Canadian workers pushed by the recession to work and live in other countries may discover they are considered to be Canadian residents for income tax purposes.

Leaving the Country for an Extended Time?

If you leave Canada and are away for an extended period of time, when do you lose your resident's status? A taxpayer is deemed to be non-resident if there is a degree of permanence to the stay abroad and the residential ties to Canada are severed.

Factors which may indicate residential ties in Canada include:

• Maintaining a dwelling in Canada available for immediate occupancy upon return. A lease which contains a short termination notice (less than 3 months) would indicate that the property is available for immediate occupancy. A long-term lease would suggest non-residency
• Continuing family ties in Canada, that is, if the taxpayer's spouse and children are here. However, if a legal separation is in place and the individual has severed all other residential ties, the individual would likely be considered to be non-resident
• Maintaining investments and bank accounts in Canada
• Retaining significant personal property in Canada such as automobiles, boats, or resort properties; and
• Retaining other ties to the country through, for example, provincial medical coverage or memberships if maintained on a resident basis.
• Revenue Canada's position is that a person is presumed to be a resident of Canada if he or she is gone for less than two years. The courts have not always agreed with this position.

While you may consider yourself a resident of another country under Canadian tax law, you may be deemed to be a resident of Canada if:

• As an individual, normally resident of another country, you visited Canada for a total of 183 days or more in any one year period
• You are a member of the Canadian Forces
• You are a federal or provincial employee employed in Canada and appointed to a position outside of Canada and were resident in Canada prior to the appointment.
• You are working outside the country under the auspices of an international assistance program (and were a resident in Canada at any time three months prior to the appointment)
• You are the spouse or dependent child of anyone described above. A dependent child is a person under 18 years of age at any time during the year, or 18 years or over if the child has a mental or physical infirmity.

Immigrants

An immigrant is considered to be a resident of Canada as at the date of entry.

For Tax Purposes

Determining whether an individual is a resident of Canada for tax purposes may have far reaching effects for residents who are temporarily assigned to other countries. Taxpayers planning to live and work in another country should discuss resident and non-resident status with their Chartered Accountant to gain a clear understanding of the criteria for maintaining or relinquishing resident status.

The above provides general information only. It should not be regarded or relied upon as accounting or taxation advice or opinions. Logan Katz LLP Chartered Accountants would be pleased to provide more information or specific advice on matters of interest to you.

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