Hi There,
I'm looking for some advice on whether you think CRA processed my non-resident return correctly. I sold some non-registered segregated funds in 2014 and reported the gain on a non-resident return and claimed a corresponding deduction on line 256 (I wrote income exempt under Canada/US tax treaty Article XIII Paragraph 4).
I paid departure tax on these funds a few years ago and realize that because they are not considered Taxable Canadian Property, subsequent growth is no longer taxable in Canada as a non-resident, only the US.
Instead of permitting the deduction on line 256, CRA used my unused carry forward tuition to offset these gains. Is this correct? At the end of the day I did not pay any tax, but I may move back to Canada at some point in the future and could use the tuition at that point.
I did as much research on this as I could and came across the ordering rules for tuition. Is this similar to foreign tax credits, where CRA forces you to use the tuition credits before foreign tax credits, or did they process my return wrong? I did not include a copy of my US return showing the gains reported in the US; perhaps this is the reason they denied the deduction? Anyone have any thoughts? I'm very confused about this.
Non-Resident of Canada Capital Gains
Moderator: Mark T Serbinski CA CPA
I had a small amount of Canadian employment income (less than $10K) that I earned commuting to Canada, so had to file a return to get the tax they withheld back. Problem was, I forgot to notify the institution with the non-registered investments that I was a non-resident until the following year, so they issued me a T3 slip.
In addition to the capital gains in box 21, the T3 slip had interest income, which CRA removed from my return and did not tax. It also had dividend income which they removed and sent me a special assessment for 15% tax on. From what I can tell, CRA handled the dividends and interest correctly. I just don't get why they taxed me on the capital gains. Why didn't they delete them like the interest? I assume this must be because they had no way of knowing if they were from Taxable Canadian Property? Does that make sense?
I was worried that if I did not include the gains from the T3 slip, CRA would add them on later and try to tax me on them; but they ended up doing that anyway. So I guess in hindsight, based on what you said I should not have reported anything and just waited for them to send me a bill for the dividends? I just assumed I had an obligation to report them, and then take a deduction for them; just like I did with the employment income.
In addition to the capital gains in box 21, the T3 slip had interest income, which CRA removed from my return and did not tax. It also had dividend income which they removed and sent me a special assessment for 15% tax on. From what I can tell, CRA handled the dividends and interest correctly. I just don't get why they taxed me on the capital gains. Why didn't they delete them like the interest? I assume this must be because they had no way of knowing if they were from Taxable Canadian Property? Does that make sense?
I was worried that if I did not include the gains from the T3 slip, CRA would add them on later and try to tax me on them; but they ended up doing that anyway. So I guess in hindsight, based on what you said I should not have reported anything and just waited for them to send me a bill for the dividends? I just assumed I had an obligation to report them, and then take a deduction for them; just like I did with the employment income.