Expatriate Tax Status for Canadians
The tax consequences of moving to another country should not be neglected. A few hours of planning can save you a lot of money in taxes and other charges.
You cannot terminate your Canadian citizenship or residency simply by living in another country. To terminate your residency, you have to leave Canada on a permanent basis, sever your residential ties with Canada and establish residential ties in the country you are moving to.
The Canada Revenue Agency (CRA) determines non-resident status on a case-by-case basis, so consult a tax advisor about the necessary steps you should take. Retaining Canadian residency does not necessarily put you at a disadvantage. Depending on your situation, your actual tax liability could be lower than the non-resident withholding taxes imposed on your Canadian pensions and investment income.
If you live outside Canada and have severed your residential ties with Canada, you will be considered a non-resident of Canada for taxation purposes. Residential ties are the connections that you may have with Canada while you are living abroad. Examples of these are:
- residence such as your principal residence or house rented on a short-term basis;
- spouse and/or dependent children who remain in Canada; and
- personal property such as furniture, automobiles, bank accounts, credit cards, driver's licenses and health plan memberships, and social ties such as club or professional memberships.
A regular pattern of visits to Canada can be regarded as evidence of continued residency, especially if you have family connections in the country. If you retain ownership of your home, you should lease it on a non-revocable basis; if you have ongoing access to it, it may still be regarded as your residence.
This may seem daunting, but if you plan ahead you will be able to easily determine the tax implications and your next steps.
We recommend consulting a tax professional to assist you in this matter. A simple consultation will have you understand how to move forward with ease.
Below is a list of professionals who can assist you. They have agreed to to speak to you for free, so call and determine what you need to do.
Joseph C. Smith
Tax Consultants - U.S., Canada, International