Tax Implications for Canadians Working Abroad, Overseas, Outside Canada

Allan Madan, CA
 Oct 17, 2011
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If you are a Canadian working aboard, whether permanently or temporarily, there are many tax implications involved. Find out what tax consequences you should consider if you are permanently or temporarily working aboard or overseas outside of Canada.

Canadians Working Abroad, Overseas, Outside Canada – Permanently:

A Canadian who is permanently working overseas must determine their residency status. You must determine if you are a resident of Canada, or a non-resident of Canada. The CRA (Canadian Revenue Agency) looks at three primary factors when determining your Canadian residency status.

  1. The first is where your permanent home is located;
  2. The second, is where your spouse and/or common law partner and children live; and
  3. The Third Factor is where you live.

Let’s take the example of John Smith who left Canada 13 years ago to work and live in the United States. His permanent home (number 1) is in the United States. His wife and two children (number 2) are in the United States; and John lives in the United States (number 3). In this case, John Smith is clearly a non-resident of Canada.

The secondary factors that the CRA looks to in determining whether Canadians working outside Canada are residents of Canada are:

  1. Canadian driver’s license
  2. Bank account and credit cards
  3. Investments in Canada (e.g. RRSPs, TFSAs, Canadian pension, brokerage account, etc.)
  4. Health cards
  5. Social ties (e.g. membership in community club, professional organization, etc.)
  6. Personal possessions (e.g. furniture, household appliances, vehicles, clothing, etc.)

A single secondary tie, by itself, will not cause you to remain or become a non-resident. When examining the secondary ties and their impact on your Canadian residency status, you must evaluate the ties as a whole.

For example, assume that John Smith (in the example above) continues to maintain many secondary ties to Canada, including:
  1. Honda civic                                                                                 banks
  2. Drivers licence
  3. bank account at Royal Bank, and TD Bank
  4. Visa and Master Card
  5. Furniture, kitchen appliances, washer/dryer, and clothing
  6. Membership in Toronto Golf Premier Club
  7. Health card (not relinquished)
  8. 3 brokerage accounts for trading stock at Scotia Bank
  9. RRSPs, TFSAs
  10. $2 million life insurance policy with Sun Life Canada

Since John Smith has many secondary ties to Canada, he may be considered a resident of Canada for tax purposes, and would therefore be taxable in Canada on his worldwide income.

Six Important Things to do Before You Leave Canada:

Now that we’ve talked about what the factors are for determining your residency status, what happens when you leave Canada? There are 6 things you need to do, as a Canadian living abroad, when or before you leave Canada.

1. File Departure Tax Return

You need to file a departure tax return (this is similar to a personal tax return due on April 30th, but has a few special forms attached to it). On your departure tax return,  it is really important that you indicate the date that you emigrated from Canada, which is the date that you left Canada.

2. Submit Form NR73

You could file form NR73 (determination of resident status upon leaving Canada). It’s not mandatory to file this form with the CRA, however, as Canadians working abroad you may want to complete this several page questionnaire and submit it to the CRA for processing. This is because once the CRA has processed it, they will give you a determination in writing as to whether you are a resident of Canada or a non-resident of Canada, and so you’re not left guessing.

Some tax practitioners do not think the NR73 should not be completed, because by submitting the NR73, you are “inviting” the CRA to audit your situation. Since the NR73 is not mandatory, you could simply write the date of departure on your final Canadian tax return instead.

3. Stop Receiving Tax Credits

Canadians working abroad, overseas, outside Canada must tell the CRA that they no longer want to receive payments or credits for GST, the Canada child benefit, and the universal child care benefit. If they continue to work abroad and receive these payments, they will end up having to pay all of that money back, plus interest and penalties, once the CRA finds out.

4. Disclose All Assets

All Canadians working overseas must give the CRA a complete list of all Canadian and foreign assets they own immediately prior to departure. You must provide a description of your assets and the fair market value of those assets at the time that you leave. However, you are not required to file this form if the total value of all your assets is less than $25,000 when you leave Canada. If you don’t file this form the CRA will levy a significant penalty of $2,500. From practical experience, I have seen the CRA levy this penalty every chance they get. The reality is Canada is running deficits, and the CRA is looking at ways to increase Canada’s revenue base.

5. Pay Departure Tax

Canadians who leave Canada are required to pay departure tax. When you leave Canada and become a non-resident, you are deemed to dispose of all of your assets at their fair market value and you must pay tax on the accrued gains. Certain assets are exempt from departure tax, like your home, RSPs, and RIFs.

6. Talk to Your Financial Adviser

Canadians working overseas need to speak with their financial advisor.

(a) You should tell your financial advisor that you have become a non-resident, the date you became a non-resident, and that you want to receive non-resident tax slips from all the financial institutions, mutual fund companies and stock brokerages that you do business with. There are special non-resident tax slips for investment income that will be given to you.

(b) You should tell your financial advisor that you no longer wish to contribute to your RRSP, and also that you want to stop contributing to the tax free savings account (because you’re no longer permitted to do so once you become a non-resident of Canada).

Tip: If you expect to have significant income and taxes (like departure tax) on your final Canadian tax return, then consider making a RRSP contribution to reduce your Canadian tax liability.

Filing Tax Returns in Canada for Canadians Working Abroad 

Now that we’ve gone through the six things you need to do before you leave Canada, what are your filing options after you leave Canada?

For example, do you have to file a tax return?

You only have to file a tax return as a Canadian permanently working abroad in three specific circumstances.

  1. You earned employment income in Canada
  2. You carried on a business income in Canada
  3. You disposed of taxable Canadian property such as real estate property

Other than these three specific circumstances you are generally not required to file Canadian tax return after you leave Canada.

Withholding Tax for Canadians Living Abroad

After you leave Canada, you will be subject to withholding tax. Withholding tax is applied at a rate of 25% on the Canadian source income that you receive. These items include interest, dividends, CPP, old age security and pension, RSP income and rents from real estate property.

Let’s take an example. You are a Canadian working abroad, and you have ten thousand dollars in Canadian savings bonds, that pay you 10% interest or $1,000 per year. In this case, your Canadian Bank would be required to withhold 25% in taxes or $250 from the interest payment that you receive. This is known as withholding tax.

You should look at the tax treaty that Canada has with the country you’re living in to see if you can get any kind of tax relief meant for Canadians working outside Canada. For example if you live in the United States, the withholding tax imposed on dividends is just 15%. If you are living in the United States the withholding tax on interest received from Canadian banks and financial institutions is zero. If you are living in the United States and you receive Canada pension plan payments, the withholding tax rate is zero, which is a lot better than 25%.

Canadians Living Temporarily Abroad:

If you are briefly living abroad you are considered a factual resident of Canada because of your residential and personal ties with Canada. As Canadians working abroad, you could be a factual resident of Canada under the following circumstances.

  1. You worked temporarily outside of Canada
  2. You teach or attend a school outside of Canada
  3. You commute daily or weekly to work in the United States
  4. You regularly vacation outside of Canada

Tax Filing Obligations for Canadians Living Temporarily Outside Canada:

What about tax filing obligations for someone who is temporarily living outside of Canada? As Canadians working abroad, you still have to:

  1. File a regular personal tax return which is due on April 30th
  2. Pay tax on your worldwide income (income earned inside as well as outside of Canada),
  3. Claim all deductions and tax credits just like all other Canadians
  4. Pay, both, Federal and Provincial tax

Let’s look at an example. John Smith is transferred to Hong Kong for a period of 18 months by his employer. He is leaving his spouse and children behind in Canada and he is still maintaining his permanent home in Canada. He is temporarily renting accommodation which is provided to him by his employer in Hong Kong for the 18 month period. In this case, John Smith is clearly is factual resident of Canada and he is subject to income tax on his worldwide income – that is, the income earned in Hong Kong and the income earned in Canada, if any.

Tip: John might also want to know if he can still contribute into his CPP while working overseas. If you are in this situation as well, check out this post on CPP contributions from overseas.

Foreign Tax Credits

Foreign tax credits for Canadians working abroad temporarily. You may be thinking that as a Canadian temporarily working abroad, you are subject to double taxation because you have to pay taxes in the country where you are working and you also have pay tax in Canada. Fortunately, the Canada Income Tax Act can provide tax relief by the way of a foreign tax credit. You can claim a foreign tax credit for the taxes that you paid in the foreign country.

The foreign tax credit is the lesser of two amounts:

                         foreign-tax
  1. The income tax you paid on the foreign country
  2. The second is the Canadian tax payable on the foreign source of income.

So if you’re working in a country that has a very high tax rate, you will in most likely get all the foreign taxes credited back to you on your personal Canadian income tax return.

Tip: Check out this article on problems with the foreign tax credit for Canadians abroad.

Overseas Employment Tax Credit for Canadians Working Outside Canada

Canadians temporarily working abroad should consider the overseas employment tax credit. To qualify for the overseas tax credit you must be working for a Canadian employer, and you must be working overseas for at least a period of six months, or more. In order to quality you must be working in one of the following industries.

  1. Exploring for petroleum, natural gas, minerals, or similar resources
  2. Construction, installation, agriculture, or engineering work
  3. You are working for the United Nations

For more tips on how to save international taxes if you are a Canadian, check out this related article 6 tips for Non-Resident & International Taxes.

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.

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Comments 498

  1. 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

    1. 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

  2. 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

    1. 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

  3. 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

    1. 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

  4. 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

    1. 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

  5. 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

    1. 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

  6. 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

    1. 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

  7. 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

    1. 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

  8. 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..

    1. 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

    2. I’m considering a job in Doha & appreciate if you can drop an e mail for some information.

      Thanks & Rgds,

  9. 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

    1. 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

  10. 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!!!!!!!

    1. 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

  11. 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

    1. 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

  12. 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:)

    1. 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

  13. 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.

    1. 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.

  14. 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.

    1. 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.

  15. 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?

    1. 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.

  16. 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?

    1. 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

  17. 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

    1. 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

  18. 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

  19. 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!

    1. 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

  20. 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?

    1. 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

  21. 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

    1. 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

  22. 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

    1. 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

  23. 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?

    1. 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.

  24. 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

    1. 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

  25. 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?

  26. 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.

    1. 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

  27. 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,,

    1. 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

  28. 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

    1. 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

  29. 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?

    1. 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

  30. 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.

    1. 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

  31. 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

    1. 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

  32. 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!!

    1. 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

  33. 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

  34. 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

    1. 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

  35. 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

    1. 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

  36. 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

    1. 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

  37. 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

  38. 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

    1. 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

  39. 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

  40. 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

  41. 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

    1. 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

  42. 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!

    1. 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

  43. 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.

    1. 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

  44. 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!

    1. 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

  45. 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

    1. 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

  46. 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

    1. 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.

  47. 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.

    1. 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.

  48. 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.

    1. 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

  49. 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!

    1. 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

  50. 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?

    1. 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

  51. 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

    1. 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!

  52. 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

    1. 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

  53. 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!

    1. 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

    2. 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

  54. 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.

    1. 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.

  55. 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.

    1. 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.

  56. 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.

    1. 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.

      1. 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.

        1. 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.

  57. 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.

    1. 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

  58. 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

    1. 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

  59. 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

    1. 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

  60. 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

    1. 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

  61. 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

    1. 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

  62. 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.

    1. 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

  63. 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?

    1. 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

  64. 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

    1. 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

  65. 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!!

    1. 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

  66. 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?

    1. 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

  67. 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

    1. 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

  68. 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 ?

    1. 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

  69. 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!

    1. 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

      1. 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 🙂

        1. 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

  70. 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!

  71. 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?

    1. 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

  72. 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.

  73. 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

    1. 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

  74. 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.

    1. 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

  75. 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

    1. 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

  76. 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?

    1. 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

  77. 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?

    1. 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

  78. 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?

    1. You can continue to posses your RRSP’s in Canada. However you will no longer be able to contribute to them.

      Thanks

      Allan

  79. 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

    1. 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

  80. 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,

    1. 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

  81. 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.

    1. 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

  82. 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

    1. 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

  83. 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?

    1. 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

  84. 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.

    1. 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

  85. 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!

    1. 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

    1. 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

  86. 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

    1. 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

  87. 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)?

    1. 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

  88. 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

    1. 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

  89. 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

    1. 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

      1. 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

        1. 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

  90. 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 .

    1. 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

  91. 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

    1. 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

  92. 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.

    1. 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

  93. 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

    1. 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

  94. 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

    1. 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

  95. 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

    1. 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

  96. 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.

    1. 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

  97. 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.

    1. 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

  98. 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

    1. 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

  99. 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!

    1. 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

  100. 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.

    1. 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

  101. 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.

    1. 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

  102. 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.

    1. 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

  103. 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.

    1. 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

  104. 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

    1. 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

  105. 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!

    1. 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

  106. 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!!

    1. 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

  107. 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

    1. 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

  108. 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.

    1. 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

  109. 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

    1. 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

  110. 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

    1. 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

  111. 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.

    1. 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

  112. 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.

    1. 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

  113. 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.

    1. 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

  114. 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?

    1. 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

  115. 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

  116. 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

  117. 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?

    1. 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

  118. 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

    1. 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

    2. 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

  119. 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?

    1. Hi Jason,

      Yes, your aunt can purchase Canadian real estate.

      Thanks,

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

  120. 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?

    1. 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: http://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

  121. Hi Allan, How does the U.S. determine residency status of its “aliens”? What are the responsibilities of each?

    1. 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

  122. 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?

    1. 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

  123. 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?

    1. 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

  124. 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

    1. 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,

  125. 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.

    1. 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

  126. 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,

    1. 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

  127. 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?

    1. 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,

  128. 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?

    1. 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

  129. 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?

    1. 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.

  130. 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.

    1. 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,

  131. 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

    1. 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.

  132. 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

    1. 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,

  133. 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

  134. 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?

    1. 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

  135. 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

    1. 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

  136. 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?

    1. 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
      ?

  137. 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

    1. 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.

  138. 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.

    1. 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.

  139. 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

    1. 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

  140. 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

    1. 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,

  141. 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?

    1. 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.

  142. 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.

    1. 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,

  143. 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

    1. 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.

  144. 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.

    1. 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.

  145. 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

    1. 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!

  146. 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.

    1. 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.

  147. 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.

    1. 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.

  148. 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.

    1. 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

  149. 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

    1. 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,

  150. 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?

    1. 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

  151. 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?

    1. 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

  152. 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?

    1. 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

  153. 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. 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

  154. 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

    1. 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.

  155. 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 ?

    1. 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

  156. 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?

    1. 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

  157. 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

    1. 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.

  158. 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.

    1. 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

  159. 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

    1. 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.

    2. 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.

  160. 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?

    1. 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

  161. 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.

    1. 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.

  162. 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

    1. 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.

    2. 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

  163. 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

    1. 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

  164. 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?

    1. 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%.

  165. 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

  166. 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.

    1. 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

  167. 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.

    1. 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

  168. 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

    1. 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.

      1. 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

  169. 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?

    1. 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.

  170. 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.

  171. 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 ?

    1. 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

  172. 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!

    1. 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

  173. 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!

    1. 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!

  174. 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.

    1. 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.

  175. 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

    1. 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.

  176. 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!

    1. 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.

  177. 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

    1. 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.

  178. 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

    1. 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.

  179. 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

    1. 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.

  180. 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

    1. 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

  181. 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)

    1. 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.

  182. 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 ?

    1. 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.

  183. 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!

    1. 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,

  184. 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!

    1. 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,

  185. 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.

    1. 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,

  186. 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.

    1. 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,

  187. 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

    1. 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.

  188. 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

    1. 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.

  189. 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?

    1. 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.

  190. 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

    1. 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.

  191. 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

    1. 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.

  192. 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.

    1. 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

  193. 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!

    1. 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

  194. 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?

    1. 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

  195. 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…!

    1. 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.

  196. 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

    1. 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.

  197. 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

    1. 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.

  198. 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?

    1. 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

  199. 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

    1. 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,

  200. 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

    1. 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).

  201. 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

    1. 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?

      1. 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.

        1. 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.

  202. 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.

    1. 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.

  203. 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…..

    1. 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.

  204. 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?

    1. 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.

  205. 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

    1. 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.

  206. 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

    1. 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.

    1. Hi Sam,

      You do not have to pay CCP premiums for income earned outside Canada.

      Huda – Please update website and send me the link

  207. 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

    1. 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.

  208. 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

    1. 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.

  209. 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!!

    1. 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.

      1. 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?

        1. 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.

  210. We will be leaving Canada to travel for roughly a couple of years. Should we complete the nr 73 form?
    Thanks

    1. Hi LaurieV,
      Form NR73 is not mandatory. If you would like CRA’s determination on your residency status, complete it shortly before leaving.