Leaving Canada

Email from early retirees leaving Canada to live in Mexico...

"We are very grateful for all the info links to websites.  Often, we feel like we are rowing a boat with one oar; toward a tiny speck in the distance that we think is where we want to get to, but once we reach it, we need to go somewhere else.....  Does that make any sense?"

Tax information for Canadians who are planning to, or have left Canada to live in another country:

Leaving Canada whether the plan is for an extended absence or forever, there will be tax consequences.  You will need to consider what you own, owe, your cash flow before and after the move. If you have a business, you may be winding up or changing jurisdictions. 

I wrote an eBook and Word Fillable forms to edit and save that you may find helpful to assist with this process.  The eBook is titled "How to walk in someone else's shoes...without wallowing in their shoe box"  and to make it easy to organize your papers, I've created 24 fillable forms to help you that I sell for just $3.95.

Click here to see the 24 checklists/fillable forms   Add to Cart

If you are reading this page because you've left, please get expert assistance from smeone who specializes in cross border tax.  For example, I know of one firm, Kotler, van den Brink, a CA/CGA partnership in White Rock www.kvdb.com.  Alternatively, you could search out one of the many CPA firms in border towns like Bellingham WA. 

The decision to leave may be easy. Extricating yourself from Canada and implanting yourself into another country, not as easy.   

After determining status regarding residence, you will find six variations on filing personal income tax returns:

  1. Factual residents (we live here and file a regular T1 return)  
  2. Deemed residents (if you stay more than 183 days in Canada, don’t have a residence but don’t have residence in any other country either) who file based on worldwide income 
  3. Non resident (NR4 slips report income and tax withheld) who file based on Canadian income only
  4. Non resident Section 216 (NR6 requires approval) (See ITA links in links below)
    • See T4144 Electing under S. 216 
  5. Non resident Section 216.1
  6. Non resident Section 217 (NR5 requires approval)
    • T4145  Electing under S. 217
    • T4155 OAS Return of Income Guide for Non Residents 
  • Factual residents by province or territory 
  • Deemed Residents and Non Residents

There are two kinds of residents, factual residents and deemed residents. Note that factual residents are never deemed residents and...

  • If you are ordinarily resident in Canada, you are considered to be factually resident 
     
  • If you are determined not to be factually resident, you still may be deemed to be a resident. File a tax return for deemed residents because you stayed in Canada for 183 days or more in the year or for other reasons:

    • Member of Canadian Forces
       
    • Working for federal or provincial employee or CIDA
       
    • or under a tax treaty, exempt on 90% of tax because of a relationship to a resident or deemed resident of Canada
       
    • or the dependent child of such persons
       
  • Government employees may be either factual or deemed depending on circumstances
     
  • A deemed resident is not resident in a province so they have to pay a federal surtax, and will not be entitled to provincial tax credits or provincial benefit programs
     
Non-residents may be required to file a non resident tax return if they for example, disposed of taxable Canadian property or realized a taxable capital gain or loss. They might choose to elect to file Section 216, 216.1 or 217 returns in order to reduce the tax required. 
 

News February 27, 2009: New calculator for non-resident taxes

http://www.cra-arc.gc.ca/nwsrm/txtps/2009/tt090217-eng.html

New calculator for non-resident taxes

Did you know...

That a new online, interactive calculator is available to help determine the current Part XIII tax payable on certain amounts paid or credited to non-residents of Canada? It provides users with the current rate of non‑resident tax, and is continuously updated to reflect all changes to new and existing tax treaties. Non‑residents of Canada, as well as Canadian payers (such as Canadian financial institutions), businesses, trusts, individuals, and tax practitioners can access the calculator online at www.cra.gc.ca/partxiii-calculator

Simplify your taxes by taking advantage of the growing number of secure, online services provided by the Canada Revenue Agency. Go to www.cra.gc.ca/electronicservices

What's new? 

As of March 4, 2010, the definition of taxable Canadian property was amended to exclude shares of corporations (and certain other interest) that, within the past 60 months, don't derive value from real or immovable property situated in Canada, Canadian resource property, timber resources, or options on or interests in these properties.

January 2011, NR elections under S. 217 wishing to reduce Part XIII withholding tax, apply once every five years on Form NR5, to authorize payor to reduce withholding rate on qualifying Canadian benefit payments

 

Canadian Government websites
Foreign Affairs and International Trade
Canadian Embassies
Canada's International Gateway
Personal Documents - Service Canada
Residence determination for individuals
What form do you use to determine status?

Form NR73 will assist the International Tax Office to make a determination of your status.

Topics of interest-International & NonResidence
Tax Treaties
Canadian Tax websites
CRA International and Non Resident Tax
Who do you talk to? The International Tax Office

This is who you call when you need help with determining your status or figuring out how the treaties with other countries work.

Leaving Canada
Tax Guide for non residents
What records do you keep?
Rentals and non residence - special rules
Newcomer or returning to Canada?
Canadian residents living abroad
Emigration

What to do in the year you emigrate.

Filing Income Tax Returns
Non resident election to file a return

Non residents might want to file a S. 217 election to get a refund of tax withheld if it's beneficial. Canadians who pay non residents must withhold and remit tax under the treaty with other countries.

Procedures for disposition of property

 IC 72-

Disposing of property
Income Tax Package - NR and Deemed 2008
Section 116
Income Tax Act S. 128.1 Immigration or Emigration
Section 216

Non residents can elect to pay tax on net income instead of gross rents

NR6 for Section 216 tax on net rents
Section 217
T4145 Electing under S. 217 Guide
NR5 5 year approval required to file S. 217 return
T106 annual information return under S. 233.1

Information Return of Non-Arm's Length Transactions with Non-Residents

See IT 419 Meaning of Arms Length

Refer to Sections 251 and 252 of the ITA

Reportable transactions for all non residents combined is more than CAN $1,000,000.

See IC 87-2 International Transfer Pricing for Transfer Pricing Methodologies

Guides
Forms
Publications
Mexico
Canada's Tax Convention with Mexico
Mexican Drivers Licence and Insurance
USA
Entry Requirements to USA
Olympics - 2010 Vancouver BC
Interested in the 2010 Olympic Games & Tax?
Immigration to Canada
Imigrating - Establishing Child Tax Benefits

 RC66SCH-Status in Canada/Statement of Income

Provincial information
Leaving your province/territory...

There is an adjustment for provincial or territorial tax credits in the year you emigrate or immigrate. 

Coverage under your provincial / territorial health care plan may be limited:

  1. Alberta
  2. British Columbia
  3. Manitoba
  4. New Brunswick
  5. Newfoundland and Labrador
  6. Northwest Territories
  7. Nova Scotia
  8. Nunavut
  9. Ontario
  10. Prince Edward Island
  11. Quebec
  12. Saskatchewan
  13. Yukon
Useful information
Average exchange rates

 If you are leaving Canada, please seek advice from professionals who handle international tax matters as this area of taxation is extremely complex, not that any other area of tax isn't just as complex, but this one involves foreign countries, and the rules can change faster than the weather.

And if you won while gambling ... which form will get you your money back?

http://www.cra-arc.gc.ca/E/pub/tg/p151/p151-e.html#P129_8101

 

     

 

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