Answers Archive

Empoyee loan

Hi Kam, In this case, the family member is using the loan for a personal investment. The key question here is whether the loan is used for a purpose that is tied to the corporation’s business or personal activities. Since this loan is being used for a personal investment (not related to the business), the … Continue reading

Departure tax in Canada

Hi Cari, Yes, you will pay departure tax to the CRA on your Spanish property. Canada imposes a departure tax on individuals who cease to be Canadian tax residents. This tax is applied to the deemed disposition of most of your assets when you leave Canada, which includes properties, investments, and other assets. The deemed … Continue reading

I made 3k in ebay canada store

Hi Hakan, Even though you are not a Canadian resident, because you have earned income from a Canadian eBay account, the CRA will want you to report this income, especially because your earnings are from Canadian-based sources. To report income to the CRA, you generally need a Social Insurance Number (SIN) or an Individual Tax … Continue reading

Tax implications of moving RRSP to Australia

Hi Joy, You can’t directly transfer an RRSP into an Australian superannuation fund (super fund), as the tax treatment and account structures differ significantly between Canada and Australia. You could withdraw the funds from your RRSP and then transfer the cash to an Australian superannuation fund or other investment vehicle. However, this would trigger Canadian … Continue reading

Canadian Departure tax on a property abroad that is not yet fully acquired

Hi Michele, 1. Deposit on Property Abroad Before Departure If you put a deposit on a property abroad before leaving Canada but the property completes after you depart, you will not owe departure tax. 2. Buying Property in the Same Year as Departure If you buy property abroad in the same year you leave Canada, … Continue reading

NR4 slip questions

Hi Sam, Here are the answers to your NR4 slip-related questions: 1. Exemption Code for 15% Withholding (Due to Treaty) If you deducted 15% withholding tax instead of the standard 25% on dividends, you should use the appropriate exemption code from the Canada-U.S. Tax Treaty. The specific code you should use is “01”, which applies … Continue reading

Leaving Canada and Cross border planning.

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 … Continue reading

Sale of Vacation home in US and tax Implications

Hi Randy, Since the property was never rented out and is not connected with a business or trade, the gain from the sale would not be treated as effectively connected income with a U.S. trade or business. It would typically be reported on Schedule D (Form 1040NR) instead of Form 4797, as it is considered … Continue reading

FICA witholding for non-resident aliens after 2 years of presnse in the US

Hi Max, You’re correct that J-1 visa holders (trainees) may remain exempt from FICA taxes if they continue to qualify as non-resident aliens (NRAs) under the U.S.-Canada tax treaty, even after the two-year period generally used to determine the Substantial Presence Test (SPT). As you pointed out, the key factor is the treaty-based position, which … Continue reading

US tax for TN status Holders

Hi Ron, The first step is to determine if you and your wife meet the US Substantial Presence Test (SPT). If you meet the US SPT, you will be treated as resident aliens for tax purposes and must file a dual-status return with the IRS. If you do not meet the US SPT requirement, you … Continue reading

withholding taxes

Hi Sam, Business profits derived by a foreign corporation through a permanent establishment located outside Canada are not taxable in Canada. However, dividends paid by a Canadian corporation to a non-resident of Canada are not exempt from withholding taxes.

new fMV on stocks to lower departure tax

Hi Michele, Most foreign countries do not recognize TFSAs as tax-sheltered investments. This means that any gains or income realized within a TFSA is taxable in the foreign jurisdiction. As a result, there’s no real benefit in keeping a TFSA if you are a non-resident of Canada, unless your new home country either recognizes the … Continue reading

Tax Form for Nonresident Canadian with Canada-sourced T4 income

Hi Byron, File form 5013-R Income Tax and Benefit Return for Non-Residents and Deemed Residents of Canada. In addition to this, complete form 5013-SA Schedule A – Statement of World Income (for non-residents and deemed residents of Canada). If more than 90% of your global income is from Canadian sources, you will be eligible for … Continue reading

How To avoid double tax issue When investing in the us as a canadiam

Yes, you will be double taxed. This is because the IRS treats a multi-member LLC as a Partnership whereas the CRA treats an LLC as a corporation. The CRA will tax distributions received by you from the LLC and the foreign tax credit allowed will be limited to 15% of the distributions received. Consider transferring … Continue reading

exclusion property of departure tax

Living outside Canada for 60 months does not mean you will qualify for the exemption from departure tax. To qualify, you must leave Canada within 60 months of your arrival. For example, suppose you became a tax resident of Canada on January 1, 2020. You would need to leave Canada before December 31, 2024 to … Continue reading

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