Residency In Canada

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Whenever there is a major change in one’s life, it is always important to understand the tax implications of making the major change and how it affects one’s life. When moving to a new country it is important to understand the differences in taxation based off residency. I will explain the following:
• Residency and whether the residential ties will be severed when moving to the U.S.
• Date of residency would change if there is a residency change.
Tax implications upon becoming a non-resident
• Tax implications for non-residents once they have left Canada
• Any additional advice regarding residency.
Residency
Residency is often referred to as a continuing state of relationship between a person and place. When considered a resident in Canada, …show more content…

The date the individual becomes a resident of the new country.
When becoming a non-resident of Canada, the taxpayer would still be considered a part-year resident and is taxed on the worldwide income for the period of January 1 to the date of becoming a non-resident. In your situation, you will be leaving Canada to work on May 1, 2019 but your family will not be joining you until the family home sells. Once that happens and you become a resident of the United States, which will be the day you will become a non-resident of Canada.

Tax implications of becoming a non-resident
When becoming a non-resident, the taxpayer is considered to have disposed of the assets owned at fair market value on the date that the taxpayer has no longer become a resident of Canada. The following types of property are exceptions to the deemed disposition rules:
• Canadian real or immovable property and Canadian resource property.
• Business property, including inventory of a business carried on through permanent establishment in Canada.
• Registered pension plans, including personal and employer-sponsored plans, deferred profit-sharing plans and tax-free savings …show more content…

The rules state that if the non-resident taxpayer is receiving Canadian source pensions, annuities, management fees, interest, rents or royalties will have Part XIII tax withheld which is normally around 25% but may be lower depending on the tax treaties. A non-resident taxpayer may elect under ITA section 216 to pay Part 1 tax on rental income. Since the only income that you will have ongoing in Canada is rental income, we suggest considering this election. When this election is made, the non-resident taxpayer files a separate return including the gross rental revenue and deducting the relevant rental expenses. No other deductions are available and personal tax credits may not be claimed. If you do not make this election, you will have to withhold 25% of the gross rental income rather than 25% of the net rental

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