CDN Residency Status moving to Bermuda

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wrightw
Posts: 2
Joined: Tue Oct 04, 2005 9:40 am

CDN Residency Status moving to Bermuda

Post by wrightw »

Hello everyone, I have searched and read over and over on the internet about Canadian Residency when working abroad. However I have yet to get a clean cut and dry answer and so I have found myself asking for more help.

I understand the forum is for Canada/US Tax and accounting issues but I hope you will be able to help me aswell.

My situation, my fiance and I just got job offers in Bermuda so we will be leaving January/06 for these positions. Now we own a home in Canada and plan to rent the home out while we are working in Bermuda.

According to the government of Canada this is a huge Tie to canada, however when renting this becomes not so big. Cars will be sold, we have no children and no other ties other then credit cards, bank accounts and RRSP's,

Now what is our best move to make things so much easier? Should I claim non-resident status? Or would I be classified as a non-resident for tax purposes only?

If I fill out a NR-73 form and the government says I'm a non resident for tax purposes does that mean I still have to fill out the non-resident forms to turn over residency?

I'm a bit confused writing this, so I feel others will be reading. I can clarify anything.

Thanks

(confused one)

Will
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

I think your confusion is based on somehow thinking that there is a distinction between 'non-residency' and 'non-residency for tax purposes'. There isn't.

There are no "non-resident forms to turn over residency", other than (a) the NR73, which is not mandatory, and (b) your final departing tax return, on which you clerarly indicate the day you departed, which, for you, would be your 2006 return, filed sometime in spring <b>2007</b>, indicating a Jan xx, 2006 departure.

Because Bermuda does not have a tax treaty with Canada, it will not be easy to break free from Cdn tax residency as it is for Cdns moving to US or other treaty countries. You should seriously consider discussing your particular situation with an accountant at one of the major Cdn accounting firms, who has experience with this specific issue: Moving to a non-treaty country.

Typically, folks who move to Bermuda or Saudi Arabia, for example, have to divest themselves of ALL Cdn ties, homes, bank account, RRSPs, etc, before CRA 'releases' them. This is not always the case, but be warned.

Your advisor may even come to the conclusion that it is not worth the trouble to become a non-resident, and advise that you continue to file as a resident, taking advantage of other tax benefits such as the overseas employment tax credit, and the foreign tax credits. Much will depend on how you are taxed in Bermuda.

Other than seeking professional advice, if non-residency is your goal, Read over the NR73 form, eliminate all the major ties (which is basically ensuring that your family moves with you, and that you rent out your home), and as many of the smaller ones as possible. and then be absolutely sure that you abide by the non-resident taxation rules, which means advising all your Cdn financial contacts that you will be non-resident, and that your rental income has tax withheld and sent to CRA on a monthly basis.

At a minimum, you would want to formally cancel your Proivincial Healthcare and Drivers License the day you leave, cancel your Cdn credit cards as soon as possible (all of them) and reduce your self to one bank account and as few RRSP accounts as possible (obe each). Be sure to cancel any memberships you have (even video store, I'm serious).

You must prove to CRA that you have no intention of returning to Canada.

Then sytstematically establish as meany of these ties in Bermuda, with the goal of clearlt 'outweighing' any remaining Cdn ties, with ones in Bermuda, and then staying out of Canada as much as possible over the next few years.


<i>nelsona non grata... and non pro</i>
danny
Posts: 91
Joined: Fri Dec 10, 2004 10:55 am

Post by danny »

great points made by nelson. superb.

the only thing is about the non treaty country e.g saudi ar, bermuda.





wrightw
Posts: 2
Joined: Tue Oct 04, 2005 9:40 am

Post by wrightw »

Thanks guys for all the info, especially you nelson I will consult an accountant on my end regarding all of this. I have an accountant friend in Bermuda, but he just got married so I have yet to receive answers from him.

thanks again, greatly appreciated.

W.

Will
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

You will want a Cdn accountant, as your big issues will be with CRA, not Bermuda.

Since all the big Cdn banks have huge presence in Bermuda, that would be a place to start.
<i>nelsona non grata... and non pro</i>
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