Leaving Canada and Cross border planning.

Question

117 viewsFebruary 11, 2025

0

Anonymous Posted February 10, 2025

Professional Eng. incorporated in Ontario and spouse – relocating to US on TN or E2 (to a state tax exempt state).

Will have no primary residential ties left in Canada but some secondary ties such as (rental prop, bank/credit card, couple of visits a year, health card etc.) and want to keep Ontario professional corp and membership in professional association active and/or a regular #company to do some remote consulting work in Canada from USA and may want to pay themselves salary/dividend and pay CPP for OAS eligibility.

1. Is it still possible to maintain non-resident status in Canada to avoid Canadian tax on non-Canadian source income personal income from USA? still achieving most of above
2. How likely CRA will trigger these individuals as resident Canadian for tax purposes and will want to tax their US source personal income on their Canadian tax return?
3. Best way to structure this in most tax efficient manner so they can work in USA and still leverage their Canadian expertise and generate some income without being penalized on US income being taxed in Canada

1 Answer

score 0 · Answer 1 · 2025-02-11T20:02:25+00:00

1. Maintaining Non-Resident Status in Canada
Yes, it’s possible to maintain non-resident status in Canada if you have no primary residential ties (e.g., no spouse or children in Canada, no significant property, etc.). However, secondary ties (e.g., rental property, bank accounts, visits) can be scrutinized. If you’re a non-resident, your non-Canadian income (like from the U.S.) won’t be taxed by Canada.

2. Likelihood of CRA Challenging Non-Residency
The CRA could challenge your status if you maintain too many secondary ties or spend significant time in Canada. If you stay more than 183 days in Canada, you may be deemed a resident. The Canada-U.S. tax treaty can help avoid double taxation on U.S. income.

3. Tax-Efficient Structure
Maintain Canadian Corporation: You can continue using a Canadian corporation to earn Canadian-source income. Your salary/dividends from the corporation would generally be taxable in Canada only if you’re in Canada.
Salary and CPP: You can pay yourself a salary from the corporation, maintaining CPP contributions to keep eligibility for Canadian benefits. However, CPP contributions are linked to Canadian income.
U.S. Taxation: U.S.-earned income will generally be taxed in the U.S., but you can use the Canada-U.S. tax treaty to avoid double taxation, offsetting taxes paid in one country with credits in the other.
In short, structure income to minimize Canadian tax exposure while maintaining non-resident status and leveraging the Canada-U.S. tax treaty. Consult a cross-border tax expert for personalized advice.

Leaving Canada and Cross border planning.

1 Answer

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