Factual non resident vs. deemed resident/non-resident

[adambow]

[b]Background[/b] – Dual citizen, moved to Canada 4 years ago. Now working in US for US firm on a full time basis. Expect to be living in US > 183 days per year… and flying back to Canada to visit Spouse + kids who remained in Canada for School. Desire to be considered non-resident of Canada, and therefore first pay IRS on US taxes, based on US pay, then submit CRA return as non-resident with $0 income in Canada. It seems that having a spouse and Children remain in Canada may create a grey area.

[i]Per CRA “If you are deemed to be a resident or non-resident, this takes precedence over any factual residency test. “[/i]
[b]
The Criteria:[/b]
1 – Factual Residency: CANADA - In Canada less than 183 days – Non Resident; US – Citizen, in country greater than 183 days – Resident
2 – Canada – Perm home available (OWNED); US – Perm home available (RENTED)
3 – Centre of vital interests: FT employment in US; most financial accounts in US, Dual citizen, Spouse , children remain in Canada for school; Spouse is US citizen, Canadian PR
4 – Habitual abode – US (based on 183 day weight) (or both depending on how measured)
5 – Dual Citizen
[b]
Question:[/b] Is this indeed a grey area, or will I be considered a non-resident of Canada? Are there similar examples? (searched but did not find any).

[nelsona]

A Deemed non-resident is by definition meets the criteria of tax resident of Canada (because of your residential ties: house and spouse (days don't matter) and another treaty country (this case US, by virtue of days in US - the IRS SPT test).

The problem are your visits to Canada. if THEY visited you, that would confirm your vital interests in US, but since you visit them, that tips the scale, in my opinion, in CRA's favor.

[adambow]

Thanks. If I were to have them visit me for 10 days in the spring, then all of July-Aug (~ 60 days) (no school)... while I fly back for periodic visits the rest of the year, would that tip the scale over to non-resident - in your opinion?

[nelsona]

Yes, along with making sure that you have no ther ties in Cdn community (like church, drivers license, cars registered)), then a case could be made for you actually having moved to US, rather than commuting as you are now.

[adambow]

Thank you - your comments are helpful! :D

[adambow]

Out of curiosity, under what scenario could someone be a Deemed Non-Resident of Canada, given the following:
1 - In Canada > 183 days
2 - Homes in both Canada and US
3 - Citizen of both Canada and US
4 - employment FT, and economic interests in US
5 - Spouse is US citizen, Cdn PR & lives in Canada

[nelsona]

In this circumstance, one would be considered Cdn resident. days matter. Anyone who works in US but spends so much time in Canada would obviously be so "drawn" back to Canada that their "vital" interests would be there.

[adambow]

thanks - seems the classification "Deemed Non - Resident" is a rare classification. With just the 183 day rule, where one w/b considered a (factual) resident, is there any scenario where one could be deemed a non-resident? Or is the deemed non resident only applied in other situations where the subject is not hitting the 183 day rule?

[nelsona]

The deemed non-resident is NOT an unusual classification, in fact, in the strictest sense it is more common than true non-residnet. It's just that what you describe would be a rare situation.

Most people living and working in US can't spend more than half the year in Canada, with their spouse also living in canada. They would be said to be living in canada, and merely commuting to work in US.