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Hi Allen,I am single and I left Canada permanently on JULY 2016 but did not notify CRA that I am immigrating to the UAE Dubai.I did not file a departure tax either. When I left Canada in 2016 I had no income or house. All that I had 2 checking bank accounts with very small balance and a used car that I sold for $1000. I am returning this year soon to Canada are there any tax implications or penalties? Am I considered non resident for tax purposes when I left Canada thanks
Hi Omar,
Thank you for your question.
Whether you became a non-resident of Canada in July 2016 depends on the facts, especially whether you severed your major residential ties with Canada when you left. The CRA looks at items such as whether you kept a home in Canada, spouse/dependants in Canada, Canadian employment/business income, provincial health coverage, driver’s licence, bank accounts, credit cards, investments, and your intention to permanently settle outside Canada. CRA confirms that residency is fact-specific and depends on the person’s residential ties and circumstances.
Based on the limited facts provided, if you had no Canadian home, no Canadian income, no spouse/dependants in Canada, and only small Canadian bank balances when you left, you may have a reasonable position that you became a non-resident when you moved to Dubai in July 2016. However, this should be reviewed before taking a final position.
If you became a non-resident in 2016, you generally should have filed a final Canadian departure return for 2016 reporting your worldwide income up to the date of departure and disclosing your date of emigration. Departure tax generally applies to certain properties deemed disposed of when you leave Canada, but based on what you described, it sounds like you may not have had taxable departure assets. Bank accounts are generally not subject to departure tax, and a used personal vehicle sold for $1,000 would typically not create a taxable gain. CRA’s emigrant rules require a departure return and may require property reporting depending on the type and value of assets owned when leaving Canada.
If you return to Canada this year, you may become a Canadian tax resident again from the date you re-establish residential ties in Canada. Canada may also deem you to have acquired certain assets at fair market value when you immigrate back, which becomes your new Canadian tax cost base.
The main risk is not necessarily departure tax, based on the facts provided, but whether CRA accepts that you were a non-resident from 2016 onward. If CRA considers you to have remained a Canadian resident, then CRA could ask about worldwide income for the years you were abroad. Form NR73 can be used to request CRA’s determination of your residency status, although it should be completed carefully because it may trigger further questions. CRA states that NR73 is for individuals who left or plan to leave Canada and need help determining residency status.
We can assist with reviewing your residency position, preparing any required 2016 departure filing or adjustment, and advising on your Canadian tax position upon return to Canada.
Regards,
in Accounting & Taxation Services
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