Tough call filing as resident or non-resident of Canada

optism · Post by **optism** » Thu Mar 10, 2016 11:59 pm

I've got a tricky situation that will likely require consultation with a tax specialist, but I'm curious to hear what people think.

I moved to the U.S. in May 2015 for a job. My wife joined me in June 2015. We have no rentals/homes in Canada, have U.S drivers licences, and by all accounts should qualify as non-residents of Canada for the portion of the year we lived in the U.S. We just submitted an NR73 Determination of Residency Status form 2 weeks ago. There are factors that may prevent getting non-residency status: First, we both still have bank accounts and credit cards in Canada. Second, my wife applied for an Ontario health card in May 2015. We were moving from BC to NY and she stayed in May 2015 in Ontario with her parents. She was pregnant at the time and needed the Ontario heath card for an OBGYN appointment. She never cancelled the card (since it's free), so that may not play favorably with CRA in getting non-residency.

It gets worse. Due to family reasons we need to move back to Canada this May or June 2016. The company I work for has an LLC in Canada and so I will continue to work for them remotely. Our claim for non-residency status in Canada for 2015 seems to be on increasingly shaky ground. Apparently the NR73 process can take 36 weeks (!!) so by the time our claim for non-residency is processed we'll be back in Canada, both with Ontario health cards, and I working for the Canadian-based LLC of the U.S company I originally left Canada to work for.

My wife and I need to choose to file as either residents or non-residents of Canada from May 2015 onwards (June 2015 in my wife's case) as the NR73 form won't be processed in time. It's obviously simpler to file as residents, but we'll end of paying more tax than as non-residents. In particular, I have amassed $60k in Canadian tuition credits that would be effectively double counted against any foreign tax credit I claimed and therefore wasted.

In your opinion, is it likely that the CRA will deem us residents or non-residents for May/June 2015 onwards? Will there be a penalty if their eventual determination differs from how we filed our 2015 taxes?

Thanks for reading, and apologies for the long rant.

nelsona · Post by **nelsona** » Fri Mar 11, 2016 6:21 am

You are non-resident, and should file a departure return for 2015.

None of what you mentioned makes you resident.

may I ask why you filed NR73. It should Never be sent unless/until CRA asks for it. YOU make the decision, not CRA.

In any event, file your departure (emigrant) return, with no US income on it.
For 2016, you will file a Immigrant New resident return.

optism · Post by **optism** » Fri Mar 11, 2016 10:21 am

Hi Nelson,

Thanks for the info. I'll file non-resident. Based on information from CRA, I was under the impression that I HAD to submit a NR73 for the year of departure. I wasn't aware that this wasn't required unless asked. I should have found this forum sooner. Have I put myself in a difficult situation by having submitted a NR73? Based on your experience, is it likely they will determine us as non-residents?

nelsona · Post by **nelsona** » Fri Mar 11, 2016 11:09 am

It won't matter. YOU make the decision.

nelsona · Post by **nelsona** » Fri Mar 11, 2016 11:27 am

Separate question: How was your spouse able to collect EI while living in US.

What status did she move to US under?

nelsona · Post by **nelsona** » Fri Mar 11, 2016 11:27 am

Or was it mat leave?

optism · Post by **optism** » Fri Mar 11, 2016 11:32 am

It was mat leave. She was taxed as NR.

tony · Post by **tony** » Mon Oct 31, 2016 8:18 pm

I am still confused regarding NR73, if I dont' file it and decide to file as non resident.
1. How can I do that?
2. What about to stop child benefit? If already receive while I am out of Canada, what shoul I do?

nelsona · Post by **nelsona** » Tue Nov 01, 2016 5:08 am

Please read inofr on CRA website.