Francesca Giroux, CPA
For the Lakeside Leader
When moving to another country it is important to consider tax obligations that you may still have in Canada. An emigrant (for personal income tax purposes) is an individual who leaves Canada to settle in another country and consequently severs their residential ties with Canada. Factors that are examined when determining if an individual has severed residential ties are whether or not the individual disposed or gave up their home in Canada and established a permanent home in another country, if the individuals’ spouse (or common-law partner) and dependants have also left Canada, and if the individual has disposed of personal property and broken social ties in Canada and is acquiring or establishing them in their new country of residence (i.e. cancelling memberships to community organizations, etc). If you are emigrating from Canada it is important to cancel your Canadian driver’s license, close Canadian bank accounts and credit cards, as well as cancel health insurance in your former home province as residency status has been known to be affected by the severing of these listed “residential ties.”
The date that you would be considered to be a non-resident of Canada for income tax purposes is the latest of the following dates: 1. the date you leave Canada; 2. the date your spouse or common-law partner and dependents leave Canada; or 3. the date you become a resident of the country to which you are immigrating. In general, you become a deemed non-resident of Canada at a time when the residential ties that you have developed in another country are such that under a tax treaty between Canada and that country you are considered to be resident of that country and not a resident of Canada.
Upon emigrating it is important to inform the Canada Revenue Agency (CRA) of the date that you left Canada. Your eligibility of the GST/HST credit, the Canada child tax benefit payments, and Universal child care benefit payments are affect by your residency status. With regards to tax obligations you must file a Canadian tax return if you owe tax; or want to receive a refund due to overpayment of tax in the year. In the year that you emigrate, for the part of the year that you are a resident of Canada you must report your world income (i.e. income from all sources both inside and outside of Canada) on your Canadian personal income tax return. After you have left Canada you will only pay Canadian income tax on your Canadian source income, as opposed to your world income.
If you are considering emigration, or in the process of emigration contact your local CPA to evaluate your residency status and determine any potential tax obligations that may arise.
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Information provided is of a general nature. As each individual or company’s situation is unique, you may wish to consult with your CPA for information specific to your own needs.