# Canadian Tax Resident?



## kid5022 (Nov 14, 2010)

Assuming I have no house, no family in Canada and I only live in Canada soil+air space of only 170 days. I cancel all my clubs, driver license, credit cards. 

The only things i have is:

1)accounts with two banks (TFSA)included in the TFSA is savings+stocks investments

2)student loan debt

assuming i still made trades in my stocks investments, and savings still earn interest both of which are in my TFSA. 
(I believe that i will not what i put into TFSA/RRSP but i could not contribute more)

Would i still be deemed non resident of Canada?


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## MikeT (Feb 16, 2010)

Residency is complicated. I've delt with it for a long time. It depends what country you are moving to, and whether they have a tax treaty with Canada. Also are you planning on keeping your provincial health care coverage active?

In general, when CRA determines your residency, they look at the whole picture. One or two ties might or might not make you a resident depending what they are. Which country are you moving to?

Also, your earnings in your TFSA are only guaranteed to be tax free if you are a Canadian resident. If you are an American resident, they will tax you on your TFSA's earnings so there's not really any point to keeping it.


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## kid5022 (Nov 14, 2010)

MikeT said:


> Residency is complicated. I've delt with it for a long time. It depends what country you are moving to, and whether they have a tax treaty with Canada. Also are you planning on keeping your provincial health care coverage active?
> 
> In general, when CRA determines your residency, they look at the whole picture. One or two ties might or might not make you a resident depending what they are. Which country are you moving to?
> 
> Also, your earnings in your TFSA are only guaranteed to be tax free if you are a Canadian resident. If you are an American resident, they will tax you on your TFSA's earnings so there's not really any point to keeping it.


probably some place in asia? China/Singapore/hk
thats basically the situation,


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## MikeT (Feb 16, 2010)

Whichever country you choose to live in would become your tax home and you'd become a hong kong resident (for example) for tax purposes.

You'd be subject to that countries taxes likely on your worldwide income. It would depend on the treaty that country has with Canada as to the treatment of your rrsp. It would be very unlikely that the TFSA would be tax free however since it's so new it's probably not in any treaty yet.

I don't know exactly as I only have experience with the states. But if you were to move to the states you should withdraw your TFSA and close it prior to leaving Canada. It's of no benefit to a non-resident.

But if the purpose is to try to be a non-resident of Canada, then closing the TFSA could help your cause anyways. By far the most accurate document that describes what primary and secondary residential ties are and how they are used by CRA to determine your residency is here:
http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/README.html


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## OhGreatGuru (May 24, 2009)

kid5022 said:


> Assuming I have no house, no family in Canada and I only live in Canada soil+air space of only 170 days. I cancel all my clubs, driver license, credit cards.
> 
> ...


If you are still spending 170 days a year here, together with your CDN investment accounts, I suspect they would consider that you still have "residential ties" to Canada.


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## MikeT (Feb 16, 2010)

Actually, if he's under 183 days and it's JUST the rrsp, he's probably ok. If you start adding chequing/debit/credit/trading accounts and health care, drivers license etc then he probably would be a resident.

You can always make a case for leaving an rrsp behind since there are penalties to withdraw it, and it is likely recognized in the other country as a tax deferred retirement account through a treaty. The student loan is probably ok as well since it's a liability rather than an asset, and one can't be reasonably expected to just pay it off instantaneously. But any accounts or property beyond that are going to be pretty significant. 

You also have to make your tax home somewhere else to become a non-resident. I.e. just traveling the world ro from country to country for a year doesn't make you a non-resident.


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## Maybe Later (Feb 19, 2011)

A lot will have to do with how you are considered by the taxman in your other residence. When I lived in the U.S., 300+ days a year I was still deemed a resident of Canada for taxation until I was deemed a resident of the U.S. for tax purposes (two years in my individual case).


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## OhGreatGuru (May 24, 2009)

MikeT said:


> Actually, if he's under 183 days and it's JUST the rrsp, he's probably ok. If you start adding chequing/debit/credit/trading accounts and health care, drivers license etc then he probably would be a resident.
> 
> ....
> You also have to make your tax home somewhere else to become a non-resident. I.e. just traveling the world ro from country to country for a year doesn't make you a non-resident.


The "183 day" rule is for people who would not otherwise be considered as having residential ties, but are "sojourning" here for over 183 days. As you say, if he got rid of all his ties other than his registered accounts, they might allow it. But there is lot of subjectivity in their determination. I think he would have to get a ruling from thems as makes the rules. 

That's a good point about wheher he is legally a tax resident elsewhere too.


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## marina628 (Dec 14, 2010)

My friend lives in Cayman Islands and he wanted to ensure he could not be held liable for any Canadian taxes on his income.He had to close all accounts and could not have any assets here.He is earning over a million a year so he went to a lawyer when he moved and actually had his lawyer send a letter to CRA informing them of his move to Cayman Islands.


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## kid5022 (Nov 14, 2010)

assuming i am going to become a tax resident of Hong Kong as in MikeT's example, all income earned in Hong Kong is subjected to tax, while any other sources of income is not. There is no tax treaty between HK and Canada that i know of.

in canada
since i have student loan(debt) i have to pay it off somehow
the savings/tfsa account is use to pay off the student loan
lets say i work in hk, earning money in HKD i have to wire it to my Canadian bank account in Canada(CAD) to pay off my student loan, otherwise i would have default 

i have no driver license, healthcare, home, club, membership, family, home etc

the only asset i could think of is the savings account and the tfsa

i could close out my tfsa and transfer funds to the savings account/pay off my loan, if it is a must.
But if i could i would prefer keeping it, even if i couldn't put in more funds.
I believe the same investment in Hong Kong, would have withholding tax of 25% Canada, 30% US of A. In the TFSA, only a 15% US of A withholding tax. Which mean i get to pay off my loan faster/less money.

I doubt i could spend more than 60days in Canada, anyway, a 60 day vacation is just a little bit too much...lol


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## MikeT (Feb 16, 2010)

Hong Kong is actually quite an exception. They tax only hong kong sourced income from salary. (apparently from my cursory reading) Capital gains from any source are tax free. This is unique to Hong Kong.

Even with Hong Kong, there is NO benefit to keeping your TFSA, and there is a large downside. No benefit since you could just withdraw and open a similar account in hong kong (all accounts are tax free apparently). Huge downside in that it remains a residential tie to Canada and Canada could potentially tax you on your hong kong salary earnings. NOT WORTH IT.

Also there is no need to keep a bank account open. You can pay student loans without an active Canadian bank account. (I know because I've done it.) And if your goal is to be a non-resident, then you should too.

The point of all of this is, if you want to avoid any possibility of a huge Canadian tax bill, do it properly and cut all ties. If you don't feel like cutting all ties because it's not convenient then just send 30% of your hong kong paycheque to CRA. No problem.


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## kid5022 (Nov 14, 2010)

MikeT said:


> Hong Kong is actually quite an exception. They tax only hong kong sourced income from salary. (apparently from my cursory reading) Capital gains from any source are tax free. This is unique to Hong Kong.
> 
> Even with Hong Kong, there is NO benefit to keeping your TFSA, and there is a large downside. No benefit since you could just withdraw and open a similar account in hong kong (all accounts are tax free apparently). Huge downside in that it remains a residential tie to Canada and Canada could potentially tax you on your hong kong salary earnings. NOT WORTH IT.
> 
> ...



thanks for your reply MikeT... i might as well close out all my bank accounts then
there is no tax in hk except biz and salary...

but for investments foreign countries do have high withholding tax on stock dividend, interest etc but anyway, thats still better than 30% salary to cra

thank you so much


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