Tax residency in Canada? These questions can help you determine

Here are the comprehensive lists of questions that help determine your tax residency in Canada.Making a conclusion on your tax residency sometimes becomes challenges. Here are some questions that may help you conquer the challenges.

First of all, here are some questions about length of stay

• How long do you expect to live in Canada?Number of days: Number of months: Number of years:
• When will you leave Canada? Entered Canada permanently and have no plan to leave Canada.
• The following questions may apply to you as well:
• You usually live in another country and you will be temporarily living in Canada for days in the year, but will leave Canada during the year.
• You usually live in another country, but enter and leave Canada on the same day to work, shop, or study.
• You usually live in Canada, but you leave Canada during the day to work, shop, or study in another country, and return to Canada the same day.
• You have permanent resident (landed immigrant) status
• You have applied for permanent resident (landed immigrant) status.
• You have been given permission by Citizenship and Immigration Canada to stay in Canada for an extended period.
• You have a visa that allows you to be in Canada temporarily. Do you plan to renew it?

Rule of thumb, if you stay in Canada over 183 days in any calendar year, you naturally become a tax resident under the Income Tax Act.

• What about if you are living outside Canada?
• Are you a member of the Canadian Forces.
• Are you a member of the overseas Canadian Forces school staff who filed income tax returns as a resident of Canada.
• Are you a locally engaged employee (you lived outside of Canada after severing ties and were then hired locally) of a Canadian embassy or mission abroad.
• Are you an ambassador, a high commissioner, an agent general of a province or territory of Canada, or an officer or servant (employee) of Canada or of a province or territory of Canada. Did you receive a representation allowance for the year?
• Are you a Canadian resident (including factual or deemed) just before your appointment or employment by Canada, the province, the territory, or the Crown corporation?
• Are you an employee or officer of a Canadian Crown corporation, either federal or provincial, where the corporation is designated as an agent of Canada;
• Were you performing services as an employee, co-operant, advisor, contractor, or subcontractor under a prescribed international development assistance program of the Government of Canada that was financed with Canadian funds?
• Were you a resident of Canada in a previous year? If yes, did you keep residential ties with Canada while living outside Canada?

Here are some additional questions helps understand your ties and connections in Canada.

• Are you, under a tax treaty with another country, considered resident in the other country and not resident in Canada?
• Are you subject to income tax in that country on your world income? (total income inside and outside of Canada)
• Are you considered a resident of a country that does not have a treaty with Canada?

The CRA may also ask you to provide proof that your income is subject to tax in that country. (e.g. Copy of the foreign tax return, notice of tax assessment, a statement from the foreign authorities with the equivalent information as the tax return)

Determining the resident status is based on the facts on each individual. A common question to start with is why you are in Canada. This is the question that understands if your routine of life be similar to what it was in your previous country. One of the particular facts that the CRA looks at is ties in Canada. The following questions look at the basic facts about your ties in Canada.

• You or your spouse (or common-law partners) own the dwelling in Canada.
• Your employer will provide a dwelling for you.
• Your spouse (or common-law partner) will live with you in Canada.
• Your dependent children will live with you or your spouse (or common-law partner) in Canada.
• You will support other persons who will live with you in Canada.
• You will own furniture or appliances in Canada.
• You will have most of your clothing and personal property in Canada.
• You will have an automobile registered in a province or territory of Canada.
• You will have a driver’s license from a province or territory of Canada.
• You will have a valid Canadian passport.
• You will have bank accounts in Canada.
• You will have investments in Canada. Can you provide things like your chequing and savings accounts, pension and retirement plans, property, and shares in companies?
• You will use Canadian credit cards.
• Other than your home, you will own real property in Canada. (e.g. real property is also known as real estate, includes land, buildings and their structural components).
• You will apply for hospitalization and medical coverage from a province or territory of Canada. To find out if you are eligible for such coverage, contact the provincial or territorial health authorities where you live.
• You will have professional association memberships that are only available to Canadian residents.
• You will join social or recreational organizations in Canada.
• You will be involved with and have responsibilities in partnerships, corporate or business relationships, and endorsement contracts in Canada.

Here are some additional questions helps understand your ties and connections in countries other than Canada.

• Do you expect to return to reside in your country because of a contract with an employer? Do you expect to return to reside in your country because you have a specific date to report back to work in that country?
• If you kept a dwelling in another country, give details such as the address, type, size, whether you rent or own the dwelling, whether you keep the dwelling available for your use or for your family’s use during return visits to that country, and whether you rent the dwelling to a relative.
  Describe the personal possessions (such as clothing, furniture, personal items or pets) you have in the other country.
• If you have a driver’s licence issued in a country other than Canada, state for which country it is issued, the expiry date, and whether you will renew it.
• You will have a passport for a foreign country?
• You will renew your foreign passport when it expires?
  List the professional, social or recreational organizations in which you will be a member in countries other than Canada.
• Describe the investments you will have in countries other than Canada. Include details of chequing and savings accounts, pension and retirement plans, property, and shares in companies you will have in these countries. Can you explain why these investments are kept outside Canada?
  Give details of other consumer relationships, such as lines of credit and credit cards, you will have in other countries.
• Give the address for any telephone service you have in other countries, even if it is not listed, and indicate if it is a personal or business service.
• Give any address you use for personal stationery and business cards in other countries:
• Give any address for post office boxes and safety deposit boxes that you use in other countries:
• Give details of your involvement and responsibilities in any partnerships, corporate or business relationships, and endorsement contracts you have in other countries:
• List the countries, other than Canada, you have visited in this calendar year, the length of time spent in each country, and the reason for visiting these countries. Include the dates of entry and departure for each country visited.

Residency status assessment is critical as there are tax obligations implications if you become a Canadian resident under the Income Tax Act. The above questions are helpful to understand your current ties with Canada and other countries. Each individual has its unique situation. If you find your situation is challenging to determine, please consult professionals. Don’t wait till the last minute to understand the impact.