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Canadian citizen applying for Canadian residency

Canadian citizen applying for Canadian residency

Old Jan 7th 2002, 7:47 am
  #1  
Dave
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Hi,

I've been working in the US on a TN Visa for a 1 and 1/2. I gave up my Canadian
Residency for tax purposes. I plan on moving back to Canada in a few months. How do I
become a Canadian resident again? Would this allow me to regain my healthcare and
driver's license?

Thanks.
 
Old Jan 7th 2002, 8:49 am
  #2  
Stuart
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You become a Canadian resident by arriving back in Canada and saying so.

The hitch is that to become a Canadian non resident for tax purposes, it is on the
basis that you stay out of Canada for 24 months minimum to sever all "factual
residential ties". If you arrive back before the 2 years has elapsed, unless it was
through no fault of your own, you will have remained a tax resident for the time you
were out of Canada and have to pay taxes on all your US income! Ouch! Returning early
when it is not your own decision may be forgiven.

So, if it's your choice, stay out until 24 months have elapsed.

Stuart
 
Old Jan 7th 2002, 4:19 pm
  #3  
Stephen C. Gallagher
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If you're a Canadian citizen, then you become a Canadian resident by moving to Canada
and setting up residency here. You don't have to apply or get permission. A Canadian
citizen can come to Canada to live anytime he chooses.

In general, you will be able to get a Canadian drivers license, as soon as you have a
residence in a province or territory of Canada.

You will also be able to apply for health coverage when you set up residency. Keep in
mind that some provinces have a waiting period of up to three months before health
insurance goes into effect. Some provinces make you wait out this period, other
provinces waive it for people who move into Canada from abroad. Check with the
provincial health authority in the province where you plan on living for more
information.

Stephen Gallagher
 
Old Jan 7th 2002, 7:57 pm
  #4  
Rudy Amid
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Do you know which province this 24-months out of Canada rule applies to?

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Old Jan 8th 2002, 1:24 am
  #5  
Stuart
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Posts: n/a
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[usenetquote2]>>[/usenetquote2]
[usenetquote2]>> The hitch is that to become a Canadian non resident for tax purposes, it is on the[/usenetquote2]
[usenetquote2]>> basis that you stay out of Canada for 24 months minimum to sever all "factual[/usenetquote2]
[usenetquote2]>> residential ties". If you arrive back before the 2 years has elapsed, unless it[/usenetquote2]
[usenetquote2]>> was through no fault of your own, you will have remained a tax resident for the[/usenetquote2]
[usenetquote2]>> time you were out of Canada and have to pay taxes on all your US income! Ouch![/usenetquote2]
[usenetquote2]>> Returning early when it is not your own decision may be forgiven.[/usenetquote2]
[usenetquote2]>>[/usenetquote2]
[usenetquote2]>> So, if it's your choice, stay out until 24 months have elapsed.[/usenetquote2]
[usenetquote2]>>[/usenetquote2]
[usenetquote2]>> Stuart[/usenetquote2]

That's CCRA ... Revenue Canada ... therefore all provinces.
 
Old Jan 8th 2002, 4:09 am
  #6  
Dave
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Stuart,

Thanks for the info. But I have another question about the 24 month time period. I
found the following quote below:

the individual "sojourned" in Canada for a cumulative period of 183 days or more in
the course of a taxation year (section 250(1) of the Income Tax Act; the individual
(who has previously been a resident of Canada) is absent from Canada for a period of
less than 24 months, unless all residential ties have been severed with Canada (ie.
no dwelling place); the individual regularly, normally, or customarily resides in
Canada in a settled routine; or ...

The "unless all residential ties have been severed with Canada" is confusing. Does
this mean if I formally submitted an application for non-residency that I don't have
to be outside of Canada for 24 months to be considered a non resident?

Do you know where I can find more info on this? My duration time outside Canada will
be 18 months, and I'll be returning by my own choice. But I don't want to have to
pay taxes on my US income. Is there a way around this without having to stay an
extra 6 months?

Thanks, Dave

Stuart <[email protected]>

    >
[usenetquote2]> > Hi,[/usenetquote2]
[usenetquote2]> >[/usenetquote2]
[usenetquote2]> > I've been working in the US on a TN Visa for a 1 and 1/2. I gave up my Canadian[/usenetquote2]
[usenetquote2]> > Residency for tax purposes. I plan on moving back to Canada in a few months. How[/usenetquote2]
[usenetquote2]> > do I become a Canadian resident again? Would this allow me to regain my[/usenetquote2]
[usenetquote2]> > healthcare and driver's license?[/usenetquote2]
[usenetquote2]> >[/usenetquote2]
[usenetquote2]> > Thanks.[/usenetquote2]
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Old Jan 8th 2002, 5:15 am
  #7  
Stuart
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The CCRA web site is the only place ... look at the section on returning residents.

The 183 day rule is for people who are non-residents of Canada visiting (sojourning)
Canada ... if you're here as a visitor for more than 183 days, you are normally
considered a tax resident. That doesn't apply to you.

To be a non-resident for tax purposes, you must be outside Canada for more than 24
months. To eliminate the problem where you'd have to submit taxes for 2 years and
then reclaim the taxes paid when you've proven your non- residence [which would be a
logistical nightmare because you'd have to correct both your Canadian and other
country taxes for two years!], CCRA allow you to not pay taxes as a Canadian
resident, if you have the intent to remain out of Canada for at least 2 years. That
non-resident status is subject to review for that 2 year period.

So, returning to Canada before the 2 years is up is going to result in the following
line of questions (more or less) ...

You said, when you left Canada that you were going to be out of Canada for more than
2 years and on that basis we accepted you were going to be a non-resident for tax
purposes. What happened ?

Did you *really* intend to be out of Canada for more than 2 years ?

No - tough luck, pay up ... subject to credits for what you paid the US

Yes -

Could you have forseen your returning to Canada before 2 years is up? After all TNs
are only one year in duration ?

Yes - tough luck, pay up ... as before

No -

Could you have forseen your decision to return to Canada at the time of your first
TN renewal ?

Yes - you'll probably have to pay up

No -

Was your returning to Canada your own decision or were you laid off between the end
of the first and second year ?

Laid off - probably won't have to pay - this was unforseen. (In the first year,
you'd probably have to pay)

Own Decision -

Were there extenuating circumstances bringing to you this decision ?

Yes -
- Either way you need some good luck ... but you stand a better No - /
chance with extenuating circumstances.

This all comes down to the discretion of CCRA based on the validity of your intent to
remain out of Canada. All the documentation that you can muster in terms of showing
your original intent to remain in the US will help your cause.

Now remember tax residence in Canada is based on facts that tie you to Canada ...
There are lots of primary and secondary factors that tie you to Canada. Some are
simple and are an almost instant bind, like continuing to own what had been your
principal residence. Others are nearly trivial, but when added together become
significant.

You won't pay full taxes to Canada, but in fact, they will be reduced, and should in
the end represent the difference between what you paid the US and what you owe in
Canada. Remember too that you may have to file corrections for your US taxes. You may
want to consider professional help here.

Stuart

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[usenetquote2]>>[/usenetquote2]
[usenetquote2]>> > Hi,[/usenetquote2]
[usenetquote2]>> >[/usenetquote2]
[usenetquote2]>> > I've been working in the US on a TN Visa for a 1 and 1/2. I gave up my Canadian[/usenetquote2]
[usenetquote2]>> > Residency for tax purposes. I plan on moving back to Canada in a few months. How[/usenetquote2]
[usenetquote2]>> > do I become a Canadian resident again? Would this allow me to regain my[/usenetquote2]
[usenetquote2]>> > healthcare and driver's license?[/usenetquote2]
[usenetquote2]>> >[/usenetquote2]
[usenetquote2]>> > Thanks.[/usenetquote2]
[usenetquote2]>>[/usenetquote2]
[usenetquote2]>> You become a Canadian resident by arriving back in Canada and saying so.[/usenetquote2]
[usenetquote2]>>[/usenetquote2]
[usenetquote2]>> The hitch is that to become a Canadian non resident for tax purposes, it is on the[/usenetquote2]
[usenetquote2]>> basis that you stay out of Canada for 24 months minimum to sever all "factual[/usenetquote2]
[usenetquote2]>> residential ties". If you arrive back before the 2 years has elapsed, unless it[/usenetquote2]
[usenetquote2]>> was through no fault of your own, you will have remained a tax resident for the[/usenetquote2]
[usenetquote2]>> time you were out of Canada and have to pay taxes on all your US income! Ouch![/usenetquote2]
[usenetquote2]>> Returning early when it is not your own decision may be forgiven.[/usenetquote2]
[usenetquote2]>>[/usenetquote2]
[usenetquote2]>> So, if it's your choice, stay out until 24 months have elapsed.[/usenetquote2]
[usenetquote2]>>[/usenetquote2]
[usenetquote2]>> Stuart[/usenetquote2]
 
Old Jan 8th 2002, 2:30 pm
  #8  
Rudy Amid
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I'm having trouble finding the statement in CCRA website that says I have to be out
for more than 24 months. I've checked the letter that the International Tax Services
Office sent me and they never mentioned anything about the mandatory 24 months
outside Canada bit.

I will call them tomorrow to verify this.

-Rudy

"Stuart" <[email protected]>

[usenetquote2]> >>[/usenetquote2]
[usenetquote2]> >> > Hi,[/usenetquote2]
[usenetquote2]> >> >[/usenetquote2]
[usenetquote2]> >> > I've been working in the US on a TN Visa for a 1 and 1/2. I gave up my[/usenetquote2]
[usenetquote2]> >> > Canadian Residency for tax purposes. I plan on moving back to Canada in a few[/usenetquote2]
[usenetquote2]> >> > months. How do I become a Canadian resident again? Would this allow me to[/usenetquote2]
[usenetquote2]> >> > regain my healthcare and driver's license?[/usenetquote2]
[usenetquote2]> >> >[/usenetquote2]
[usenetquote2]> >> > Thanks.[/usenetquote2]
[usenetquote2]> >>[/usenetquote2]
[usenetquote2]> >> You become a Canadian resident by arriving back in Canada and saying so.[/usenetquote2]
[usenetquote2]> >>[/usenetquote2]
[usenetquote2]> >> The hitch is that to become a Canadian non resident for tax purposes, it is on[/usenetquote2]
[usenetquote2]> >> the basis that you stay out of Canada for 24 months minimum to sever all[/usenetquote2]
[usenetquote2]> >> "factual residential ties". If you arrive back before the 2 years has elapsed,[/usenetquote2]
[usenetquote2]> >> unless it was through no fault of your own, you will have remained a tax[/usenetquote2]
[usenetquote2]> >> resident for the time you were out of Canada and have to pay taxes on all your[/usenetquote2]
[usenetquote2]> >> US income! Ouch! Returning early when it is not your own decision may be[/usenetquote2]
[usenetquote2]> >> forgiven.[/usenetquote2]
[usenetquote2]> >>[/usenetquote2]
[usenetquote2]> >> So, if it's your choice, stay out until 24 months have elapsed.[/usenetquote2]
[usenetquote2]> >>[/usenetquote2]
[usenetquote2]> >> Stuart[/usenetquote2]
[usenetquote2]> >[/usenetquote2]
 
Old Jan 8th 2002, 3:06 pm
  #9  
Stuart
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Oh God! Don't do that ... your chances of misinformation are about 60%!

You are correct ... Look in forms and publications list and look for the
Interpretation Bulletin IT221R ... it specifically mentions that it has removed the
time limitations. So, any call to CCRA will get you the party line.

Clearly this was done to rein in the high roller tax payers who left Canada for more
than two years to escape Canada's income taxes.

The time considerations were certainly in place before, and will certainly be part of
the consideration now as a guideline although CCRA will clearly no longer admit to
them. I believe in the residence determination matrix from CCRA someone provided to
me a few months ago, there was still mention of 2 years ...

So, while this has clearly changed, I would be very careful because you'll note
that if they determine your trip outside Canada was temporary (and how do they
determine that if not in part by duration) they can determine that you continue to
be a resident.

Stuart
 
Old Jan 9th 2002, 6:18 am
  #10  
Dave
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Posts: n/a
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Rudy, what did you find with the phone call?

"Rudy Amid" <rudy@amidcom>

[usenetquote2]> > >>[/usenetquote2]
[usenetquote2]> > >> > Hi,[/usenetquote2]
[usenetquote2]> > >> >[/usenetquote2]
[usenetquote2]> > >> > I've been working in the US on a TN Visa for a 1 and 1/2. I gave up my[/usenetquote2]
[usenetquote2]> > >> > Canadian Residency for tax purposes. I plan on moving back to Canada in a[/usenetquote2]
[usenetquote2]> > >> > few months. How do I become a Canadian resident again? Would this allow me[/usenetquote2]
[usenetquote2]> > >> > to regain my healthcare and driver's license?[/usenetquote2]
[usenetquote2]> > >> >[/usenetquote2]
[usenetquote2]> > >> > Thanks.[/usenetquote2]
[usenetquote2]> > >>[/usenetquote2]
[usenetquote2]> > >> You become a Canadian resident by arriving back in Canada and saying so.[/usenetquote2]
[usenetquote2]> > >>[/usenetquote2]
[usenetquote2]> > >> The hitch is that to become a Canadian non resident for tax purposes, it is on[/usenetquote2]
[usenetquote2]> > >> the basis that you stay out of Canada for 24 months minimum to sever all[/usenetquote2]
[usenetquote2]> > >> "factual residential ties". If you arrive back before the 2 years has elapsed,[/usenetquote2]
[usenetquote2]> > >> unless it was through no fault of your own, you will have remained a tax[/usenetquote2]
[usenetquote2]> > >> resident for the time you were out of Canada and have to pay taxes on all your[/usenetquote2]
[usenetquote2]> > >> US income! Ouch! Returning early when it is not your own decision may be[/usenetquote2]
[usenetquote2]> > >> forgiven.[/usenetquote2]
[usenetquote2]> > >>[/usenetquote2]
[usenetquote2]> > >> So, if it's your choice, stay out until 24 months have elapsed.[/usenetquote2]
[usenetquote2]> > >>[/usenetquote2]
[usenetquote2]> > >> Stuart[/usenetquote2]
[usenetquote2]> > >[/usenetquote2]
[usenetquote2]> >[/usenetquote2]
 
Old Jan 10th 2002, 2:24 am
  #11  
Dave
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Posts: n/a
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Guys,

I checked my letter of confirmation from the year 2000 which states I am no longer a
Canadian resident. There was no mention of 24 month time period. I called up Canada's
international tax office and the respondent said there used to be a 24 month time
period but it's no longer in place. He said if I return to Canada I would be required
to pay US income taxes to the US government on my US earnings and Canadian taxes to
the Canadian government only on my earnings while working/living in Canada.

thanks, dave

"Rudy Amid" <rudy@amidcom>

[usenetquote2]> > >>[/usenetquote2]
[usenetquote2]> > >> > Hi,[/usenetquote2]
[usenetquote2]> > >> >[/usenetquote2]
[usenetquote2]> > >> > I've been working in the US on a TN Visa for a 1 and 1/2. I gave up my[/usenetquote2]
[usenetquote2]> > >> > Canadian Residency for tax purposes. I plan on moving back to Canada in a[/usenetquote2]
[usenetquote2]> > >> > few months. How do I become a Canadian resident again? Would this allow me[/usenetquote2]
[usenetquote2]> > >> > to regain my healthcare and driver's license?[/usenetquote2]
[usenetquote2]> > >> >[/usenetquote2]
[usenetquote2]> > >> > Thanks.[/usenetquote2]
[usenetquote2]> > >>[/usenetquote2]
[usenetquote2]> > >> You become a Canadian resident by arriving back in Canada and saying so.[/usenetquote2]
[usenetquote2]> > >>[/usenetquote2]
[usenetquote2]> > >> The hitch is that to become a Canadian non resident for tax purposes, it is on[/usenetquote2]
[usenetquote2]> > >> the basis that you stay out of Canada for 24 months minimum to sever all[/usenetquote2]
[usenetquote2]> > >> "factual residential ties". If you arrive back before the 2 years has elapsed,[/usenetquote2]
[usenetquote2]> > >> unless it was through no fault of your own, you will have remained a tax[/usenetquote2]
[usenetquote2]> > >> resident for the time you were out of Canada and have to pay taxes on all your[/usenetquote2]
[usenetquote2]> > >> US income! Ouch! Returning early when it is not your own decision may be[/usenetquote2]
[usenetquote2]> > >> forgiven.[/usenetquote2]
[usenetquote2]> > >>[/usenetquote2]
[usenetquote2]> > >> So, if it's your choice, stay out until 24 months have elapsed.[/usenetquote2]
[usenetquote2]> > >>[/usenetquote2]
[usenetquote2]> > >> Stuart[/usenetquote2]
[usenetquote2]> > >[/usenetquote2]
[usenetquote2]> >[/usenetquote2]
 
Old Jan 11th 2002, 3:01 am
  #12  
Stuart
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Posts: n/a
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There you go ... bad information from CCRA phone lines as usual.

Indeed the 24 month time period now has formally gone.

BUT what that means is that any time the CCRA decides that your ties are closer to
Canada, and that treaty provisions may not apply, that you can be dinged for Canadian
taxes on US income earned while in the US.

While the 24 month period has gone, it is still apparently used as a bench mark of
your intentions.

Stuart
 
Old Jan 13th 2002, 4:31 am
  #13  
Rudy Amid
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Dave,

Well, they told me the same thing they told you. If you're a Canadian citizen, just
come back any time you want, no 24-month lockout. As stuart said, that may be only
half of the truth since they can proceed to grill you on the intentions. I guess if
you have really sever all ties with Canada and established a new one in USA, then I
don't see how Canada can claim you are still resident eventhough you have already
delcared non-resident.

-Rudy

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Old Jan 13th 2002, 5:02 am
  #14  
Stuart
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Yup ... it's a fine line. Personally, I think this is the thin end of the wedge on
the way to attempting to require as the US does ... potential taxation of citizens
wherever they are in the world.

That's the bottom line though ... they state openly in the IT (Interpretation
Bulletin) Draft that a temporary stay abroad may not exempt you from Canadian
taxation. Working in the US on a work visa is essentially a temporary stay, by
definition. How long till they decide that for TNs and H1Bs ?

Stuart
 

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