LiffyB

Ive just found this on the CRA website, and if I am to believe them then it looks like we can't buy a house and rent out as owning a house would imply residential status - see what you think and see if you gree with me?

Liffy

http://www.cra-arc.gc.ca/tax/nonresi...onres-e.html#d
Residency status
Non-residents
You're a non-resident for tax purposes if you:
• normally, customarily, or routinely live in another country and aren't considered a resident of Canada; or
• don't have residential ties in Canada; and
o you live outside Canada throughout the tax year; or
o you stay in Canada for less than 183 days in the tax year.
What are residential ties?
Residential ties include:
• a home in Canada;
• a spouse or common-law partner (see the definition in the General Income Tax and Benefit Guide) and dependants in Canada;
• personal property in Canada, such as a car or furniture;
• social ties in Canada.
Other ties that may be relevant include:
• a Canadian driver's licence;
• a Canadian bank account or credit cards;
• health insurance with a Canadian province or territory.

JonboyE

A home is a place where you live. It is nothing to do with ownership. You can buy your home, or rent it from someone else. If you maintain a home in Canada you will be considered as a tax resident.

An investment property is different. If you buy a house (or apartment) and rent it to tenants, it is their home, not yours. It is perfectly possible to be non resident in Canada for tax purposes, but still own real estate in Canada.

I am not necessarily advocating this. It will start to cloud the issue of tax residency. Also, managing rental property from 3,000 miles away can be fraught with difficulties. However, if you are concerned about missing out on rising house prices in Canada (and it is no certainty that they will continue to rise) then this is a possible option.

LiffyB

That seems to be what other people are saying on some of the other threads out there - but OH is convinced that we will be classed as residents and liable to tax (this is the man that always tells me that I moan about my glass be half empty!!).

There must be others out there going through the same as us?

Liffy

JonboyE

There is a more detailed discussion by the CRA in their Interpretation Bulletin 221.

You can also request a written ruling from the CRA. The form is here.

If you feel the form is not appropriate, you could just write to the International Tax Services Office at 2204 Walkley Road, Ottawa, ON, K1A 1A8, Canada.

LiffyB

Thanks for that -I'll certainly check it out! As the law stands now without our PR visa activated we could buy and rent out a place very easily - but it's once our visa's are activated we could get potential problems. Sensible option would be to wait unitl next year to apply for the CI route to NS - but the goal posts may have change by then. Devil you win - Devil you loose!

Thanks so much for help - it's been much appreciated! everything seems to be getting clearer now!

Liffy

agr

Just bear in mind that the PR visa might have a short fuse by the time you get it. It's only valid 1 year from date of medicals, and in our case it took about 5 months to arrive, so we only had a 7 month window to land.

Brian Boru

I wrote to JPAC and got the following reply direct from xafinity paymaster in Nov 07.

This rate seems good. Better than a bank/tourist rate. For now I have set up a monthly transfer with MoneyCorp (good rates & £4 fee), but will look to see if the Citibank deal above is marginally better when the dust settles after we arrive.

Hope this helps

DAVIE_MAC

JonboyE

Just a quick question. When we went over to PEI on our recce last year - before this gratuity situation came to light - while there we opened some RBC bank accounts thinking it would be the way forward and be ahead of the game on arrival as we could have transfered money to them before leaving the UK.

Would you suggest then that we close those accounts ASAP so as not to have any taxable ties to Canada as previously mentioned & will this have any bearing on the gratuity situation.

Many Thanks for your help.

Dave

JonboyE

Hi Dave

I wouldn't worry about the bank accounts - they are considered as a secondary indicator of residence.

The tax treaty talks about the "centre of economic interests". If you have a bank account in the UK that you use to pay for your day-to-day living expenses, and a bank account in Canada that is dormant or little used, this is evidence that you are still resident in Britain.

By far the most important facts are the location of the home that you normally live in, and where the rest of your family, i.e. spouse and children, normally live. If these are in not in Canada then the bank accounts in Canada will not make a difference.

agr

Can tax residency change at any time, or only at the start of a tax year?

DAVIE_MAC

Jonboy

Thanks again for your help, very much appreciated.

If thats the case then we will just leave them dormant on a zero balance then when we have made the move have the funds transfered once in Canada.

Cheers Dave

JonboyE

At any time. For most WP holders or people immigrating with PR, it is the day you land in Canada to start living here.

The only exception I can think of off the top of my head is people who become deemed residents because they stay temporarily in Canada for more than 183 days in a year. In this case they are deemed tax residents for the whole year.

agr

Thanks JonBoyE.
It seems to me that, under the UK-CA tax treaty, the bottom line is that your tax residency follows your closer residential ties. Before final departure from UK, the CRA would need a pretty compelling catalogue of your Canadian residential ties to outweigh your long-standing UK residential ties.

JonboyE

Yes, I think you are right. Generally this is pretty clear from the circumstances: you are usually tax resident where your home is and your family live.

My advise of caution to LiffyB was because activating PR status is a clear indication of intent to become resident in Canada, and if this was combined with another significant residential tie, like a family home, might tip the balance. If she was a PR and living in a family home in Canada it becomes difficult to argue that her OH, also a PR, was not resident. As their intent is to be sure he can receive his military gratuity tax free this could be a bad idea.

Most of the secondary indicators of residency are really aimed at Canadians moving to the US, not immigrants. However, the rules are there and apply to all. It is quite common for Canadians to move to the US to work for a few years. Although many intend to return to Canada, they claim they have ceased to be resident in Canada to avoid Canadian taxes, which are significantly higher than in the US.

The CRA successfully argued that even though you had moved your family to the US, the fact that you maintained Canadian bank accounts, credit cards, an available home, memberships of professional organizations and so on demonstrate that you had not permanently relinquished residential ties with Canada, and so are still resident here for tax purposes.

frankieforehead

Having read this thread with interest...I have found it confusing...can someone please clarify the situation. The reason I ask is I leave my Army pension in the UK, and tell the tax man (Canada) about my world income ......consequently last year I had to pay $$$$ on last years tax return.

Anyway, do you guys pay less tax in the UK on your pension, because you declare it in canada, and if so what forms do you need? or is just a case of paying in both countries.

Please make the replies simple, as the whole tax issue really confuses me.