deltadeliquent

I am sponsoring my husband for PR. we will be sending in our application this week. So I am thinking it will be late 2012 or early 2013 before he is given PR and allowed to land.

If he is living in Canada in a house we own but on a visitors visa from September, is he a tax resident from September, or from landing?

I ask because there is a large tax free lump sum from the UK from his pension due in early September and we want to keep Canada's hands off it...

So can he or we be in Canada when the payment is made, or should we wait until its in the bank before he goes to Canada?

Aviator

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

Once you are a tax resident, it matters not where you when you receive any funds, it is still taxable in Canada. To be tax free you would have to sever tax residency to avoid tax, so best not to initiate it.

CRA on there web site state 'people who have applied for or received permanent resident status' as being tax residents if sufficient ties are established, so likelihood is that he would be deemed a tax resident.

You might want to hold off moving to Canada until after the funds are received.

JonboyE

A person becomes a tax resident of Canada when their residential ties to Canada are stronger than their ties to another country. The CRA will argue that if he is living in a house you/he owns with his spouse in Canada then his residential ties are with Canada. Immigration status can be a factor regarding tax residency but it is a secondary factor after considering where he lives and who he lives with.

If it is possible to stay in the UK until after the lump sum is sitting in his bank account this is, by far, the safest way to ensure the CRA don't get their hands on it.

deltadeliquent

That's what I was afraid of. Thanks.

deltadeliquent

how about if we still lived in the UK, but owned a house in Canada?
Or...
We lived in the Uk and were in the process of buying a house in Canada?

JonboyE

Not necessarily a problem. People own real estate in Canada without being tax residents. The tax treaty states:

2 (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 Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests);

So you will have to be able to prove that your OH's personal and economic relations are closer to the UK than Canada when he receives the lump sum. However, you are adding a potential complication.

agr

Your question is eerily similar to this recent one. There's a wiki link in that thread.

Atlantic Xpat

I saw the thread title and thought that the obvious answer would be:

"When JonboyE says you are."

deltadeliquent

Animal

In the UK, looks like you only have to pay 1%... I wish it was the same here !!!

http://www.bbc.co.uk/news/uk-politics-18531008


I don't think it will be long before this loophole is closed by the HMRC