Hello
Let's say we have a guy named John who is a US Citizen, going to school in Canada with the immigration status of Permanent Resident.
He was in Canada until late 2011 and in November 2011, he went to the US to continue his education.
He remained in the US until early 2015. In early 2015 went back to Canada for a few weeks, then left Canada to other countries. He sometimes came to Canada and stayed with relatives but never exceeded 183 days in a tax year.
John did not spend more than 183 days in Canada in a tax year after leaving in November 2011.
John did not have a spouse or common in law in Canada, but a house was under his name which the title was transferred to his sister in 2014.
John is self employed and works as a freelancer online.
Did john become a tax non-resident when he left Canada in Nov 2011 and automatically became a US tax resident under the US-Canada tax treaty? Is he still a non-resident since he does not own or lease a home in Canada and also does not spend more than 183 days?
Regards,
When did 'John' become a tax non resident in Canada
Moderator: Mark T Serbinski CA CPA
In my opinion he became a deemed non-resident via treaty when he left Canada in 2011 and has NOT been a resident since.
Continuing to own a home in Canada would only really be relevant if:
1) He had other primary ties (wife, child) remaining in Canada and was coming back to visit regularly
2) He moved to a country that does not have a tax treaty with Canada.
3) He had no other primary ties, but was still spending a significant amount of time in Canada.
Continuing to own a home in Canada would only really be relevant if:
1) He had other primary ties (wife, child) remaining in Canada and was coming back to visit regularly
2) He moved to a country that does not have a tax treaty with Canada.
3) He had no other primary ties, but was still spending a significant amount of time in Canada.
Just to correct steve (who is putting up some pretty good posts btw), your Cdn status would depend on your US status.
Since you are a US citizen, once you left Canada with no ties in Canada you became a non-resident of Canada pure and simple. had you been a Cdn citizen, on a student visa in US you would remain a Cdn resident until you got a working status, since foreign students are not considered US tax residents. So John became Cdn non-resident by Cdn rules, not be treaty,
The house in Canada is meaningless for residency, since you do not live there. It is merely an investment. That does mean it is subject to Cdn taxation when you/she sells.
Btw, from your story, you have lost your Cdn PR status. by being out of the country for more than 3 of the past 5 years.
Since you are a US citizen, once you left Canada with no ties in Canada you became a non-resident of Canada pure and simple. had you been a Cdn citizen, on a student visa in US you would remain a Cdn resident until you got a working status, since foreign students are not considered US tax residents. So John became Cdn non-resident by Cdn rules, not be treaty,
The house in Canada is meaningless for residency, since you do not live there. It is merely an investment. That does mean it is subject to Cdn taxation when you/she sells.
Btw, from your story, you have lost your Cdn PR status. by being out of the country for more than 3 of the past 5 years.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Thanks for the clarification Nelsona. Can you please help me understand this a bit better? Is the reason we can’t use section IV of the treaty to determine residency in this situation simply because he is a US citizen? For example, if a US citizen was living in Canada for 20-30 years and decided to move back to the US, would the treaty not be used at all in this case either? Stated another way, is CRA section 250(5) never applicable to US citizens either?
If we can’t rely on the treaty for US citizen residency issues, their ties to Canada would hold much more weight. If in this case the individual had no other primary ties (other than the house), BUT had many secondary ties, would the conclusion still be the same? Or would he still need to have some other primary ties to maintain residency?
I’m aware that a Canadian student can’t break Canadian residency via treaty if they are on a J or F visa in the US, because these days don’t count towards the SPT. Do the rules work in reverse if you are a US citizen student in Canada for school purposes? I’m guessing not, as our poster was a US citizen and was able to establish Canadian residency.
Thanks.
If we can’t rely on the treaty for US citizen residency issues, their ties to Canada would hold much more weight. If in this case the individual had no other primary ties (other than the house), BUT had many secondary ties, would the conclusion still be the same? Or would he still need to have some other primary ties to maintain residency?
I’m aware that a Canadian student can’t break Canadian residency via treaty if they are on a J or F visa in the US, because these days don’t count towards the SPT. Do the rules work in reverse if you are a US citizen student in Canada for school purposes? I’m guessing not, as our poster was a US citizen and was able to establish Canadian residency.
Thanks.
The reason the treaty doesn't come into play is that he no longer met any of the residency standards for CRA, so he is not resident.
Article IV is a 'tie-breaker". There is no tie here. No spouse, no abode in Canada.
I said his STATUS in US mattered because students go on F or J status, which does not make them US residents for 2 to 5 years, so then John wouldn't use the treaty either, since he wouldn't meet any US requirements. Again no tie-breaker since he can't lose Cdn residency until he meets it elsewhere.
US citizen going to school in US, with no ties, like John, is simply a non-ressisnt of Canada.
Being on a property document is not an abode.
Article IV is a 'tie-breaker". There is no tie here. No spouse, no abode in Canada.
I said his STATUS in US mattered because students go on F or J status, which does not make them US residents for 2 to 5 years, so then John wouldn't use the treaty either, since he wouldn't meet any US requirements. Again no tie-breaker since he can't lose Cdn residency until he meets it elsewhere.
US citizen going to school in US, with no ties, like John, is simply a non-ressisnt of Canada.
Being on a property document is not an abode.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Ok I think I got it. I was getting a bit carried away with the notion of a deemed non-resident in this post. I'm aware this is only used when you have ties in both countries and need to rely on the tie-breaker rules to resolve the issue. In this case, he’s simply an emigrant because he really doesn’t have any remaining ties in Canada (other than the house).
However, if this house was available for him to use (poster did not specify), could you not make the argument that the treaty tie-breaker rules are necessary? This is the entire essence of the first test. He ties the first test as he has a home in each country. Then you move on to centre of vital interests, which would tip in favour of the US and the treaty and deemed non-resident section 250(5) would kick in. This is the way I interpreted the situation, but perhaps it wasn’t necessary. The end result is the same, but this is an important distinction.
However, if this house was available for him to use (poster did not specify), could you not make the argument that the treaty tie-breaker rules are necessary? This is the entire essence of the first test. He ties the first test as he has a home in each country. Then you move on to centre of vital interests, which would tip in favour of the US and the treaty and deemed non-resident section 250(5) would kick in. This is the way I interpreted the situation, but perhaps it wasn’t necessary. The end result is the same, but this is an important distinction.
I dis agree. Nothing in the posters comments say the house is is abode.
I always have a room available at my mom's house and it is partially in my name too....
No point making things complicated for what was really a simple question, which you answered simply at the last.
I always have a room available at my mom's house and it is partially in my name too....
No point making things complicated for what was really a simple question, which you answered simply at the last.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Thanks for the replies.
Would john become a tax resident of Canada again by spending more time in Canada than US? Let's say all his ties are in the US including accountants, business bank accounts and credit cards, personal bank account and credit cards, driver's licence and corporation.
Does it matter if John did not spend 183 days in a tax year in Canada but he did spend more than 183 in a 12 months period? He was not renting or owned a house in Canada but was staying at a relatives house. Would he still remain a tax resident of US?
Would john become a tax resident of Canada again by spending more time in Canada than US? Let's say all his ties are in the US including accountants, business bank accounts and credit cards, personal bank account and credit cards, driver's licence and corporation.
Does it matter if John did not spend 183 days in a tax year in Canada but he did spend more than 183 in a 12 months period? He was not renting or owned a house in Canada but was staying at a relatives house. Would he still remain a tax resident of US?
If you remained in Canada 183 days in the calendar year, since that would meet a Cdn definition of tax residency (deemed residence), then the Treaty tie-breakers would need to be applied, and you would need to outweigh your Cdn ties with US ones.
Canada does not have a "rolling" period of days for residency, so as long as the time spent was less than 183 days in any year (and you did not establish a residence for yourself in Canada) you would be fine.
Since your PR status would be done, you would have to convince the Cdn border officer of your right to visit Canada for such long, continuous periods.
Canada does not have a "rolling" period of days for residency, so as long as the time spent was less than 183 days in any year (and you did not establish a residence for yourself in Canada) you would be fine.
Since your PR status would be done, you would have to convince the Cdn border officer of your right to visit Canada for such long, continuous periods.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing