards, mortgage, investment or possessions in the country. I know I’ve been too lax about the whole thing, but I honestly don’t know who I should be paying taxes to or the necessary steps to become a non-resident. Can you help clarify?
Hi Amie, thank you for reaching out to me. Your first step is to file a departure tax return with the CRA in order to establish your non-residency status with Canada. Next, we need to determine whether you are liable for income tax in Canada on your freelance income, because you are depositing your revenues into a Canadian bank account. If you are residing in a treaty country, this will be a smaller issue.
Please let me know if you need my assistance to sort out these issues for you.
Hello, currently I am using “SimpleTax” online to file my taxes while living and working in Canada(t4). If I plan to work and live abroad for several years is there a specific tax form to report my worldwide income or I can still file my taxes online the same way? Since i will no more be getting a t4, in what box should I specify the income I earned and the taxes I paid in Lebanon? What utility can I use to file income taxes while working abroad?
Hi Adam, you can continue to use the same software if you are a resident of Canada. Report your overseas employment income on line 104 of your T1 return. Complete form T2209 to claim a foreign tax credit for foreign taxes paid in respect of your foreign employment income. Form T2209 is part of your T1 return.
I am a Canadian working in the USA.
When i file Canadian taxes where do enter the Social security tax that i paid in the US.?
Thanks
Hi Sunny, enter the US Federal Income Tax, US State Income Tax, Social Security Tax, and Medicare Tax on Form T2209, Federal Foreign Tax Credits. Attach this form to your Canadian T1 tax return.
I am Canadian working in USA. My US company paid a third party mover for my moving expenses which show on my W2 as US income on top of my regular income. When I file taxes in Canada will I be taxed on this move income that shows on my W2?
Thank You
Hi Sue, moving expenses paid by your employer are a taxable benefit. However, you can also claim a tax deduction on your Canadian tax return for moving expenses, if you meet certain conditions. See form T1M which you can download from the CRA’s website.
I’m a resident of Canada working in another country with a lower tax rate than Canada. As a result, I will have a foreign tax credit, but I still have to pay the difference to the CRA. How does contributing to my RRSP work? I’m guessing CRA can’t refund more than the difference I pay? Now assuming I don’t contribute more than what it takes for that to happen, do I still get refunded according to the highest tax brackets possible (i.e. marginal tax rate at first), retaining the full benefit of the RRSP deduction as if I were still working in Canada?
Hi Wen, if you contribute too big of an amount to your RRSPs, you will end up wasting all or part of the foreign tax credit that you want to claim on your Canadian return. In other words, the maximum amount that you should contribute to your RRSP is the amount that equalizes your Canadian taxes payable on your foreign income (before foreign tax credits) with the foreign taxes paid.
Hi,
I want to know how I will be taxed if I have a PR and live in Canada but have foreign income from Pakistan. Also my husband will live in Pakistan (he also holds a PR) and files returns in Canada, how will he be taxed. Please keep in mind that we have a child under 4 years of age and another is expected and we want to be claiming benefits if that is possible and also pay our taxes.
Thanks
Hi AN, it appears that you are both tax residents of Canada. As such, you both must report your worldwide income on your Canadian tax returns and pay Canadian income taxes. To avoid double taxation, you can claim a foreign tax credit on your Canadian tax return for the taxes paid in Pakistan.
Hi, my husband and I and our 2 kids were living in Dubai for 6 years. My husband then left the marriage and my kids and I returned to Canada. We became legally divorced in February of 2017 and I am receiving monthly spousal support payments. I know that my monthly spousal support is taxable but my tax preparer said that I might not have to pay income tax as my ex-husband is still living in the UAE and we have a tax treaty. between canada and the UAE. Is this true? Thanks.
Hi Katie May, spousal support payments received by you pursuant to a court order or written agreement are taxable to you if the court order or agreement clearly states the amount to be paid to you is for spousal report. This is true even if the payer is a non-resident of Canada.
Hi Allan,
I am a non Resident Canadian for the last 18 years and have been declaring my rental income in Canada. I maintained my non-resident bank account to service my mortgage. Now my child wish to return to Canada to study in grade 10 while I continue to reside outside Canada. Since I am not in Canada for 183 days or more, is my income become taxable?
Thank you and look forward to your reply
JL
Hi Jason, having a child live in Canada is a primary tie for you with Canada. In the absence of a tax-treaty with Canada and your home country, you will be treated as a tax resident of Canada and will be liable for Canadian income tax on your worldwide income.
Hello Allan,
Thank you for your previous reply.
This is just a follow up. Here is the background:
I have been away as non resident for 18 years and declared my rental income in Canada annually. Now, we are considering to send our child back to Toronto area for high school while I will continue to reside overseas.
I am currently residing in Singapore and will soon move to Vietnam. Both of these 2 countries has tax treaty with Canada, am I deemed as non-resident in this case?
Look forward to hearing from you.
Hi Jason, sending your child to study in Canada will create a primary tie for you with Canada, and as such, you will be treated as a tax resident of Canada. However, the tax treaties between Canada-Singapore and Canada-Vietnam specifically state that you are a resident of the country where your permanent home is located. Therefore, you will be treated as a resident of Singapore or Vietnam, so long as you have a permanent home (either rented or owned) in either of those countries.
If you maintain a permanent home in Canada (for your child to live in), and you also maintain a permanent home in either Singapore or Vietnam, then you will be treated as a resident of the country where your personal and economic ties are closest.
Hi. I work on a cruise ship and am out of the country for 6 month contracts and then back for 2months. I do own property here in Canada. Do I have to pay taxes on the income I earn when abroad? Is there any tax credit for seafarers who work on cruise ships?
Hi Zaeen,
Since you come back to Canada every 6 months to stay for a period of 2 months before you leave again, and since you have a property in Canada (available for your personal use), you are a factual resident of Canada. This means that you will be taxable in Canada on your worldwide income. There is no special ‘tax deduction’ for overseas income available in Canada. To the extent that taxes have been deducted from your paychecks, you can claim a foreign tax credit on your Canadian return.
IHello Allan. I am 63 and going to work in Mexico for 1 year… 3 months this year 9 months in 2019. I will file taxes as normal with income made worldwide , my question is .When I file for cpp 1 year and 3 months from now will this have any effect?
Hi Jack,
In general, income earned outside of Canada is not subject to CPP premiums. However, if you do want to contribute to the CPP in respect of your overseas earnings, complete this form https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/cpt20/cpt20-17e.pdf By doing so, your CPP benefits upon retirement will increase.
My daughter moved to Denmark in March of 2018 to accept a 9 month contract position with the World Health organization in Denmark. She has no personal property in Canada but has a Canadian Drivers License, an RRSP, Canadian Bank Accounts, Student Loans, Health Card and Canadian Credit Cards. She has been told any earnings from a United Nations Organization is considered tax free in Canada. Is that the case? Is she considered a Canadian resident for the 2018 tax year?
Hi Larry,
Staff members of the UN or a prescribed organization (as per CRA) do not pay income tax on UN earnings. However, residents of Canada (even UN employees) still have to file a Canadian tax return. On the return, the total UN wages paid is included as income, and a deduction is taken for the same amount, resulting in $0 of taxable income.
Denmark is a member of the UN, and I believe that UN employees do not have to pay tax in Denmark either. Since she is neither taxable in Denmark nor Canada, she cannot take advantage of the double taxation treaty between Canada and Denmark. This is relevant, because she has a lot of secondary ties to Canada. This is an indicator that she intends to return to Canada, and will therefore be considered a tax-resident of Canada.
Dear Madam,
I am canadian citizen and i moved to Oman in Feb/2017 with Family and we declared as non Resident, Now i got job in canada, i would like to move in Dec/2018, Do i need to pay taxes for 2018 overseas income? Or i need to pay taxes for last two weeks of income( Dec) from Canada?
Hello,
You do not need to pay income taxes on foreign income to the CRA for all of 2018. You will be liable for Canadian income taxes on worldwide income starting from the date that you come back to Canada (i.e. last 2 weeks of December in your example).
My question is something of a reverse of most cases. I am a UK citizen and resident in the UK for tax purposes. I file annual tax returns in the UK and pay any required taxes in the UK. My wife is a Canadian citizen & we have a daughter who is dual nationality. We have a home in Canada which is the permanent residence of my wife & daughter. Legally I am a 1% owner of the home. I own other assets in Canada (two boats & trailers), I have a joint RBC account and I am a secondary card holder on my wife’s RBC credit card. I am employed as a seafarer by a Bermudan company, paid in sterling that is directly deposited into our RBC bank account. I have a bank account and two credit cards in the UK. I have no tangible assets in the UK. My main question is…if I become a Canadian Resident (I currently enter as a visitor and stay for less than 183 days), will I be required to pay Canadian taxes, or can I continue to be resident in the UK for tax purposes? There is a dual taxation treaty in place, which I believe implies that any taxes due in Canada would be reduced by the amount of tax paid in the UK. I would like to get Canadian residency so that I can get a drivers license and join MSP. Compicated???
Hi Jon,
If you apply for permanent residency in Canada, and obtain it, then you will certainly become a tax resident of Canada. This is because your spouse and child live in Canada, and you have a home available for your use in Canada. To avoid double taxation, you can claim a foreign tax credit on your Canadian return for UK taxes paid.
Hi Allan,
I have a quick question about TFSA’s. I’m a Canadian working abroad for the past 5 years and have declared non-residency during this time. I will be moving back to Canada soon (either Vancouver or Toronto) so in regards to TFSA contribution room, will it start from zero or will it start at whatever contribution space I had already accumulated prior to declaring non-residency?
Really appreciate your answers and great article!
Thank you!
Hi Nic,
You will not start at zero. Your contribution room when you return will be the same as the contribution room you had available when you left Canada.
Great article. Question related to the link at the end… for cases when foreign tax year does not coincide with Canada. I am a Canadian resident with income from a HK company. Since HK’s tax year is 1 April to 31 May, how do I report the foreign tax? What’s worse, since I won’t be given a tax assessment/tax bill by HK government until the second half of the year following tax year (i.e. the bill for 1 April 2018—31 March 2019 taxes is received in Sept 2019). Thanks!
Hi Huey,
You will have to calculate the HK income that falls within the 2018 calendar year (January 1 to December 31). To do so, follow this approach:
HK Income for 2018 Year-Ended March 31, 2018 x (3 months divided by 12 months)
PLUS: HK Income for 2019 Year-Ended March 31, 2019 x (9 months dividend by 12 months)
The sum of (1) and (2) above is the total HK income that you earned in the 2018 calendar year. You have to report this on your Canadian tax return. Furthermore, follow the same approach when calculating HK taxes associated with the HK income earned within the 2018 calendar year. You can claim a foreign tax credit on your Canadian return for the HK taxes paid.
You are correct – timing is an issue, because you won’t have your 2019 HK return completed in time for filing your 2018 Canadian tax return. As such, you will have to estimate the HK income and HK taxes for the last 9 months of the 2018 calendar year.
This is Manoj T and I and my family have my Canada PR and I completed my landing formalities along with my family on Oct 25th 2018 and moved back from Canada to the USA on 3rd November 2018 as I am working in the USA on H1B visa.
I and my wife opened RBC credit and debit accounts but we haven’t transferred any amounts from our Indian or USA accounts to that account and also we don’t have any income sources in Canada.
Also, we applied for medical cards and we received them as well
I heard from my friends and online forums that I need to do tax filing even though I am not staying in Canada as of now but I am really confused
Need your guidance and help on below
1)Do I need to pay taxes for Canada
2)If I need to pay do I need to pay from the day I landed in Canada or the day I left Canada
3)As I am staying in the USA I have not opted for child benefits of my kid. Can I do that? will it not have any impact as I am outside Canada.
4)Do I need to be there in case if I want to apply child benefits for my kid
Hi Manoj,
It appears that you and your family did a ‘soft landing’ in Canada, and then returned to the US all together after a few weeks. In this case, you will not be considered a resident of Canada for tax purposes. You will not be eligible for Canada Child Benefits until you become a tax resident of Canada (i.e. when you permanently move to Canada with your family).
Hi —
I am currently being recruited for a one year contract position in Saudi Arabia (contract is extendable). The KSA income is being offered “tax free” 400K US$. Will I end up paying Canadian income taxes on all of that?
Hi Ian,
If you come back to Canada within a year, you will pay tax in Canada on your Saudi income. Also, if you maintain a house, spouse or children in Canada, you will pay tax in Canada on your Saudi income. Lastly, you must cancel the majority of your secondary ties and have no primary ties to Canada in order to become a non-resident of Canada for tax purposes.
Dear Madan,
My daughter canadian married to UK citizen . She started working since sept 1919 .
She owned one house with my son . as principal residence
she is having condo which is rented
So she has
Rental income for last year in canada
and employment income in Uk
She got married and now getting settled with her husband in Uk
How to file her tax return
Hi Shailesh,
If your daughter has moved to the UK personally, she should file a departure return with the CRA to update her status to a non-resident of Canada. She should file a Section 216 Non-Resident Rental return in respect of her Canadian rental property. Additional forms must be filed. For further information, please send an email to me: amadan@madanca.com
Hi Allan,
I am a dual citizen leaving Canada to study law in the Philippines. However, my employment will still continue with the same employer still paying me my income here (same payroll) via my Canadian bank account. Will I still continue to receive Canadian child benefits and do I have to report my departure? I live with my mother here in Canada.
Hi Cherry,
If you are temporarily leaving Canada, and plan to return to Canada in the near future, then you are still considered a resident of Canada. In this case, you can collect Canada Child Benefits if you maintain a home where you and your child both live. In addition, you will be liable for Canadian taxes on your global income.
However, if you have permanently left Canada, and have severed your primary ties to Canada and most of your secondary ties, then you will likely be considered a non-resident of Canada. As a non-resident, you are not eligible for the Canada Child Benefit. Furthermore, you will still be liable for Canadian income taxes on your Canadian employment income.
I’m a Canadian resident working this year in the United States, on a TN visa. I have ties to Canada, bank accounts, driver licence etc. Am I required to pay FICA taxes, which my employer is currently deducting. Also do I need to file a return in the US or just file my return with CRA
Hi Heather,
Yes, you are required to pay FICA taxes. If you have a home, spouse or children in Canada, then you are likely a Canadian tax resident, which means that you have to pay Canadian taxes on your US income. You can claim a foreign tax credit as a reduction of your Canadian tax liability for the American taxes paid.
Hello,
I am planning to retire early at 55 (next August 2021) and live overseas with my wife and receive rental income from my Canadian home that my oldest daughter will still live in. I will also receive RRIF income from my RRSPs and income from my TFSA’s. I plan to return back to Canada every 1-2 years for a few months with my wife to visit family.
What do I need to do to prepare for this. Do I need to fill out all the forms you suggest above even if retiring.
Thanks for your help.
Hi Tony,
You will become a non-resident of Canada if (a) you sever all of your primary ties to Canada and (b) sever most of your secondary ties to Canada. As a non-resident, you can keep an RRSP/RRIF, TFSA, and a Canadian rental property. In addition, inform your financial institution that you became a non-resident so that they will withhold non-resident tax on RRIF / RRSP payments made to you.
Also, you must file a Departure Return with the CRA along with other forms (e.g. Form T1161). Lastly, you will need to remit a non-resident withholding tax equal to 25% of the monthly rents collected and file a Section 216 Non-Resident Rental Return each year.
Hi.. My name is Joe… I have been living outside Canada for 30 years, I have no ties what so ever with Canada (no bank accounts, no credit cards, so health insurance…nothing…) I would like to go back to Canada and live again…. I am 62 years old. Please advise if I can return without any tax declaration. Please advise
Hi Joe,
You will have to file a part-year resident return for your arrival in order to reestablish your tax residency with Canada. The return is due April 30 of the following year.
Hi Allan,
Not sure how to start my inquiry but I will try.
We are Canadians who left Dubai last 2021. We are still receiving child benefit and paying our taxes yearly (except for 2023 as we are still thinking what’s the best move).
We informed CRA about our situation recently and they advised us to fill up the nr73 form and they said they will assess us as per that document. However, what concerns us was they said that they might ask us to repay the child benefit from the beginning we left Canada as we are not resident anymore. But I thought since we were paying tax then we are still residents.
My question is
1. if they decide that we are considered as non resident will that mean we don’t need to pay our tax for 2023 and our taxes for the previous years will be returned?
Thanks for your help in advance.
Regards,
Alona
Hi Alona,
If the CRA determines that you became a non-resident of Canada starting from the date you left Canada in 2021, then you will no longer be eligible for the Canada Child Benefit. Any CCB payments made to you while you are a non-resident of Canada must be returned to the CRA. At the same, you will not owe Canadian income tax on foreign income starting from when you became a non-resident of Canada. If you paid income tax on foreign income in error, then file a T1 adjustment to request a refund of the tax.
My son (Canadian) worked in Australia (working holiday visa) from November 2022 through April 2023. I filed his Canadian tax returns for 2022 and 2023 already. First, does he need to file an Australian tax return? How can he claim back taxes (not to pay twice)? If he does need to file an Australian tax return, how do I amend the Canadian tax return to reflect this?
Thank you!
Hi Melissa,
Your son should file an Australian tax return. After filing, he should amend his Canadian personal tax return to include his Australian income and claim a foreign tax credit for the Australian taxes paid. We can file the amendment for your Son.