I left Canada, never cancelled my provincial health insurance, but want to be seen as a non-resident for tax purposes. How will CRA assess this in my backdated departure?
If I never cancelled my provincial health insurance for 3 years but was outside Canada living, will CRA expect I pay worldwide income?
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Not cancelling your provincial health insurance does not automatically make you a Canadian tax resident, but it is a secondary residential tie that CRA will consider when assessing your tax residency, especially if you are trying to backdate your departure from Canada.
How CRA determines tax residency
CRA does not look at any single factor in isolation. Residency is determined based on your overall residential ties to Canada at the relevant time.
1. Primary residential ties (most important)
• A home available to you in Canada
• A spouse or common-law partner in Canada
• Dependants in Canada
If these ties remain in Canada, CRA will often consider you a resident regardless of where you were physically living.
2. Secondary residential ties
These include:
• Provincial health insurance coverage (OHIP, MSP, etc.)
• Canadian driver’s licence
• Canadian bank accounts and credit cards
• Personal property in Canada
• Social ties and memberships
• Filing Canadian tax returns as a resident
Provincial health coverage falls into this secondary category. It matters, but it is not determinative on its own.
What keeping provincial health insurance means
Keeping your provincial health insurance active suggests you may have maintained ties to Canada, but by itself it does not prove residency.
Example scenarios
Scenario A – Likely non-resident
You:
• Left Canada and established a home abroad
• Sold or rented out your Canadian home
• Moved your spouse and dependants abroad
• Worked and lived full-time outside Canada
In this case, CRA may still accept that you became a non-resident when you left, even if you failed to cancel your health coverage.
Scenario B – Likely resident
You:
• Kept a home available in Canada
• Left family members in Canada
• Maintained multiple Canadian ties
• Took no steps to formally sever residency
Here, CRA may conclude you remained a Canadian resident, and your worldwide income would be taxable in Canada.
Backdated departure and worldwide income
If CRA determines you remained a resident for part or all of the period you were abroad:
• You may be required to file Canadian tax returns for those years
• You would report worldwide income
• Foreign tax credits may be available to reduce double taxation
CRA does not automatically accept a claimed departure date. They assess when your residential ties actually changed.
How CRA evaluates a backdated departure
CRA typically looks at:
• When you physically left Canada
• When you disposed of or rented out your Canadian home
• Where your spouse and dependants lived
• Whether you established a permanent home abroad
• Whether you maintained or severed Canadian ties (including health coverage)
It’s a fact-based, holistic analysis.
Practical next steps
If you are trying to support a non-resident position:
1.Document your departure
• Flight records
• Lease agreements or property sale documents
• Employment contracts abroad
2.Demonstrate severance of Canadian ties
• Evidence of housing abroad
• Family relocation
• Closure or reduction of Canadian accounts
• Health coverage cancellation (even if done later)
3.Correct past filings if needed
• File missed returns
• Claim foreign tax credits
• Submit a detailed residency position (often preferable to Form NR73)
Bottom line
Keeping provincial health insurance does not automatically make you a Canadian tax resident.
It does weaken a non-resident position if other Canadian ties remain.
Residency is determined by the total pattern of ties, not one factor alone.
If your situation involves a backdated departure or multiple years abroad, professional advice is strongly recommended, as the tax exposure can be significant if CRA disagrees with your residency position.
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