Candian moving permanently to US - how do I prove it to CRA?

jacek99 · Post by **jacek99** » Mon Oct 01, 2012 10:57 am

I am a QC resident who is soon relocating to U.S. for a long term job opportunity.
I will be selling my home soon and once that is done I will have just U.S. residency.

My question is how to I prove it to CRA?

Do I just stop filing Canadian taxes once I am fully moved?

Or is there some special document I have to submit that states "as of this and this date I am not a Canadian resident any more"?

nelsona · Post by **nelsona** » Mon Oct 01, 2012 11:56 am

You prove it, at the time you normally file your tax return, by filing a final return, indicating your departure date, and fulfilling the requirements of departure, which are outlined in the "Emmigrnts Guide" from CRA., such as departure tax, and stopping reciept of QST/GST/CCTB payouts before you leave. You also inform your bank/broker/etc that you will become US resident on such date.

The same that apply for your federal return, apply to your QC return.

jacek99 · Post by **jacek99** » Mon Oct 01, 2012 3:42 pm

Is there *any* way that I could keep my house (assuming me and my spouse leave for the US) and rent it?

Or having real estate in Canada automatically still makes you a resident?

The CRA guide mentions nothing about the real estate part:

[quote]
When you leave Canada to settle in another country, you usually become a non-resident for income tax purposes on the latest of the following dates:

the date you leave Canada;
the date your spouse or common-law partner and dependants leave Canada; or
the date you become a resident of the country to which you are immigrating.
[/quote]

thank you in advance

nelsona · Post by **nelsona** » Mon Oct 01, 2012 3:56 pm

If you rent it out (non-arm's length), that is DEFINITELY NOT a residential tie and will not adversely affect your goal to be non-resident.

Even keeping the house empty as a second home, you could still be considered non-resident (the term is a demmed non-resident, or treaty non-resident) by making sure you have far more ties in US than in canada. This is how most americans have cottages in Canada and are not considered Cdn tax residents.

The information you are looking at already presumes you have disposed of your residence, also, The CRA definitions don't take treaty wording into consideration, where a 'home' is a key ingredient.

jacek99 · Post by **jacek99** » Mon Oct 01, 2012 4:05 pm

Sorry, what does it mean exactly "non-arm length"? Does that mean we always have to rent out ourselves or can we use some management company?

Also, are the rules the same in QC or does Revenu Quebec have different criteria for residency?

nelsona · Post by **nelsona** » Mon Oct 01, 2012 4:12 pm

It means renting to a stranger, not your brother-in-law at a reduced rate.

In any event, making sure you live in US (home/DL/ etc) negates any effects from having a house in canada 9empty,trented out, whatever), so focus on that.

I already said that MRQ rules were the same.

jacek99 · Post by **jacek99** » Mon Oct 01, 2012 4:31 pm

That is extremely useful information, thank you so much.

I have hopefully two last questions:

a) if we decided to keep the house in Canada and rent it, do we report the rental income on our US tax return or do we need to file a separate Canadian tax return for that portion?

b) if we sell the house (and thus sever all ties with Canada completely), do we still have to file a Canadian tax return at all?

nelsona · Post by **nelsona** » Mon Oct 01, 2012 4:45 pm

CRA has detailed info on how renatl income is reported by non-residents (including the need to remit tax monthly, and file a specuial return).

Your rental income will also be reported in US, with credit given for Cdn tax paid.

In either case you will have to file a departure return, as I said.

jacek99 · Post by **jacek99** » Tue Oct 02, 2012 7:15 am

Thank you for the info.

What happens if we sell our property once I am a non-resident? How is the capital gains tax handled?

Do I need to file a special Canadian tax return for just that transaction, or would it be on my US return?

nelsona · Post by **nelsona** » Tue Oct 02, 2012 8:55 am

This is covered on the CRA website. Non-resdients have some special forms to fill, but rule of thumb is that (assuming you do not rent out your place) you will have no cap gains to pay in canada if you sell within a year of leaving, and no US tax to pay if you sell with 3 years of moving to US.

Get used to the fact that any Cdn income will be taxed in both countries, with credit given on your US return for Cdn tax paid.

jacek99 · Post by **jacek99** » Tue Oct 02, 2012 9:08 am

Could you point me to the CRA doc to read? Their website is not the easiest to find the info sometimes. If not for your mention, I would have never found the Emigrants Guide for example.

I actually do rent out my place (it's a duplex), so things may be different for me.

nelsona · Post by **nelsona** » Tue Oct 02, 2012 12:02 pm

Google is your friend: type "CRA Emigrants Guide" and you will find it.

Becuase you already are subject to cap gains on your property, you will need to establish a FMV on your departure date, as this will be used in future (in both countries) to determine cap gains as well as other things like depreciation, etc.

A liitle more reading before you come back with more questions, please.