We have recently moved to Grand Cayman where there is no tax base. We moved in Jan 2007 and have some questions regarding non residence status, selling our house back in Canada and liquidating assets to avoid paying income tax on my world income.
First off I am employed with a Caymanian company and paid in Caymanian currency, my spouse is not working (yet) and we have 2 children all registered as dependants on my work permit.
We listed our house for sale back home in December 2006 and have had a few offers on it. One thing that came up, is there is a declaration on the offer of purchase and sale stating whether we are a "resident" or non Resident of Canada. Seeing as this is our final asset to liquidate back home, do I declare we are non residents.
If I do that, will I be subject to capital gains tax (even though it has been our primary residence for the past 10 years) and if so, would we be liable for the entire gain from the date we purchased it or simply from the last evaluation date (listing price) before we moved?
If I declare that we are residents of Canada on this form, do we open ourselves up for tax on our world income here in Cayman?
This seems to be a chicken and egg scenario and I am leary on how to approach it.
As we moved in January 2007, do we submit the NR73 form now or wait until we have the house sold, bank accounts and credit cards cancelled and simply file this form with our 2007 income tax forms (my wife has nominal residual income foor 2007).
Any help you could provide would be very helpfull!!!!
Clueless in Cayman
NR73 non residence tax questions
Moderator: Mark T Serbinski CA CPA
You did note that this is a Canada-US tax forum? US has a treaty with Canada, thus residecy is determined in the treaty, and allows that one can have *some* ties in Canada and stil be considered non-resident.
GC, of course, does not have such a treaty, thus in CRA's eyes you need to have NO ties in Canada at all to be non-resident. Minimal allowable ties would be a passport, and that is about it. Every bank account, RRSP, insurance, library card, that you continue to hold is a tie that can make you resident. An empty house is considered a major tie.
For the sale of your house, your residential status will not affect your taxes on the house; you can sell up to a year after you leave and pay no tax due to the change of use rules. What does change ist he need to file a form prior to the sale to avoid a large tax withholding (which you would get back next year but should try to avoid).
An important fact in determining whether you are still resident in Canada is how you portrat yorself to any Cdn payors, including the one's buying your house, the bank, etc
So, if this is indeed your last asset and tie, I would indicate 'Non-resident', file the required complince forms (T2062/2062A) on which you will calculate '0' tax owing. This will set in motion the CRA to request an NR73 from you,, and then a residency determination will be made.
There is a chance that CRA will determine your residency date will be when you physically left Canada; they more likely will say it was when you sold your house. You will inndicate this date onyour 2007 'departure return' that you will file in spring '08. You will have to include any world income you receive up til that date.
If CRA doesn't ask for a NR73, don't send one, and simply write the date you left as your departure date.
As well as NR73, you should look over the CRA "Emigrants" guide to make sure that you are meeting all the other reporting requirements for departing Cdns.
GC, of course, does not have such a treaty, thus in CRA's eyes you need to have NO ties in Canada at all to be non-resident. Minimal allowable ties would be a passport, and that is about it. Every bank account, RRSP, insurance, library card, that you continue to hold is a tie that can make you resident. An empty house is considered a major tie.
For the sale of your house, your residential status will not affect your taxes on the house; you can sell up to a year after you leave and pay no tax due to the change of use rules. What does change ist he need to file a form prior to the sale to avoid a large tax withholding (which you would get back next year but should try to avoid).
An important fact in determining whether you are still resident in Canada is how you portrat yorself to any Cdn payors, including the one's buying your house, the bank, etc
So, if this is indeed your last asset and tie, I would indicate 'Non-resident', file the required complince forms (T2062/2062A) on which you will calculate '0' tax owing. This will set in motion the CRA to request an NR73 from you,, and then a residency determination will be made.
There is a chance that CRA will determine your residency date will be when you physically left Canada; they more likely will say it was when you sold your house. You will inndicate this date onyour 2007 'departure return' that you will file in spring '08. You will have to include any world income you receive up til that date.
If CRA doesn't ask for a NR73, don't send one, and simply write the date you left as your departure date.
As well as NR73, you should look over the CRA "Emigrants" guide to make sure that you are meeting all the other reporting requirements for departing Cdns.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Just wanted to add that there are a LOT of Canadian expats living in GC. It's possible the OP could get some guidance and advice from them as well. And if he can afford to live in GC, he could spring for some professional advice too. If there are cross-border financial experts to be found anywhere, GC is the place.