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Residency for Tax Purposes

Who is a Resident for tax purposes in Canada?

On T1 tax return following information need to be provided about residential status:

Are you

A resident

Non resident

Deemed resident

Non-resident - S 216

Non-resident -S 216(1)

Non-resident - S217

Often, the issue is not properly understood.

Residency for tax purposes in In Canada is different from permanent residency status obtained by new immigrants

Canada revenue Residency defines following terms for tax purposes:

A person who is neither a non-resident, deemed resident or a factual resident is a Resident.

Now let’s look at each term and what it includes.

· Non-Resident:

· A Non resident is one.

· 1. Who doesn’t have significant residential ties with Canada AND

· 2. Who lived outside Canada throughout the year OR who lived in Canada for less than 183 Days in Canada

· Resident:

· If we see the definition of a non resident above, a person who doesn’t meet the Non- Resident criteria is a Resident which means that

· If a person, who has significant residential ties with Canada AND

· Lives in Canada for at least 183 days within a taxation year, will be considered as a resident for the tax purposes.

· We should note the word AND which means both the conditions need to be met In order to be a resident.

· Significant residential Ties are established if following questions are asked and and any of the criteria is met:

· · 1. Do you have a home in Canada?

· 2. Do you spouse or common in law partner in Canada

· 3. Do you have Dependants in Canda?

· Secondary Residential Ties are also considered while establishing residency:

· Following are examples of secondary ties:

· Having a personal property in Canada for example, a Car,or furniture

· Social ties in Canda – For example, a membership of a sports or religious organization

· Having an economic ties in Canada for example having bank or Credit cards, Investments in Canada

· Canadian Driver’s Licence

· Canadian Passport

· A provincial Health Insurance coverage

· Deemed Resident

· A Person is deemed resident of Canada

If he lives outside Canada during the year AND is not a Factual resident

If he is a government employee

He is a member of Canadian Forces including theire overseas school staff or working under a global assistance program( This includes a member of the family of such person as well)

· Factual resident

· A factual resident is one who

· Who maintains significant residential ties with Canada

· Is temporarily working outside Canada

· Vacationing outside Canada

· Commuting back and forth from Canada to place of work and home.