If you live outside of Canada, you may or may not need to file a return with the Canada Revenue Agency. The requirements vary based on your residency status and the types of income you have earned.
If you live outside of Canada temporarily, you are likely a factual resident. As a general rule, factual residents have residential ties to Canada, such as homes, businesses or families, and they usually spend 183 days or more in Canada per year.
In some cases, however, you may spend more than 183 days outside of Canada and still be considered a factual resident. For example, if you attend school outside of Canada but maintain residential ties with Canada, you are considered a factual resident, regardless of the number of days you spend in Canada.
As a factual resident, you must file an income tax return and report all of your Canadian and world income. However, if you pay foreign tax on the world income you earn, you may be able to claim a credit for it on your return.
If you permanently live abroad and have no residential ties to Canada, you are likely considered a non-resident of Canada. As a non-resident, you do not have to report world income to the CRA. However, if you earn Canadian income such as pension payments or if you dispose of capital property in Canada, you must file a return to report your Canadian income.
In addition, the last year you live in Canada, you must file a final return. Report your income as usual, but if you claim any benefits or credits, only claim an amount related to the portion of the year you spent in Canada.
There are some cases where you may sever your residential ties with Canada, live abroad and still be considered a deemed resident. If you are a missionary, a member of the Canadian Services or a government employee, you are most likely a deemed resident.
As a deemed resident, you have the same tax obligations as a resident. You must report all of your Canadian and world income, but you can also claim all of the applicable federal deductions and credits. You cannot claim provincial or territorial credits or benefits, but you don’t have to pay provincial or territorial tax, either. You will, however, incur a federal surtax.
In rare cases, factual residents may be considered deemed non-residents based on the terms of tax treaties between Canada and the countries where they reside.
For example, imagine you have residential ties to Canada and you meet the criteria to be a factual resident. The country you live in, however, also considers you a resident. Based on that country’s treaty with Canada, you are a deemed non-resident. You have the same filing requirements as a non-resident.
As Canada has tax treaties with nearly 100 countries, it can be hard to conclusively determine your own residency status. If you are unsure of your status, file Form NR73, Determination of Residency Status (Leaving Canada).
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