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Under Canadian tax law, it is important to determine if the
taxpayer is a resident or not of Canada. A resident will be taxed on
his worldwide income, while a non-resident is personally taxed only on
Canadian source income.

Judicial decisions – factors considered by the courts:

Major Factors

Routine settled life concept (regularly and customarily live)
1. Dwelling
2. Location of immediate family (spouse & children)

Secondary Factors

a. Your social and economic ties (bank accounts)
b. Ownership of personal property
c. Unforeseen return
Temporary Absences
If based on the above factors, some residential ties still remain, the
courts will also consider:
a. Intent of taxpayer, i.e., was there intention to permanently sever the
residential ties.
b. Frequency of visits (watch out for the 183 day rule)
c. Residential ties outside Canada

Factors individuals should consider in severing residential ties

  •  Sell home or lease it on a long term basis
  •  Move personal effects or sell them
  •  Close bank accounts, safety deposit boxes
  •  Cancel credit card with Canadian financial institutions & apply for
  •  new ones from financial institution of new country of residence
  •  Cancel newspaper subscription
  •  Have mail forwarded to new address
  • Immediate family should move ASAP
  • Cancel Canadian registration of cars, boats
  • Obtain drivers license from a foreign jurisdiction
  • Have immigration status in new country
  • Keep visits to Canada to a minimum
  • Make sure your last tax return has a non Canadian address
  • Cancel provincial hospitalization plan
  • Consider revoking will prepared in accordance with Canadian law
  • Consider selling burial plots

Determination of Residency Status (Entering Canada)

I would strongly suggest completing an NR-74 if entering Canada have the government determine your status.

If you have anymore questions please call me now 514-583-9832

Category: Personal Tax Tips

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