# non-resident for tax purposes query



## mememeow (Sep 20, 2015)

I have been a non-resident of Canada for several years already. I am about to officially be a non-resident for tax purposes. I am hoping someone can help answer my questions. 

1) When I officially become a non-resident for tax purposes, how does Revenue Canada calculate how much I need to pay for the capital gains on the stocks I currently own but don't plan to sell? 

2) When I officially become a non-resident for tax purposes, and I then send money from overseas into my investing account, how does Revenue Canada calculate how much I need to pay for the capital gains (and in addition, dividends) on new stock purchased and sold? 

Thank you so much if anyone knows how to find out these answers!!


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## Nerd Investor (Nov 3, 2015)

Do you mind telling us what country you are a resident in? Some of the answers may depend on the tax treaty in place between Canada and your current resident country. Generally, the day you become a non-resident for tax purposes (there is an actual day you'll have to use on your tax return) you are deemed to dispose of all your capital property (with a few exceptions, RRSPs for example are not subject to this rule). So you would calculate the gain based on the fair market value of the stocks you have on that day. 

As for your second question, it's going to depend on what country you're in. Canada will withhold at certain tax rates on different types of income depending on the agreement they have in place with your resident country. If we use the US for example, Canada would not withhold tax on Canadian interest income or capital gains on the sale of stocks, but would withhold 15% on Canadian dividend income. It's going to be important that you advise your Canadian institutions that you are a non-resident and what country you are resident of so that they issue you the correct slips and withhold the correct amount of tax.


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## mememeow (Sep 20, 2015)

Thanks for your reply!! As of a few weeks ago, I was a resident of Saudi Arabia as I was employed there. I have since finished my job, have left KSA, and so do not have residency in any country. It is my intention to get residency in South Korea, albeit not for several months still. 

If I can find out the actual day that I become a non-resident for tax purposes, how does Revenue Canada calculate the gain based on the fair market value of the stocks I had on that day? Is there a particular percentage they take (considering that I have no permanent residency in any other country)?

Your answer to my section question was very informative; I will research this further with the expectation that I will advise my Canadian institutions that I will be a resident of South Korea.


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## Numbersman61 (Jan 26, 2015)

mememeow said:


> Thanks for your reply!! As of a few weeks ago, I was a resident of Saudi Arabia as I was employed there. I have since finished my job, have left KSA, and so do not have residency in any country. It is my intention to get residency in South Korea, albeit not for several months still.
> 
> If I can find out the actual day that I become a non-resident for tax purposes, how does Revenue Canada calculate the gain based on the fair market value of the stocks I had on that day? Is there a particular percentage they take (considering that I have no permanent residency in any other country)?
> 
> Your answer to my section question was very informative; I will research this further with the expectation that I will advise my Canadian institutions that I will be a resident of South Korea.


I have difficulty with your premise that at some point in the past, you became a non-resident and that on some other date, you became an official non-resident. They should be the same date. The Canadian income tax system is based on self assessment - you report your income in Canada until you become a non-resident. This is the date you report on your tax return as the date you became a non-resident. Your are deemed to have sold all your stocks on the date you became a non-resident and you should report the gain or loss on that final tax return.


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## OhGreatGuru (May 24, 2009)

It's possible that CRA considered him a "deemed resident" due to the complexities of the residential ties rules while he was in Saudi Arabia. But if that were the case he should have been continuing to file Canadian tax returns for some or all of his income. I agree the story is confusing, and OP may need to see a tax specialist to sort this out.


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## Nerd Investor (Nov 3, 2015)

mememeow said:


> Thanks for your reply!! As of a few weeks ago, I was a resident of Saudi Arabia as I was employed there. I have since finished my job, have left KSA, and so do not have residency in any country. It is my intention to get residency in South Korea, albeit not for several months still.
> 
> If I can find out the actual day that I become a non-resident for tax purposes, how does Revenue Canada calculate the gain based on the fair market value of the stocks I had on that day? Is there a particular percentage they take (considering that I have no permanent residency in any other country)?
> 
> Your answer to my section question was very informative; I will research this further with the expectation that I will advise my Canadian institutions that I will be a resident of South Korea.


I'm not sure I understand the question about a particular percentage. If you're referring to how you're taxed on the gain, you'll be taxed at your marginal rates on your final Canadian tax return. I'd recommend getting that tax return done by accountant, it can get fairly complicated (credits and other things get pro-rated, there are the deemed dispositions etc.)

Also, be advised you have to be a resident somewhere for tax purposes. Until you get established in a new country you country, Canada will likely not consider that you have severed your ties or at the very least will consider you a deemed resident. I'd recommend checking out CRA's webiste, there are some pretty informative publications about becoming a non-resident.


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## Market Lost (Jul 27, 2016)

OhGreatGuru said:


> It's possible that CRA considered him a "deemed resident" due to the complexities of the residential ties rules while he was in Saudi Arabia. But if that were the case he should have been continuing to file Canadian tax returns for some or all of his income. I agree the story is confusing, and OP may need to see a tax specialist to sort this out.


I think we're all having a bit of a difficult time with this. As Numbersman61 states, the dates should be the same, but it seems he still has investments, and who knows what else, so he could still be a resident for tax purposes.


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## Numbersman61 (Jan 26, 2015)

Market Lost said:


> I think we're all having a bit of a difficult time with this. As Numbersman61 states, the dates should be the same, but it seems he still has investments, and who knows what else, so he could still be a resident for tax purposes.


I presume the OP did not report his income from Saudi activities on his Canadian tax returns. In effect, he considered that when he went to Saudi he became a non-resident of Canada. That is when he should have filed the final Canadian tax return and reported the deemed sales of his Canadian investments.


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## Market Lost (Jul 27, 2016)

Numbersman61 said:


> I presume the OP did not report his income from Saudi activities on his Canadian tax returns. In effect, he considered that when he went to Saudi he became a non-resident of Canada. That is when he should have filed the final Canadian tax return and reported the deemed sales of his Canadian investments.


That's the part I'm not clear about - if he reported his world-wide income to CRA. If he didn't then, as you say, he should have filed his final return. It's just rather confusing the way it's presented.


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## mememeow (Sep 20, 2015)

I left Canada about 2009. I had no investments or savings or property at that time, so I stopped filing taxes as well. At no time did I report any of my subsequent world-wide income to CRA, with the understanding that I was now officially a non-resident of Canada. A few years ago (when I was officially a resident of KSA) I sent money to Canada and purchased stocks. Once I started making dividends and capital gains, I received T5s from the bank, and filled out my tax form with the income made in Canada, indicating that I was a non-resident as of that taxation year. Just this year I've made the additional step of informing the banks that I'm a non-resident, with the understanding that once the banks are aware of my situation, then I will no longer have to file taxes as the withholding fees will be sent directly from the bank to CRA. These stocks are my only "property" in Canada.


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## AltaRed (Jun 8, 2009)

Given what we now know based on the latest post from the OP, the OP should have on cap gains tax owing on any stocks he sells in Canada while a tax resident of another country. Any cap gains he has from stock sales would/should be taxable in the country in which he is a resident for tax purposes when he makes the sale. An individual is always a resident of some country for tax purposes. The OP really needs to have an Int'l (cross-border) tax accountant to provide guidance on resident tax obligations whereever he is, e.g. Saudi, South Korea, or......

The OP is doing the right thing by ensuring all of his financial institutions have his non-Canadian residential address. That way, the FIs will automatically withhold the appropriate amount of taxes due under Part XIII of the ITA. 

As returns cap gains on his stocks he now holds, as long as he holds them, no cap gains need to be declared or taxes paid therein. It is only when they are sold that cap gains taxes are due to some jurisdiction, e.g. South Korea, on worldwide income.

The OP needs to keep track of his ACB regardless of the jurisdiction involved, i.e. the cost of each of his purchases, and the price received for any sale.

Investment income such as interest and stock dividends will have to have


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## mememeow (Sep 20, 2015)

I think part of my confusion can be solved if someone can tell me what’s the diff b/w being a non-resident of Canada & being a non-resident of Canada for tax purposes? At what point could you be one but not the other??


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## AltaRed (Jun 8, 2009)

mememeow said:


> I think part of my confusion can be solved if someone can tell me what’s the diff b/w being a non-resident of Canada & being a non-resident of Canada for tax purposes? At what point could you be one but not the other??


Immigration officials of a country determine when you become a resident of a country. For example, the type of Visa one might hold in the USA for example. OTOH, the tax treaty between 2 countries will determine where one's ties are strongest based on tie breaking criteria. There are examples like James4Beach (currently I think) and myself some 15 years ago where we hold (held) certain types of Visas to work in the USA and thus are considered residents of the USA....while at the same time, we maintained enough ties to Canada, that for income tax purposes, the tax treaty determined that we were 'non-resident aliens' for tax purposes and thus declare our worldwide income to Canada for tax purposes.

Your cross-border tax accountant can help you make the determination of where you are resident for tax purposes. It is often not that clear. My example goes back to 2001-2002 when I worked in Alaska, but I was there single status. I maintained my family back in Canada, went home every 2-3 weeks for weekends and maintained my Canadian driver's license, health insurance, bank accounts, investment accounts all in Canada. Under the tax treaty, I was declared a tax resident of Canada. The US IRS tried to make a case otherwise, but the tax treaty was clear.

You have not really provided enough personal information for anyone here to give you an opinion, and by personal information, I mean what ties you kept with Canada, the basis of your Saudi assignment, etc. Having said that, an Internet forum is not the place to be making your bets on your status. That is what you hire a professional for.


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