Novocastrian

Eh? I know better than to question you on these things, but if someone owns something or other before they arrive here and then leaves and flogs it as a profit, after they cease to be tax resident in Canada, it's got nothing to do with CRA?

I await enlightenment.

Aviator

When you become a tax resident, all you own is valued (in CDN$) as if it were sold. This is the base cost of all future transactions as a tax resident. When you leave Canada the reverse. CRA treat is as if you had sold it on the day you leave (you don't have to actually have sold it), deemed disposition for emigrants http://www.cra-arc.gc.ca/tx/nnrsdnts...spstn-eng.html

They want a slice of the real or theoretical gain (if any). If one owns a house as principal residence, sell it before leaving, no tax.

Novocastrian

OK. I knew about CGT on selling a principal residence in Canada after emigration, but just to clarify (not for me but for others who may be interested), are you saying that Joe Bloggs, who owns a house in the UK valued at say 200K arrives in Canada on a TWP but decides to rent the UK house out, declares any income correctly in both jurisdictions, rents here then returns to the UK after three years say, finds that property prices have inflated in the UK in the meantime and that the UK house is now valued at 250K, but moves back into it for another 10 years, sells it then for 300K, is liable for Canadian CGT on the 50K?

News to me and no doubt of interest to many in that sort of situation.

Aviator

No. Exemption would be 'property you owned when you last became a resident of Canada, or property you inherited after you last became a resident of Canada, if you were a resident of Canada for 60 months or less during the 10-year period before you emigrated'

http://www.cra-arc.gc.ca/tx/nnrsdnts...spstn-eng.html

Deemed disposition rules apply on the day you cease to be a tax resident, not some years in the future. No sale of assets actually has to take place, the value is assessed as if it had been sold on the day you left.

How one deals with things after leaving would also depend on whether one wanted to return in the future.

Novocastrian

OK, thanks for the clarification... as I said merely academic interest.

JAJ

It is curious that deemed disposition rules appear to apply to anyone who is tax resident, even if not a Canadian citizen/PR. One wonders if this is intentional or not. It makes Canada less competitive as a location for international business.

Although many temporary residents do leave Canada before the 5 years is up. Anyone who is planning to leave Canada around this timescale may wish to ensure that tax residence is abandoned before this deemed disposition becomes an issue.