Client that has left canada

Forum|Forum|3 years ago
March 13, 2023
2 replies
6 views

I have a friends daughter who left Canada in August. Do I file the return as Non Resident. The program seems to want me to do Resident and not prorating credits. I usually trust what the program wants but it doesn't seem clear. She is gone for a minimum 2 years and probably won't return,

ProFile (Canada)

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J

janisbossenberry

Level 7

You likely will have to continue to treat her as a Canadian resident if she has not severed all ties and taken up permanent residence elsewhere. For example, is she renting a home in another country, have a job with a long term contract there, given up her Canadian drivers license and medical, etc. etc. If she has had a "clean break" and is a residence of another country, then you show the date of departure, put the foreign sourced income in 52930 (below where you put the date of emigration), and record the Canadian income earned in the appropriate fields (T4, etc). The program will determine based on the portion of foreign (non-resident) income to Canadian income if the non-refundable tax credits are to be prorated.

If she is just away for now temporarily, has retained personal connections to Canada, and not taken up permanent residence elsewhere, do not show her as an emigrant. She has to report all of her Canadian and foreign income as a resident of Canada.

S

Stevie1

Level 4

What if the client was on a work permit, working in Canada for three years and left for US to work and never to return back to Canada in September 2022? Would the same situation apply? To mark the date of departure and enter the information from his T4. Does he have to declare his US income from Sep-Dec 2022 anywhere? Anything else does he have to declare on his tax return?

J

janisbossenberry

Level 7

If he was filing as a permanent resident of Canada for those 3 years, and he will now be a permanent resident of the US, then you mark the date of departure, and he is taxed in Canada only on income earned up to the departure date (regardless of where it is earned). You report the income earned in the US after departure just for purposes of prorating the non-refundable tax credits.

He has to file a US tax return if he is now qualifies as a permanent resident of the US, and will file a US tax return reporting income earned from the date of immigration.

Everyone has to have one country where they are taxed, basically. They can't just float around homeless (in other words, the courts have ruled they cannot be "stateless"). The tie-breaker rules in the income tax acts will look at various factors to determine where they are considered resident, and the tax conventions between the countries also will have tie-breaker rules. If your client has been considered a permanent resident of Canada, he only stops being taxed as a permanent resident when he takes up permanent residence elsewhere. If you look at form NR73 Determination of Residency Status available on CRA's website you will get an idea of the type of questions he would have to answer if CRA disputes that he is an emigrant.

R

RTS7

Level 2

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