CRA & Revenu Québec, Foreign, Non-Residents

Does Having Dual Citizenship Impact Your Taxes?

As a Canadian, it is perfectly legal to be a citizen of Canada and of another country. You are allowed to keep your Canadian citizenship even if you no longer live in the country. However, there could be some tax implications depending on the what the other country is, your residency status and your income.

What Is Dual Citizenship?

Dual citizenship means that a person is a citizen of more than one country. Each country usually has a different definition on what it means to be a citizen, as well as how citizenship is achieved and what it means on your taxes.

In Canada, a citizen may have citizenship in another country, but not all countries allow you to keep their citizenship if you become a Canadian.

There is no application process to be classified as a dual citizen in Canada or any formal acknowledgement. A second citizenship can result from a number of different circumstances for other countries, such as an application, the place of birth, family birth connections (such as a grandparent born there), marriage or extended residency.

Dual Citizenship and Taxes

Canadian taxation obligations are based on your residency status and not based on your citizenship.

Individual residency is on a case-by-case basis, and there are no strict rules. There are guidelines and interpretations by the Canada Revenue Agency on the subject, however. The CRA reviews your residential ties to Canada, how long you have been in the country, where you normally reside and a number of other factors to make its determination. Based on that outcome, you could be taxed or not taxed.

A complication may arise if you are a citizen of another country and classified as a Canadian resident. A common example would be U.S. citizens with either dual Canadian citizenship or resident status in Canada. They are taxed on their worldwide income regardless of where they live. In that case, the individual must file Canadian and U.S. tax returns. The two countries have a tax treaty with provisions and relief for these individuals so they do not pay double the tax. Instead, they pay in one country and receive credit in the other for the taxes paid.

Permanent Residents

A permanent resident of Canada has immigrated to Canada, but is not a Canadian citizen. That means you must still be a citizen of another country.

You can receive most of the same social benefits as citizens while living, working or studying in Canada and applying for your Canadian citizenship. You must also pay taxes and adhere to all Canadian laws, as would be expected of a Canadian citizen. As a permanent resident, you are allowed to live outside of Canada for a period of time, but you must live in Canada for at least two years in a five-year period. If you live outside of the country for longer than that, you may lose your permanent resident status.

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