Taxation and Canadian Residence Status : Tax tips
Planning to immigrate to Canada?
If you are planning to immigrate to Canada, consider having a trust settled on your behalf before you become a Canadian resident in order to save on Canadian income taxes.
Non-residents with Canadian resident children?
Non-residents with Canadian resident children should leave property to an offshore trust for their children, rather than directly to the Canadian resident child.
Paying Non-resident withholding taxes?
If you reside outside of Canada for part of the year but you continue to file your Canadian tax return as a Canadian resident, you are not obliged to pay non-resident withholding taxes on the income from your Canadian investments
Immigrating to Canada and have accrued losses on investments?
If you're immigrating to Canada it is often advantageous to sell investments with accrued losses before coming to Canada since you will be unlikely to be able to use the foreign capital loss to offset other gains after you arrive in Canada, while gains that accrue on the investment after immigration will be taxable in Canada upon disposition.
Immigrating to Canada and you have some foreign-source income?
If you're immigrating to Canada, your world income will become subject to Canadian tax once you establish Canadian residence. Any foreign-source income you receive after becoming a Canadian resident will be subject to Canadian tax, although any foreign tax paid on this income may be eligible for a foreign tax credit in Canada.
Going to become a non-resident of Canada and want to sell your house?
If you're planning to move out of Canada and you'll be selling your house, try to make the sale while you're still a Canadian resident. That way, you'll still be able to claim the principal residence exemption and avoid paying tax on the capital gain that will arise.
Deemed U.S. resident and required to file a U.S. income tax return?
If you spend more than 183 days a year living in the United States (with a portion of your time in the U.S. in the previous two years counting towards this total) you could be deemed a U.S. resident for tax purposes and be required to file a U.S. income tax return. However the Canada-US tax treaty may provide you with some relief.
Going to become a non-resident of Canada? Consider proper pre-departure tax planning.
In order to become a non-resident of Canada for Canadian income tax purposes you must sever most ties with Canada, including your residence. Proper pre-departure planning is essential to avoid future Canadian taxation.
Leaving Canada? Did you check if you sill have “significant ties” with Canada?
In the 1999 Canadian Income tax case of McFadyen v. The Queen, the taxpayer moved to Japan with his wife, not knowing when and if he would return. He stored his furniture and appliances in Canada and maintained two bank accounts in Canada, owned two houses which he rented out, maintained his membership with a professional association in Ontario, rented a safety deposit box, and maintained an RRSP, credit card and Ontario driver's license. The Tax Court of Canada concluded that these ties were significant enough to make him ordinarily resident in Canada for the years in question.
Determination of Residency Status (Leaving Canada): Form NR73
If you are leaving Canada and want to determine your tax status, the Canada Customs and Revenue Agency provides form NR73 Determination of Residency Status (Leaving Canada) if you want to obtain an official determination. This is essentially a questionnaire in which you provide details of your residential ties or lack of them. To become a non-resident of Canada you must divest yourself of as many residential ties as possible. Proper pre-departure planning is essential.