Cdn living in US with TN visa but keeping ties to Canada

[tom2510]

I will be working full time in the US with a TN visa starting in March for 2 years. I have other businesses in Canada and they will be minimally active for those 2 years. I also have investment accounts as well as RRSPs and I have a house in Canada. I will be considered US resident for tax purposes due to the substantial presence test. I do not wish to formally emigrant and leave Canada as unwinding businesses, liquidating investments (capital gains) will be a huge bill, and I will be returning in 2 if not 3 years and will need to re-establish. I believe if I keep all these I would be a factual resident of Canada. I was thinking of paying US resident taxes on US income, and claiming Cdn income (I will keep to a minimal, no liquidation or capital gains) as world income on the US tax return. On the Canadian tax return, I would pay taxes first on any Cdn income (and claim pd taxes as foreign credits on the US return). I would claim my US income on the Cdn return but deduct all of it in line 256 referencing Tax Treaty as this income has already been fully taxed in the US. Is this correct? If not, what is the best option for my situation? Any advise would be greatly appreciated.

[nelsona]

This used to be correct, however, since about 2004 CRA has been actively kicking out non-residents, by the "deemed non-resident status".

From what you post you will be not be Cdn resident, factual or otherwise.

You may not have to wind down your Cdn businesses, so I don't see how departure would drastically affect you.

[tom2510]

Thank you for your reply. If this used to be correct, then can I submit it that way and let CRA determine whether this is acceptable in my case? Especially since I have registered businesses and family present in Canada, they may feel that my ties are strong enough not to "kick me out"? Is there a penalty for me trying it? If they do kick me out in April 2012 after I file my tax return for 2011, at that time I can close out bank accounts and whatever else necessary?

[nelsona]

family only means spouse; no one else counts. accounts are not considered residential ties.

You can try. The moment you include wages on line 256 and/or include a copy of your 1040, they willstart the ball rolling.

You can't be considered resident of canada, and then exclude foreign wages because you claim you are resident elsewhere. CRA closed this loop-hole years ago, Ingram notwithstanding.

[tom2510]

Thanks again. I've accumulated about $350,000 in capital gains over the years. Adding this deemed disposition all in the departure year would result in the highest tax bracket. Is there a way to spread it out? Originally I was going to keep capital gains unrealized until lower income years.

[nelsona]

Nope. This is classic case where CRA would push you out. You don't have to pay the gains tax right away. And if, like you say, you will be back in canada in 2 years, your deemed dispo will be unwound anyways.