Under Canada’s tax system, your income tax obligations to Canada are based on your residency status. You need to know your residency status before you can know what your tax responsibilities and filing requirements to Canada are.
An individual’s residency status is determined on a case by case basis and the individual’s whole situation and all the relevant facts must be considered.
The relevant facts in determining your residency status include: the residential ties you have in Canada, the purpose and permanence of your stays abroad, and your ties abroad.
The following steps can help you determine your residency status for income tax purposes and your tax obligations to Canada.
Determine if you have residential ties with Canada:
The most important thing to consider when determining your residency status in Canada for income tax purposes is whether or not you maintain, or you establish, residential ties with Canada.
Significant residential ties to Canada include:
· If you have a home in Canada;
· If you have spouse or common law partners in Canada; and
· If you have dependents in Canada;
Secondary residential ties that may be relevant include:
· Any personal property in Canada, such as a car or furniture;
· Any social ties in Canada, such as memberships in Canadian recreational or religious organizations;
· Any economic ties in Canada, such as Canadian bank accounts or credit cards;
· Canadian driver’s license;
· Canadian passport; and
· Health insurance with a Canadian province or territory.
· The residential ties you establish or maintain in other countries may also be relevant.
For more information on residential ties contact us at 514-585-6848
But what happens if you are Resident of Canada and another Country:
If taxpayer is resident of Canada and another country, he will be subject to double taxation. But not to worry!! Article IV deals with most treaties between Canada and the other jurisdiction that usually provides relief by determining that the individual will be a resident of either Canada or the other country by applying the tests listed below in the following order:
a) He shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both States or in neither State, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (center of vital interests);
b) If the Contracting State in which he has his center of vital interests cannot be determined, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;
c) If he has an habitual abode in both States or in neither State, he shall be deemed to be a resident of the Contracting State of which he is a citizen; and
d) If he is a citizen of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
Pauls & Associates Team