Canada: deemed vs non-resident vs ordinary. How to file?

[Taxos]

Hoping to gain some perspective on the following scenario
- non US Citizen/Green Card, Canadian PR holder third country national.
- Living and working in the US until 2020 (only short 1-2 week visits to Canada since gaining PR)
- visited (and stayed more than 183 days due to border restrictions/covid and remote work) in 2021
- stayed more than 183 days in 2022, travelled back and forth frequently as the border conditions normalized.
- No income/earnings of any kind in Canada. No dependents/spouse.
- Ties in US: vehicle, license, employment, savings/investments continued in 2021, 2022.
- Planning to stay in Canada in 2023 as FT resident so will file as ordinary resident.

For 2021 and 2022: wondering if the person should file as a deemed resident or non-resident (given ties leaning towards US in both years) or ordinary resident. Goal is to minimize tax burden and stay tax compliant.

[nelsona]

cra gave guidance on this and allowed those who would not normally be considered resident, to remain non-resident.

search covid in this forum and you will find the mechanics for ensuring you are compliant with the special regs for those years, but in essence you will not have to report any world income, or perhaps not even file.

[Taxos]

thanks for response. I did check the other posts - appears for 2021 that guidance applies. What about 2022, given the circumstances noted above?

[nelsona]

What were your living arrangements in canada for all these years?

[Taxos]

Hi, circumstances as below:
- stayed more than 183 days in 2022, travelled back and forth frequently as the border conditions normalized in later half of the year.
- No income/earnings of any kind in Canada. No dependents/spouse.
- Ties in US: vehicle, license, employment, savings/investments continued in 2021, 2022.
- Planning to stay in Canada in 2023 as FT resident so will file as ordinary resident and may be eligible for citizenship (min days in Canada requirement will be met)
Thanks

[nelsona]

you did not describe your LIVING arrangements. I didn't ask about days spent in canada (you already mentioned these) , which by treaty doesn't really matter.

[nelsona]

You need to determine when you stopped being a vistor stranded in canada and when you became a commuter, and thus subject to tax on world income.

[Taxos]

Thanks - what do you mean by living arrangements? I don't think I understand that question/concept beyond what I outlined above. As of 2023 I have called Canada home since even in 2022 my job scene kept me 'stranded'. I no longer hold a job in the US as of 2023, and have thus left US for Canada to make a base in Canada (and so I intend to file 2032 returns as a resident). But 2022 was up in the air, with circumstances decided previously.

[nelsona]

Look. What do you think I man by living arrangements? Were you in a hotel? Were you bunking at a friends? Did you have a home in US at the time?

That is a primary criteria for determining RESIDENCE, if you have a RESIDENCE in one or both countries. Its more important than any of the information you have given me thus far.

[Taxos]

I stayed with a family member in Canada in a rented place and stayed in the US through short term rentals. Is residence the supreme factor in determining tax residency?

[nelsona]

AS the term would suggest, residence (the treaty uses the word abode) is the primary factor in determining residency, along with dependents.

Given the temporary nature of your stay in canada, since you had already established tax residency in US, you did not break this until you actually moved to Canada since you no longer had US immigration status.

[Taxos]

Thanks. I'm not sure I understand your last sentence. Mind explaining again?

[nelsona]

There is a principle in tax residency, especially in canada, that once you have established tax residency somewhere, you cannot break it unless and until you establish it elsewhere.

Since you had US tax residency, you never established "enough" residency in Canada to become resident -- until you lost your right to live in US, ie. when you no longer worked under a work visa, and subsequently moved to canada. That day would be your arrival date in Canada, in my opinion.