Hello,
I would like to request your professional advise for my personal situation in 2015.
I have lived and worked in Montreal, Quebec, from Jan 1 to July 18 2015, when I permanently moved back to the USA severing all my residential ties in Canada. I had previously moved to Montreal in August 2014 under a temporary work visa.
I am neither an American nor Canadian Citizen. Therefore my situation in the USA for the period of July 19 through December 31 2015 is as non-resident Alien.
I have reached out to the CRA to confirm my residential status in Canada, and they confirmed that I should file my return as a Canadian Emigrant in 2015, filing in Canada only my Income from Canadian sources throughout the year, and any foreign income only for the time I was a resident in Canada (until July 18).
However, when contacting Revenue Quebec, they have given me two different pieces of advice. First, to follow CRA criteria stated above; and second one, to file my worldwide income throughout the year (including my USA income after July 18, even if I wasn't a resident in Quebec anymore).
Does anybody now what advise should I follow for Quebec? If the second, should I claim the tax credit in Canada/Quebec for my USA source of income?
I just feel that is weird that the Federal guideline differs from the Provincial one.
Thank you very much for your help.
Quebec: Emigrant or Deemed Resident
Moderator: Mark T Serbinski CA CPA
Hi Gabro,
In my opinion you will become a non-resident of Canada and Quebec on July 18th and need to file a federal and Quebec departure return. As you mentioned, you will pay tax on your worldwide income from January 1st to July 18th and your US income earned after this point should NOT be taxed in Canada. However you should know the following about Quebec:
As a general rule, the determination of residency in the province of Quebec is aligned with the federal determination. Occasionally, Quebec will ask an individual to respond to a departure request in the form of a pre-assessment review to determine the residency status in situations where the individual is leaving Quebec and Canada.
Similar to the federal authorities, Quebec will also use the tiebreaker rules contained in the relevant tax treaty to determine an individual's residency. However, the Taxation Act (Quebec) contains no equivalent to subsection 250(5) deemed non-resident for individuals, and therefore an individual may be deemed to be non-resident under Canadian domestic laws but remain a resident of Quebec for Quebec tax purposes. At times this makes it a bit more difficult to depart from Quebec.
This is likely why you received the advice you did from Quebec. Or maybe you were talking to someone who had no idea what he was talking about. I would file the departure return and then if they send you the pre-assessment review, deal with it then. I filed a similar departure return for an individual in August and they did not challenge it.
Also, keep in mind that because you are a short-term resident (resident less than 5 years), you will not be deemed to dispose any of the assets you owned before coming to Canada in 2014.
Hope this helps.
In my opinion you will become a non-resident of Canada and Quebec on July 18th and need to file a federal and Quebec departure return. As you mentioned, you will pay tax on your worldwide income from January 1st to July 18th and your US income earned after this point should NOT be taxed in Canada. However you should know the following about Quebec:
As a general rule, the determination of residency in the province of Quebec is aligned with the federal determination. Occasionally, Quebec will ask an individual to respond to a departure request in the form of a pre-assessment review to determine the residency status in situations where the individual is leaving Quebec and Canada.
Similar to the federal authorities, Quebec will also use the tiebreaker rules contained in the relevant tax treaty to determine an individual's residency. However, the Taxation Act (Quebec) contains no equivalent to subsection 250(5) deemed non-resident for individuals, and therefore an individual may be deemed to be non-resident under Canadian domestic laws but remain a resident of Quebec for Quebec tax purposes. At times this makes it a bit more difficult to depart from Quebec.
This is likely why you received the advice you did from Quebec. Or maybe you were talking to someone who had no idea what he was talking about. I would file the departure return and then if they send you the pre-assessment review, deal with it then. I filed a similar departure return for an individual in August and they did not challenge it.
Also, keep in mind that because you are a short-term resident (resident less than 5 years), you will not be deemed to dispose any of the assets you owned before coming to Canada in 2014.
Hope this helps.
Thank you SM. It definitely helps.
One question:
When you say depature return, do you mean the standard Federal T1 and T1P Quebec return forms indicating the date of departure?
Lastly if I may, based on the Federal guide, the federal non-refundable tax credit basic personal amount (Schedule 1 line 300) should be prorated based on the time spent in Canada. I am using StudioTax to file both Federal and Provincial retuns, and it automatically does the same for the basic personal amount in the Quebec provincial return (prorated on line 350, page 3). Revenue Quebec again said that there is not such a thing as prorating the basic personal amount. Should I claim full basic personal amount in Quebec or just for the prorated amount based on the time spent in Canada (199 days/365 days) x $11,425?
Thank you so much for your help. Really appreciated.
One question:
When you say depature return, do you mean the standard Federal T1 and T1P Quebec return forms indicating the date of departure?
Lastly if I may, based on the Federal guide, the federal non-refundable tax credit basic personal amount (Schedule 1 line 300) should be prorated based on the time spent in Canada. I am using StudioTax to file both Federal and Provincial retuns, and it automatically does the same for the basic personal amount in the Quebec provincial return (prorated on line 350, page 3). Revenue Quebec again said that there is not such a thing as prorating the basic personal amount. Should I claim full basic personal amount in Quebec or just for the prorated amount based on the time spent in Canada (199 days/365 days) x $11,425?
Thank you so much for your help. Really appreciated.
Yes correct, you use the same forms, but just indicate a departure date on them. It’s this date that will prorate the credits for you.
They are incorrect; you prorate BOTH, just as your software has done for you automatically. They likely told you no proration was necessary because they were under the impression that you needed to report your worldwide income for the entire year, but you don’t.
They are incorrect; you prorate BOTH, just as your software has done for you automatically. They likely told you no proration was necessary because they were under the impression that you needed to report your worldwide income for the entire year, but you don’t.