Resident Alient in US with Canadian Income...

qzzf1w · Post by **qzzf1w** » Tue Jun 28, 2011 2:29 am

I am a Canadian. Have been living in US for 6 years. Am currently on an L1 visa. I have had no income from Canada during this time and had no Assets in Canada during this time (Other than RRSP). My wife and son (also Canadian) live with me in US.

I am about to be gifted a gas well in Canada. This will generate income in the coming year. This will be about 5% of my US Income.

I presume that I will now have to file Canadian income tax. Is this right?
Is there an income level below which this is irrelevant?

If I do have to file income tax in Canada will I also have to declare my US Income on my Canadian Income Tax? Or just the Canadian income?

I also presume that I will have to claim my Canadian income on my US TAx, as well as declare any Tax paid in Canada as a deduction. Good Assumption?

Is there a form or something on the Canadian side that I need to fill out to declare this change of status? I know that I senta a letter to revenue Canada with my last tax filing telling them that I was moving to US and would have no residence or income in Canada.

Thanks in Advance for your insight.

nelsona · Post by **nelsona** » Tue Jun 28, 2011 8:25 am

You will need to report the Cdn income on a CDn non-resident return. That should be it in Canada. Depending on what type of income it is, you may only have a flat tax to pay and no return to file.

You will report the income on your US return, and take credit for the Cdn tax paid.

You should have filed a departure return when you left, but the letter covered you.

qzzf1w · Post by **qzzf1w** » Tue Jun 28, 2011 2:45 pm

Good quick feedback... Much appreciated!

It gave me a few more keywords to search the Canadian Revenue Agency site.

Found this...

[color=violet][i]Generally, Canadian income received by a non-resident is subject to Part XIII tax or Part I tax. If the income you receive is:

â€¢subject to Part XIII tax, you do not file a Canadian tax return, except in two situations when you can elect to file a tax return;
â€¢subject to Part I tax, you may have to file a tax return.[/i][/color]

So does revenue from a lease to a gas company to pump gas form land where I won the mineral rights fall under Part XIII?

If so, would I really need to file a Canadian Tax Return?

On a seperate question you talk about a "CDn non-resident return" is this a special form? or just a T1 General?

Many thanks in advance

qzzf1w · Post by **qzzf1w** » Tue Jun 28, 2011 3:20 pm

A typo in the previes message

woth the mineral rights

should read

own the mineral rights

nelsona · Post by **nelsona** » Tue Jun 28, 2011 4:07 pm

Rents and royalties are Part XIII income and the flat tax is generally 25%.

For US residents however, royalties are only taxable at 10%, while rental income is 25%.

So, the gas company no doubt deals with foreign rightsholders all the time, and their accounting division will be able to correctly withhold as long as you tell then you are a US resident.

You then report all this income in US as well, and take credit for the Cdn tax that was withheld.

nelsona · Post by **nelsona** » Tue Jun 28, 2011 4:09 pm

When you sell the property, then you will file a non-resident return (it is a special form), as cap gains from Cdn property is Part I income.

qzzf1w · Post by **qzzf1w** » Tue Jun 28, 2011 4:27 pm

That is great information and great news.

Thanks

nelsona · Post by **nelsona** » Tue Jun 28, 2011 5:32 pm

Well, it isn't great news if your Cdn tax ends up being 25%, since this is more than you will pay in US.