Hi,
I left Canada in Apr2005 and my wife and kids came down and join me in Nov 2005. I kept my house in Ontario without renting it out (so far) and I don't plan to sell it anytime soon. As far as I know, I was a DNR as off nov 2005 regardless I have a house in Canada because the tie-breaker rule says if the taxpayers pass the permanent home test and centre of vital interest test. I think I passed because I have a permanent home in US and I work in the US on an H-1 visa. As a DNR, I don't pay tax for non-Canadian source income. Am I correct so far?
I called CRA today trying to see if I was required to "deemed disposition" my house in my exit return. The agent asked if I plan to sell or rent my home. I answer no, no.. Then he goes I will be a "factual resident" and need to file CND returns each year as a resident... I told him the treaty and tie-breaker rule, but he insists I will have to sell my home or rent it to someone which is not my family member (i.e. parents) to be DNR.
I'm totally lost... Is he correct?
Thanks,
Calvin
Factual resident or DNR, got confused again.
Moderator: Mark T Serbinski CA CPA
You are a deemed non-resident from november on. CRA international will almost ALWAYS say that someone is a factual resident.
remember: to be a deemed non-resident, you must have a residential tie in Canada, otherwise you would be a pue non-resident. DNR status is by definition someone who has a strong residential tie in canada, like an empty house. But that tie is outweighed by other factors, like you mantionned.
Don't bother calling International anymore.
By the way, the rules on deemed dispositions don't have to apply to Cdn real estate, since these remain taxable in canada forever, regardless of your residentil status. It will be good for you to hava an accuarte appraisal of the home for Nov 2006, as the Cdn (and US) tax clock begin running on that date, but you would only pay tax on sale.
If you sell within a year, you will owe nothing in Canad on the sale. If you sell within 3 years, you will owe nothing in US.
remember: to be a deemed non-resident, you must have a residential tie in Canada, otherwise you would be a pue non-resident. DNR status is by definition someone who has a strong residential tie in canada, like an empty house. But that tie is outweighed by other factors, like you mantionned.
Don't bother calling International anymore.
By the way, the rules on deemed dispositions don't have to apply to Cdn real estate, since these remain taxable in canada forever, regardless of your residentil status. It will be good for you to hava an accuarte appraisal of the home for Nov 2006, as the Cdn (and US) tax clock begin running on that date, but you would only pay tax on sale.
If you sell within a year, you will owe nothing in Canad on the sale. If you sell within 3 years, you will owe nothing in US.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thre is a reporting form that all departing residents must file, and your house would be listed on this. but no tax would be due.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks to our super hero--Nelson! Now I can sleep tonight 
Another question, I read some posts from other mailinglist. Someone suggested in similar case, one can file a "factual resident" return 2005 and use CAN-US tax treaty Article IV to excempt the US income on the Canadian return. If that was true, I could save couple grands. Does anyone have such experience?
Calvin
Another question, I read some posts from other mailinglist. Someone suggested in similar case, one can file a "factual resident" return 2005 and use CAN-US tax treaty Article IV to excempt the US income on the Canadian return. If that was true, I could save couple grands. Does anyone have such experience?
Calvin
Ingram uses the term 'factual resident' incorectly. The DNR is the correct way to file, and using 256 to exclude income means you are a DNR.
The rules changed 2 years ago to remove this little benefit. A DNR used to file as a resident and then exclude income, this getting full personal deductions. CRA has changed this now: you file as a non-resident or as a departing residdnt when you are DNR. But even in your case the April-Nov income must be reported in Canada, since you did not become DNR until November.
What could save you money is if you were to declare yourself DNR from back in April, but I thing that, given your wife was not trying to sell your house, is too aggressive a position in my opinion.
The rules changed 2 years ago to remove this little benefit. A DNR used to file as a resident and then exclude income, this getting full personal deductions. CRA has changed this now: you file as a non-resident or as a departing residdnt when you are DNR. But even in your case the April-Nov income must be reported in Canada, since you did not become DNR until November.
What could save you money is if you were to declare yourself DNR from back in April, but I thing that, given your wife was not trying to sell your house, is too aggressive a position in my opinion.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best