Income / Taxes - Spousal

Old Jan 15th 2013, 1:53 am
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Default Income / Taxes - Spousal

I declare a $0 tax return every year as a resident in Canada, namely as I still live in the UK as a temporary resident and when I first queried this at the CCRA office in 2006 they said its not worth declaring what they considered my small income to be.

Will this have an effect on my sponsorship for common law as they will see I have continuisly lived outside the UK? Does the CCRA and CIC 'talk' to each other in this regard? I havent filed a return since 2009 (2010/11/12 still outstanding). Should I file these as a non resident asap? Or is the sponsorship side of the application process fairly straightforward? IE no criminal record in canada not every sponsored before etc would they dig around with CCRA etc??
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Old Jan 15th 2013, 2:01 am
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Default Re: Income / Taxes - Spousal

also i understand spousal is exempt from income proof, so do we just put my net income on my sponsorship forms (not a lot as OH is the main breadwinner!) and I dont see anywhere to put his income details down on any of the forms? We will also have rental income from our home after we move, is it worth mentioning this somewhere?
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Old Jan 15th 2013, 4:03 am
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Default Re: Income / Taxes - Spousal

I can't help with the immigration side but ...

Originally Posted by MegRobEarlee
Does the CCRA and CIC 'talk' to each other in this regard?
No.

I havent filed a return since 2009 (2010/11/12 still outstanding). Should I file these as a non resident asap?
As a non-resident for tax purposes you should only file a tax return in Canada if you have Canadian sourced taxable income.
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Old Jan 15th 2013, 4:19 am
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Default Re: Income / Taxes - Spousal

Originally Posted by JonboyE
As a non-resident for tax purposes you should only file a tax return in Canada if you have Canadian sourced taxable income.
Not true - I have done a ridiculous amount of research into this - I will try to be as clear as possible.

Canada doesn't let the person decide whether or not they are resident, they make that assessment themselves. The way it works is when you file what will be your last tax return, there's a check box on the form that says "This is my last tax return" (or something along those lines). This tells CRA not to expect any more filings from you, presumably because you will no longer be living in the country.

When you return to Canada and file your tax return as normal, once you have Canadian income again, CRA will get a flag that says there will be x years of tax returns missing. At that point, CRA will determine whether or not you were actually a non-resident of Canada during the time you were gone.

If they deem you to be non-resident, then you just go on as normal.

If, however, you are deemed to have been resident in Canada while you were away, you owe taxes on all your worldwide income. Canada and the UK have tax treaties so that you aren't double-taxed, you basically will owe to Canada any tax in excess of what you paid in the UK. (For example, if in the UK you paid 20% tax and in Canada you pay 28%, then you owe Canada 8%. This is a huge generalisation but you get the idea.)

To make this determination, CRA looks at two things: Length of time gone form Canada, and ties to Canada.

Generally speaking:
Less than 3 years out of Canada: You will be deemed resident.
More than 5 years out of Canada: You will be deemed non-resident.
Between 3 and 5 years: It depends.

CRA looks at a number of things to determine whether or not you have ties to Canada, for example:
-Do you still have a Canadian drivers' license?
-Do you still have your OHIP (or other health care) card?
-Do you have a partner/boyfriend/girlfriend/husband/wife/etc in Canada?
-Do you have children in Canada?
-Do you have other dependents in Canada?
-Do you have property in Canada?
-Do you have significant assets in Canada? (car, furniture, etc)
-Do you have Canadian bank accounts and credit cards?

CRA's link on all this: http://www.cra-arc.gc.ca/tx/nnrsdnts...sdncy-eng.html
CRA's link about leaving Canada: http://www.cra-arc.gc.ca/tx/nnrsdnts.../lvng-eng.html

No one of these questions will necessarily tip you one way or the other, it's the combination of them together that helps CRA determine whether or not you severed your ties with Canada. The more you do, the better. In my case, I closed all my bank accounts, all my credit cards, changed my drivers license to a UK one, cancelled my OHIP, I was living with my parents so no significant assets, was single when I moved and have since married a Brit, and have been out of Canada for 4.5 years so far (September will be 5).

Hope that helps...
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Old Jan 15th 2013, 4:42 am
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Default Re: Income / Taxes - Spousal

Oh right so you didnt file a return then at all?
I filed 2004-2009 in one chunk, as $0 income, but I havent filed anyting for 2010 onwards.
I still hold my BC licence, never exchanged it, but opted out of BC medical (altho I did see the doc once or twice in bc, nothing ever came of it). I have savings in TD, and as a result of my $0 returns, i received a GST rebate in BC (altho I didnt cash any of hte cheques so they are no longer valid)
I guess ill just wait to file upon return and file a $0 return as normal then start again once I am earning in Canada (will miss it all being done for you here however, that was a nice perk)
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Old Jan 15th 2013, 5:54 am
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Default Re: Income / Taxes - Spousal

Originally Posted by SchnookoLoly
Not true ...
I am not arguing with the rest of your post but my statement "As a non-resident for tax purposes you should only file a tax return in Canada if you have Canadian sourced taxable income." is completely true.
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Old Jan 15th 2013, 6:07 am
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Default Re: Income / Taxes - Spousal

Originally Posted by MegRobEarlee
Oh right so you didnt file a return then at all?
I filed 2004-2009 in one chunk, as $0 income, but I havent filed anyting for 2010 onwards.
I still hold my BC licence, never exchanged it, but opted out of BC medical (altho I did see the doc once or twice in bc, nothing ever came of it). I have savings in TD, and as a result of my $0 returns, i received a GST rebate in BC (altho I didnt cash any of hte cheques so they are no longer valid)
I guess ill just wait to file upon return and file a $0 return as normal then start again once I am earning in Canada (will miss it all being done for you here however, that was a nice perk)
It is a question of tax-residency. You haven't helped yourself by retaining your driver's license. Also, if you filed as a non-resident I don't understand why you received a GST rebate. Assuming you did not keep a house available for your use in Canada then:

You lived in the UK since 2004
You had a home there
Your immediate family lived there
The centre of your life was in the UK for those years.

This seems pretty clear cut that, in fact, you were tax-resident in the UK. This being the case you were correctly advised to file a return with zero Canadian income if you did not have any. [edited to add: though there is no requirement to file a zero return unless the CRA request that you do so.] By giving you this advice the CRA have implicitly accepted that you are non-resident. If you were tax-resident in Canada you would have had to file a return declaring your world-wide income, as SchnookoLoly has already noted.

Last edited by JonboyE; Jan 15th 2013 at 7:56 am.
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Old Jan 15th 2013, 7:48 am
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Default Re: Income / Taxes - Spousal

To add:

If HMRC were taxing MegRobEarlee as a UK resident (tell me if they were not) then she cannot be tax-resident in the UK and Canada at the same time. The tax treaty has the tie-breaker rules if both countries claim the taxpayer as a tax-resident. There are in Article 4 of the treaty. http://www.fin.gc.ca/treaties-conventions/UK_-eng.asp.

The tax treaty superceeds national law.
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