Table of Contents

Table of Contents
Chapter 1
CANADIAN RESIDENT ...................................................... 1
General Comments ................................................................ 1
Factual Residence.................................................................. 1
Establishing Non-Resident Status .................................... 2
INCOME TAX FOLIO S5-F1-C1: Determining
an Individual’s Residence Status...................................... 3
Income tax folios (ITF) - a new income tax
technical publication.............................................. 3
Phase-out of income tax interpretation bulletins
and ITTNs ........................................................... 3
Permanence of Stay Abroad................................... 3
Residential Ties with Canada ................................. 4
Primary Ties with Canada .............................................. 4
Dwelling............................................................... 4
Spouse and Dependents ......................................... 5
Secondary Residential Ties.............................................. 5
Establishing Ties in Your New Country........................... 7
Visits to Canada ............................................................ 7
When Does Non-Residency Begin? .................................. 7
Tax Avoidance............................................................... 8
NR73, Determination of Residency Status ....................... 8
Listed Factual Residents ................................................. 9
Students ............................................................... 9
Teachers ............................................................... 9
Missionaries.......................................................... 9
Vacationers......................................................... 10
Commuters......................................................... 10
Other Employees................................................. 10
Tax Relief? ......................................................... 11
Deemed Residence ............................................................... 11
Sojourners ................................................................... 11
Other Deemed Residents............................................... 12
Residency — Questions and Answers .................................... 13
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Chapter 2
EMIGRATION................................................................... 23
Final Tax Return ................................................................ 23
Deemed Dispositions .................................................... 24
March 4, 2010 Budget Change — TCP .......................... 25
Providing Security in Lieu of Tax.................................. 27
Valuations — TCP ....................................................... 27
Non-TCP .................................................................... 27
Non-TCP — Deferral of Payment of Tax ...................... 28
Security — TCP and Non-TCP ..................................... 28
Acceptable Security ...................................................... 28
Election to Dispose of Taxable Canadian Property ......... 31
Exception .................................................................... 31
Tax Relief — Deemed Dispositions ............................... 32
Reduction of Canadian Tax .......................................... 32
Application of Losses from TCP ................................... 33
March 4, 2010 — Amendment TCP............................... 34
Reduction of Double Taxation...................................... 34
Elect to Undo Deemed Disposition ............................... 34
Employment Stock Option — TCP................................ 35
Declared Unpaid Dividend ........................................... 35
A Word of Caution............................................. 36
Principal Residence — Change of Use ........................... 36
Change of Use — Deemed Disposition .......................... 36
Change of Use Election ................................................ 37
Change of Use Election ................................................ 38
Deferred Capital Gains................................................. 40
Deductions: RRSP ....................................................... 40
RRSP: Home Buyers’ Plan ........................................... 41
RRSP Withdrawal for Education .................................. 42
TFSA Tax-Free Savings Account .................................. 42
Deductions: Moving Expenses....................................... 42
Capital Gains Deduction .............................................. 42
Tax Credits.................................................................. 43
Tax Rate ..................................................................... 44
Other Types of Income ........................................................ 44
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Rental Income ............................................................. 45
Other Income............................................................... 48
Reporting Requirement — T1161 .................................. 50
Planning ............................................................................. 51
RRSP/RRIF/TFSA Planning — Emigration .................. 52
Chapter 3
TAXATION OF A NON-RESIDENT .................................. 53
Income Tax — Non-Resident Tax Return.............................. 53
Income from Employment ............................................ 53
Non-resident Employed as an Aircraft Pilot ................... 54
Income from Business................................................... 55
Disposition of Taxable Canadian Property (TCP) ........... 56
Transfer of Taxable Canadian Property ................ 59
Principal Residence ............................................. 62
Exemption .................................................. 62
Change of Use and Election Options ............ 64
Capital Losses..................................................... 65
Other Canadian Source Income..................................... 66
Persons Deemed to be Employed in Canada................... 66
Reduction of Canadian Tax .......................................... 68
Deductions ......................................................... 68
Support Payments ............................................... 68
RRSP Contribution............................................. 69
Canadian Exploration and Development
Expenses ............................................................ 70
Employee Stock Options...................................... 70
Amounts Exempt by Treaty or Agreement ............ 70
Losses ................................................................ 70
Tax Credits.................................................................. 71
Donations .......................................................... 71
Disability............................................................ 71
Student Loan Interest and Tuition........................ 71
Canada Pension and Employment Insurance ......... 71
Medical .............................................................. 72
Personal Non-Refundable Tax Credits .................. 72
Non-Resident Withholding Tax............................................. 72
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New Non-Resident Form.............................................. 72
Limitation of Treaty Benefits ........................................ 74
Management or Administration Fees or Charges ............ 74
Interest........................................................................ 74
Estate or Trust Income................................................. 74
Rent .......................................................................... 75
Timber Royalties.......................................................... 75
Support Payments ........................................................ 75
Pensions ...................................................................... 75
Death Benefits ............................................................. 76
Retiring Allowances ..................................................... 76
Registered Supplementary Unemployment Benefit Plan... 76
Payments — RRSP, RRIF, RDSP, DPSP, LIF .............. 76
Registered Education Savings Plans............................... 77
TFSAs, ETFs, Income Trust, Segregated Funds et al ...... 77
Tax Relief........................................................................... 78
Canadian Tax Relief..................................................... 78
Reduction of Tax on Rental Income.............................. 78
Section 217 Election ..................................................... 78
Tax Treaties ................................................................ 81
Foreign Tax Relief ....................................................... 81
Estate Tax ................................................................... 81
Offshore Trusts ............................................................ 82
Non-Resident — RRSP Planning .................................. 82
Non-Resident — Locked-in RRSP Planning................... 83
Non-Resident — RCA Planning.................................... 83
Chapter 4
TAX TREATIES ................................................................ 85
Overview ............................................................................ 85
Dual Residence Status.......................................................... 86
Tie-Breaker Rules ........................................................ 86
Tie-Breaker Rules Application ...................................... 87
Types of Income.................................................................. 91
Business Income........................................................... 91
Rental Income ............................................................. 92
Dividends .................................................................... 92
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Interest........................................................................ 93
Royalties ..................................................................... 93
Capital Gains .............................................................. 93
Independent Personal Services (Self-Employed)............... 94
Income From Employment ........................................... 94
Pensions ...................................................................... 94
Miscellaneous .............................................................. 95
Double Taxation.................................................................. 95
Special Provisions................................................................ 95
Treaty Withholding Tax Rates ...................................... 97
Chapter 5
IMMIGRATION .............................................................. 105
Timing ............................................................................. 105
Date of Arrival.................................................................. 105
Capital Property ............................................................... 107
Taxable Canadian Property ............................................... 109
Tax Return — Year of Immigration ................................... 110
Timing ...................................................................... 110
Returning Former Residents ....................................... 111
RRSP ............................................................................... 112
Over-Contribution...................................................... 112
Withdrawal................................................................ 112
RRIF Withdrawal ............................................................. 113
Offshore Investments ......................................................... 113
Offshore Trusts .......................................................... 113
Immigration Trusts for Individuals .............................. 114
Granny Trusts .................................................. 114
Testamentary Offshore Trust.............................. 114
Exempt Foreign Trust ....................................... 115
Former Canadian Residents ............................... 115
Other Trusts ..................................................... 115
Foreign Accrual Property Income (FAPI) .................... 116
Offshore Investment Funds ......................................... 116
Foreign Asset Reporting Requirements ........................ 117
T1135-Foreign Income Verification Statement .............. 117
What Property do you have to Report? ....................... 118
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Penalties for Non-Reporting ....................................... 119
Voluntary Disclosures................................................. 119
Foreign Affiliates ....................................................... 119
Transfer and Loans to Foreign Trusts ......................... 119
Distributions from Foreign Trusts ............................... 120
Dual Resident Status.................................................. 120
What if the Returns Aren’t Filed? ............................... 120
Addition of a Due Diligence Test ................................ 120
March 21st, 2013 Federal Budget ................................ 121
February 11, 2014 Federal Budget ............................... 121
New Canada USA Border Crossing Rules.................... 122
Chapter 6
MISCELLANEOUS TAX RELIEF, RESIDENTS
OF CANADA ................................................................... 123
Overseas Employment Tax Credit (OETC) .......................... 123
Treaties ............................................................................ 126
Employment Income — Prescribed International
Organizations.................................................................... 126
International Non-Governmental Organizations ................... 127
Foreign Tax Credits/Deductions.......................................... 128
Relocation ........................................................................ 129
Moving Expenses and Relocation Benefits ................... 129
Eligible Housing Loss................................................. 130
Home Relocation Loans ............................................. 131
Non-Accountable Allowances...................................... 131
Benefits ..................................................................... 131
Counselling Services .......................................... 131
Educational Allowances For Children................. 131
Group Term Life Insurance Policies:
Employer-Paid Premiums................................... 132
Housing, Board and Lodging ............................. 132
Housing ................................................... 132
Special Circumstances that Reduce the
Value of a Housing Benefit ........................ 132
Free or Subsidized Board and Lodging ....... 133
Subsidized Meals............................................... 133
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Exception to the Rules ...................................... 133
Interest-Free and Low-Interest Loans ................. 134
Loans Received because of Employment ..... 134
Medical Expenses.............................................. 134
Premiums under a Private Health
Service Plan .............................................. 134
Premiums under Provincial
Hospitalization, Medical Care
Insurance and Certain Government
of Canada Plans........................................ 135
Professional Membership Dues........................... 135
Recreational Facilities ....................................... 135
Club Dues ........................................................ 135
Registered Retirement Savings Plans................... 135
Stock Options ................................................... 136
Tax Equalization and Protection......................................... 136
Chapter 7
SAFEGUARDING YOUR HEALTH ................................. 137
Health Insurance............................................................... 137
Leaving Canada ................................................................ 138
Provincial/Territorial Insurance.......................................... 138
Contacts ........................................................................... 138
Private Health Plans .......................................................... 139
Private Health Insurance While Living Abroad ............ 139
Returning to Canada.................................................. 140
Safeguarding Your Health ................................................. 141
Travellers’ Clinics....................................................... 141
IAMAT..................................................................... 142
Canadian Medic Alert Foundation .............................. 142
Healthy Reading ............................................................... 143
Health Supplies ................................................................. 143
Healthy Pets ..................................................................... 144
Canadian Consular Assistance............................................ 144
Heathy Travel Web Sites ................................................... 145
Chapter 8
CANADIAN DRIVER’S LICENCES ................................. 147
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Chapter 9
GOODS AND SERVICES TAX (GST)/HARMONIZED
SALES TAX (HST) .......................................................... 149
What is the GST/HST? ...................................................... 149
Who Pays the GST/HST? ........................................... 150
Taxable Supplies ............................................................... 150
Supplies Taxable at 5%, 13%, 14% or 15%................. 150
Zero-Rated Supplies ................................................... 150
Exempt Supplies ........................................................ 151
Should You Register? ................................................. 152
Small Supplier ........................................................... 152
Chapter 10
CANADA PENSION PLAN AND OLD AGE SECURITY . 153
Canada Pension Plan (CPP) ............................................... 153
What are the Changes? ............................................... 154
Old Age Security (OAS)..................................................... 155
Eligibility for the Old Age Security Pension
and the Guaranteed Income Supplement ...................... 156
Voluntary Deferral of the Old Age Security Pension ..... 156
Proactive Enrolment for OAS Benefits......................... 156
Lived or Living Outside Canada — Pensions
and Benefits............................................................... 157
If you have lived or worked in Canada and in
another country ................................................ 157
What is a social security agreement? ................... 157
How can a social security agreement help
me qualify for benefits?...................................... 157
Canadian benefits.............................................. 158
Foreign benefits ................................................ 158
Applying for benefits......................................... 158
Canada’s Social Agreements with other Countries ........ 159
Further Information .......................................................... 161
Chapter 11
CUSTOMS AND EXCISE ................................................ 163
Residents Returning to Canada .......................................... 163
Before leaving for Canada .......................................... 163
Who are considered Settlers?....................................... 164
Who are considered Former Residents?........................ 164
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Items you can import duty- and tax-free ...................... 165
Value limitation (CAN $10,000) .................................. 165
Additional personal exemption .................................... 166
Wedding gifts ............................................................ 166
Ownership, possession and use requirements ................ 166
Exceptions to ownership, possession and use
requirements .............................................................. 166
Replacement goods .................................................... 167
Declaring your goods ................................................. 167
Disposing of goods you imported duty- and tax-free..... 167
Public health.............................................................. 167
Alcoholic beverages .................................................... 168
Tobacco products....................................................... 169
Travelling with CAN $10,000 or more ......................... 169
Settlers’ effects acquired with blocked currencies........... 170
Restrictions ............................................................... 170
Firearms and weapons................................................ 170
Explosives, fireworks and ammunition ......................... 171
Vehicles..................................................................... 171
Restrictions on temporary importing ........................... 172
Goods subject to import controls ................................ 172
Prohibited consumer products ..................................... 173
Food, plants, animals and related products .................. 173
Prohibited goods ........................................................ 175
Health products (prescription drugs)............................ 175
Cultural property ....................................................... 175
Items you import for commercial use........................... 175
Additional information ............................................... 176
Chapter 12
DEATH AND TAXATION ............................................... 177
Wills ............................................................................... 177
Death of a Non-Resident .................................................... 177
Powers of Attorney............................................................ 179
APPENDIX.......................................................................................... 181
INDEX ................................................................................................ 385
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DIRECTORY ....................................................................................... 409
Addresses, Phone/Fax Numbers .............................................................. 409
Time Zones........................................................................................... 410
Foreign Currency .................................................................................. 411
Metric/U.S. & Imperial Conversion......................................................... 414
Important Contacts ............................................................................... 415
Notes.................................................................................................... 417