Canada Departure tax return

jjz · Post by **jjz** » Sun Feb 06, 2011 2:04 pm

My wife moved to US under TD in Nov 2009 during her maternity leave. She was planning to go back to work in 2010 after the maternity leave. We didn't own a house in Canada, but keep all the bank accounts, rrsp, tfsa, driver license and health card(never used since then). Her job was guranteed. She and her company contributed rrsp to her group rrsp account during the maternity leave. Her company also kept all the benefit during her maternity leave. She got maternity and parental benefit from Canada during the leave. At the end of the maternity leave, she decided to quit the job, cause it is too hard to take care a baby and work full time by herself.

We both filed 2009 tax return as resident to Canada. Now it's time to file 2010 tax return. I guess we have to file departure return to Canada. What's the departure date? Is it the date my wife quit her job (sep 2010) also shown on her ROE or the date she moved to the states ( Nov 2009)?

Thank you

nelsona · Post by **nelsona** » Sun Feb 06, 2011 2:20 pm

She left in 2009. with you. That should have been both your and her departure date.

jjz · Post by **jjz** » Sun Feb 06, 2011 7:10 pm

Do you mean even she quit the job last year. The departure day will still be 2009?

thanks

jjz · Post by **jjz** » Sun Feb 06, 2011 7:14 pm

How about the group rrsp she and her company contributed during her stay in the states? Is it allowed? She still belonged to the company and that's part of her benefit from the company.

JGCA · Post by **JGCA** » Sun Feb 06, 2011 7:15 pm

She departure from Canada is last day you resided in Canada not last day you stopped work, you can be a resident of Canada and be unemployed the job has no bearing on the departure date.

jjz · Post by **jjz** » Sun Feb 06, 2011 7:22 pm

Just try to straight things out. Is her job counted as tie with Canada before she quit?

jjz · Post by **jjz** » Sun Feb 06, 2011 10:13 pm

Now I am clear with the departure date. I have 2 questions regarding the RRSP.

1) Can she claim RRSP deduction for the contribution she made during 2010?
So she can get some tax back for the 25% tax withhold on maternity leave pay.

2) Based on my understanding, I can't contribute to RRSP for 2010 anymore.
is this right?

JGCA · Post by **JGCA** » Mon Feb 07, 2011 9:30 am

For the period in 2010 while you were resident you file a regular tax return with pro-rated tax credits till date of departure, yes on this return you can deduct the 2010 RRSP contributions assuming you have room to do so based on your 2009 tax assessment from CRA saying what the limit for 2010 is.

The 25% witholding tax on the maternity leave will be shown as tax paid against the income to get it back depends on her tax payable if it exceeds this amount based on the tax owing its refunded up to the excess amount over tax owed.

jjz · Post by **jjz** » Mon Feb 07, 2011 10:14 am

Do we have to adjust 2009 tax return? We filed as resident for that year to Canada if the departure date is Nov 09,

nelsona · Post by **nelsona** » Mon Feb 07, 2011 11:24 am

The 25% tax on mat leave (since it was withheld as non-resident) does NOT go on your return, nor does the mat leave payment. It is a flat tax.

Yoi would have to elect to put it on, using section 217, and would be based on world income.

JGCA · Post by **JGCA** » Mon Feb 07, 2011 7:18 pm

That is correct the mat leave and tax would be included on a tax return with world income also it would not be alone.

nelsona · Post by **nelsona** » Tue Feb 08, 2011 6:53 am

There seems to be some confusion here.

EI payments made to a non-resident ARE NOT to be reported on a tax return. This is regardless of whether the person is filing a departure return, or is already non-resident for that tax year.

So, any EI benefits paid by Govt (which is what I'm assuming our poster was recieving -- not company mat benefits) do NOT go on the tax retirn if they were recieved after the departure date. they should have been flat-taxed at 25%.

ONLY IF one elects, by section 217, to include the EI payments on their return,( subject to world income limitations), would the income and tax be reported.

The question is if our poster actually told the Govt that she was non-resident, and when they began applying the 25% NR tax.

nelsona · Post by **nelsona** » Tue Feb 08, 2011 7:07 am

My guess, if she correctly wishes to ammend her 2009 return, is that the 25% NR tax on EI would be LESS than what she would owe if she included it, so it would be best not to include it for 2009.

For 2010, if she had no other income, then a 217 return would probably be in order.

I either case, the RRSP contributions made are not going to benefit her much, so she should consider holding on to these for a future time when she can deduct them 'fully' in Canada.

JGCA · Post by **JGCA** » Tue Feb 08, 2011 9:55 pm

Nelsona is correct, my confusion is in the fact that one can collect uic benefits while they are non resident, I did not realise that you could collect UI while a non resient and you have disclosed this to Service Canada.

That would explain why you say that it should not be reported on the tax return at all unless you elect to do so under sec 217.