Residency in US - Start Date & Reporting of Income

[Southern]

Thanks. Unfortunately none of the EI payments were withheld at the correct rate. I'll need to call in and ask for the appropriate rate.

How does the non-resident surtax of 48% work? Does that apply to the HBP repayment ?

[nelsona]

For 2016, assuming you are choosing a 2016 departure date, you won't be subject to this on your return, you will pay provincial tax, because, as I said, the HBP income is considered taxable the day you left, it is taxable as a resident of your province.

For future reference, the surtax replaces provincial tax for some forms of income (not employment income, and not income that id flat-taxed) and essentially multiplies the fed tax by 48%. It might come into play if you would use 217 in future, if you are not working in US and have RRSP income, for example. Doesn't apply this year.

[nelsona]

A review of the treaty indicates that (un)employment insurance benefits are not covered by a special treaty rate, so the NR rate should be 25%. It is also taxable in US, with credit given for the 25% NR tax (using form 1116).

[nelsona]

btw, since you are non-resident when you sold your house, you are subject to certain CRA reporting requirements. Did you handle these? there are fines for not providing documentation at time of sale.

[Southern]

Thanks.

I'll send a letter to the International Dept with the EI NR tax top up to 25%.

I may be doing something wrong in Turbo Tax; I've listed my departure date as 1/1/2016 and it still calculates the 48% non-resident surtax.

[Southern]

I sent in a T2062 for the sale of the property and it was approved.

[nelsona]

Beautiful! What period of non-residence did you use in determining the cap gains you would owe? You are allowed one year after departure before possibly incurring cap gains. You figure this all out finally on your 2017 non-residents return. Usually your selling fees wipe out the small gain that results in the calculation.

[Southern]

I used the green card date on the T2062. The agent I spoke with told me that it is based on year ends so the actual date being Jan 1 or anything else in 2016 shouldn't matter. The +1 rule also applied.

I also think I'm exempt from the T1161.
The only non-residence & non-registered or company pension assets I had were below 25,000. The market value of assets was also slightly below the book value at the end of December / start of January so there wouldn't be any capital gain to report.

I assume the FMV 25,000 threshold relates to the equity portion of assets i.e. a margin account with 20,000 equity and 10,000 of margin for a total of 30,000 of assets would not count.

[nelsona]

I'll let you figure those out. Read the assets list carefully. And you do still have to report your deemed dispositions, positive or negative. We are talking January 2016.

[nelsona]

It includes your cars, for example, unless they are clunkers.

[Southern]

We didn't have any cars in Canada.

I'll report the capital losses on the T1243 for the non-registered shares.

I understand that the loss on T1243 should be based on the full asset value as that is what I would receive if I sold the shares and any amount of margin would have been paid back from the proceeds.

As it was a margin account I'll need to figure out whether FMV is based on equity or asset for the T1161. I could just fill it out to be cautious as there is no gain either way.

And I figured out the TurboTax issue. I needed to select Ontario as residence and then enter a departure date.

[nelsona]

It is all property that you own on the day you left, anywhere in the world.
Was your spouse ever living in Canada? what did they report on departure, if anything?

[nelsona]

Whatever they did not report, you must.

[nelsona]

I'm going to have to leave this thread as is now. too much info for April. This should have ben discussed last fall.

[Southern]

Thanks for all your help Nelsona

My wife was a student and had no Income or assets. Just student debt. It was easy.