There are many tax implications to be considered for those who earned income in Canada and who may call another country home.
At first, it's important to determine your residency status for tax purposes.
A person is considered a non-resident of Canada (for Canadian income tax purposes) if they:
- Had no residential ties to Canada and lived outside Canada all year, and was not a deemed resident.
- Had no residential ties to Canada and they stayed in Canada for less than 183 days.
- Were deemed not to be resident in Canada under the Income Tax Act because of the provisions of a tax treaty Canada has with another country.
A person is classified as a deemed resident of Canada (for Canadian income tax purposes), if they :
- Did not have significant residential ties in Canada
- Stayed in Canada for 183 days or more, AND
- Were not considered a deemed non-resident of another country under a tax treaty, OR
- Lived outside Canada during 2019.
Significant residential ties almost always include a home in Canada, and a spouse or common-law partner and/or dependants who stayed in the country while the subject was living abroad. Other relevant residential ties may include:
- A Canadian driver's license
- Canadian bank accounts or credit cards
- Health insurance with a Canadian province or territory
- Personal property, and social ties within Canada.
As per CRA :
If you are a deemed resident of Canada for the tax year, you:
- Must report world income (income from all sources, both inside and outside Canada) for the entire tax year
- Can claim all deductions and non-refundable tax credits that apply to you
- Are subject to federal tax and instead of paying provincial or territorial tax, you'll pay a federal surtax
- Can claim all federal tax credits, but you cannot claim provincial or territorial tax credits
- Are eligible to apply for the goods and services tax/harmonized sales tax (GST/HST) credit
For further information on non-resident tax obligations please click Canadian tax obligations and entitlements for non-residents.
If you need any further clarifications, we would be glad to guide you through.
We hope you enjoyed your living in Canada.
Thank you for your inquiry.
If you are unsure whether someone is a non-resident, a deemed resident, or a resident of Canada, we can assist you. Individual with income from Canada and a residence in another country may have many tax implications to consider.
Before filing tax returns, you need to determine your residency status.
For Canadian income tax purposes, a person is not considered to be a resident of Canada if :
- They lived all year outside Canada and had no ties to the country, so he was not considered a resident.
- Their stay in Canada was less than 183 days, and they did not have any residential ties to Canada.
- Due to Canada's tax treaty with another country, they were not deemed to be Canadian residents under the Income Tax Act.
According to federal tax law, a person is considered a deemed resident of Canada if they meet any of the following criteria:
- A resident of Canada but has no significant ties to the country
- ; has lived in Canada for at least 183 days; AND;
- A tax treaty does not consider you a deemed non-resident of another country OR
- if you lived outside of Canada during 2019.
Most significant residential ties among respondents are related to the home in Canada they own or rented and their spouse, common-law partner, or dependents who lived and worked within Canada. Other significant residential ties that may be relevant include:
- License to drive in Canada
- Credit cards or bank accounts in Canada
- Provincial or territorial health insurance
- Private property and relationships with other citizens within Canada.
In accordance with the CRA:
If you are deemed to be a resident of Canada for the tax year, then:
- For the entire tax year, you must report world income (income from all sources, domestic and international).
- If applicable to you, you may claim all deductions and non-refundable tax credits
- Unlike provincial or territorial taxes, you will pay a federal surtax rather than provincial or territorial taxes
- All federal tax credits are available to you, but you cannot claim provincial or territorial tax credits
- There is a credit for goods and services tax and harmonized sales tax (GST/HST) applicable to you
The Canadian tax obligations and entitlements for non-residents can be found by clicking Canadian tax obligations and entitlements for non-residents.
Please feel free to ask us for clarification if necessary.