non-resident returning to Canada
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Thread: non-resident returning to Canada

  1. #1
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    non-resident returning to Canada

    I am a non-resident of Canada for tax purposes. I have made income outside of Canada and declared it on my Schedule A on my last few tax returns, although being a non-resident I didn't need to pay any tax on that money. If I return to Canada and start my residency again, will Revenue Canada want me to pay tax on money earned while I was a non-resident? Or is there a general statute of limitations regarding this? Thank you in advance for your help!!


  2. #2
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    you will be deemed part year resident under fresh start election and only taxed on world wide income from the day you were deemed resident here. you will not have to pay on tax on your world wide income while you are a non resident. (you will always be taxed on canadian income)

  3. #3
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    Welcome back to Canada. How long were you nonresident?
    I have been in this situation, returning after a 9 year absence about 10 years ago.
    At that time, as a wrinkle to what @redsgomarching said, in such an instance CRA could go back and challenge whether you truly had been nonresident, i.e. there could be greater scrutiny if indeed you had met the conditions of (tax) nonresidency. I forget what the informal duration threshold was that might invite scrutiny - it was at least 2 years, but much less than my 9 years. But the question was not "we'll tax your foreign income X months/years prior to your return", instead rather, "did you really *mean* the nonresidency, given you've come back?"

    The rules and especially their enforcement have changed slightly in that period, and in particular the advice these days is more for nonresidents to explicitly apply to be deemed nonresident at departure. If you did that, I imagine it might make it less likely this might become an issue -- but here I'm speculating rather than knowledge.
    Last edited by houska; 2016-12-26 at 07:26 AM.

  4. #4
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    A key component of becoming a non-resident of Canada for tax purposes was to file a final T1 tax return to CRA for the year of departure. In that tax return, one would have inserted their date of departure, their new non- Canadian postal address, and paid any deemed disposition capital gain taxes on investment cap gains. CRA would then assume that the OP had left Canada, potentially forever.

    Upon return to Canada, having proof if tax returns filed in another jurisdiction, documentation on home ownership or lease agreement, a non- Canadian drivers license and non-Canadian health insurance goes a long way to prove non- residency for the period out of country.

  5. #5
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    No, the whole point of being non-resident for tax purposes is to legally not have to pay tax to the Canadian government on monies earned during the period of non-residency. They look at it that since you are not receiving the benefits of residency that are supported by taxes (military/police protection, health care, using the roads, etc etc etc), you are not required to pay taxes. Once you have become a legal resident again you are back in the tax system, but only for what you have begun earning as a resident.
    "What good is money if you can't inspire terror in your fellow man?"- C.M. Burns

  6. #6
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    Quote Originally Posted by mememeow View Post
    I am a non-resident of Canada for tax purposes ...
    If I return to Canada and start my residency again, will Revenue Canada want me to pay tax on money earned while I was a non-resident? Or is there a general statute of limitations regarding this?
    The income is recorded as NR and non-taxable. The way that there have been posts about questions from CRA is if the period of NR was so short that CRA could think the time as a Canadian NR was tax evasion instead of genuinely being a NR.

    As for "statute of limitations", the tax book I used decades ago said that where everything looked normal, it was something like six or seven years. If CRA was arguing fraud, there was no limit as well as it was up to the tax payer to prove it was legitimate (i.e. the opposite of a criminal case where one is presumed innocent).


    How long was the NR in effect?

    Out of curiosity, why were the last couple of Canadian tax returns filed?
    Most who have talked about it have filed a final Canadian tax return for the year of departure that included a specific date for the departure then stopped filing Canadian tax returns.


    Cheers

  7. #7
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    Thank you everyone for your helpful comments!!


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