# Non-resident of Canada for Tax purposes?



## anon100 (Dec 18, 2016)

I used to be a Canadian tax resident as a US Citizen for a few years. I then moved back to the US and stopped filing Canadian tax returns. I have filed and payed US income taxes since I moved to the US. 

I never declared my departure date, so CRA has no idea that I have left. They are sending letters to my old Canadian address that I need to file income taxes for the years I was filing in the US.

I have two questions

1. What do I need to show them that they know I'm a non-resident of Canada?

2. As far as I know, the US Canada tax treaty prevents the US assisting Canada in any form of tax collection if that person was a citizen of US. All of my assets are in US and I have nothing in Canada. If for any reason, CRA gives me a tax bill, what can they do if I ignore it? As far as I have read it's not a crime not to pay your taxes in Canada, but it is a crime to commit tax fraud which I did not do.


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## AltaRed (Jun 8, 2009)

When you left Canada, you would have filed a final tax return for the year of departure in which you would have said on Page 1 (I think) that 'you left Canada on X date', and given them your new USA postal address, correct? You would have also had a 'deemed disposition' of all capital gains on any investments you owned at the date of departure, correct? 

All you should have to do is tell them that you provided all that information about date of departure on the T1 General of tax year XXXX.


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## Eclectic12 (Oct 20, 2010)

AltaRed said:


> When you left Canada, you would have filed a final tax return for the year of departure in which you would have said on Page 1 (I think) that 'you left Canada on X date', and given them your new USA postal address, correct? ...
> All you should have to do is tell them that you provided all that information about date of departure on the T1 General of tax year XXXX.


It seems such a simple response is not available as the OP has already stated ...


anon100 said:


> ... I then moved back to the US and stopped filing Canadian tax returns ...
> *I never declared my departure date, so CRA has no idea that I have left.*
> They are sending letters to my old Canadian address that I need to file income taxes for the years I was filing in the US ...


I am not sure why so many seem to take becoming/exiting tax residency so lightly and seemingly with so little advance planning.


The main way I can think of adjusting it is to file a T1-ADJ for the year the departure occurred to the get the data of departure on file.
http://www.cra-arc.gc.ca/changereturn/


Of course that may raise questions about the departure tax for capital property.


Cheers


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## AltaRed (Jun 8, 2009)

Eclectic12 said:


> The main way I can think of adjusting it is to file a T1-ADJ for the year the departure occurred to the get the data of departure on file.
> http://www.cra-arc.gc.ca/changereturn/
> 
> 
> ...


My point was the OP would have had to file a Canadian tax return anyway for the year of departure....so why was the date of departure not in it? OR did the OP fail to file a tax return for the year of departure? Example: If the OP left sometime in calendar year 2013, the OP would still have had to file a Canadian tax return by April 30, 2014 for tax year 2013. Taxes are due to Canada for the period of time of residency in Canada in 2013. I agree a T1ADJ for that year might be the way to do it IF the OP did indeed file... If not, than a tax return for 2013, for income earned for the time he continued to reside in Canada, is way overdue.


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## OhGreatGuru (May 24, 2009)

AltaRed said:


> When you left Canada, you would have filed a final tax return for the year of departure in which you would have said on Page 1 (I think) that 'you left Canada on X date', and given them your new USA postal address, correct? You would have also had a 'deemed disposition' of all capital gains on any investments you owned at the date of departure, correct?
> 
> All you should have to do is tell them that you provided all that information about date of departure on the T1 General of tax year XXXX.


It would be more correct to say he "should have". It certainly sounds like he didn't, or CRA wouldn't be sending him notices. And in fact he says _"I never declared my departure date, so CRA has no idea that I have left."_ He may have an amount still owing from the last return he did file; and he could have a further amount owing if he should have declared a deemed disposition of assets.

To OP: Copies of your US tax returns would probably satisfy CRA about your non-residency, but you are still going to have to deal with them over a failure to file a final return, and any outstanding amounts owing.


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## OhGreatGuru (May 24, 2009)

anon100 said:


> ...
> 
> 2. As far as I know, the US Canada tax treaty prevents the US assisting Canada in any form of tax collection if that person was a citizen of US. All of my assets are in US and I have nothing in Canada. If for any reason, CRA gives me a tax bill, what can they do if I ignore it? As far as I have read it's not a crime not to pay your taxes in Canada, but it is a crime to commit tax fraud which I did not do.


You're splitting hairs. It's tax evasion, not tax fraud. It's true that CRA tries to handle most tax evasion cases outside of the courts, but criminal prosecution is ultimately possible. And hope your plane never makes an emergency landing in Canada.


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## Eclectic12 (Oct 20, 2010)

AltaRed said:


> My point was the OP would have had to file a Canadian tax return anyway for the year of departure....so why was the date of departure not in it? OR did the OP fail to file a tax return for the year of departure? ...


Fair enough .... (one of the problems with the media is this sort of different readings *grin*).


Cheers


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## anon100 (Dec 18, 2016)

I did file my taxes for the year that I left. But I never marked myself as a non-resident. As for tax-evasion, under reporting or not filing when I should have would be considered tax evasion. CRA does not know that I have left. Also if for any reason I owe them tax, if I don't pay them, that would not be tax evasion. That would be not paying a debt. Am I correct? according to the US/Canada tax treaty the US is not allowed to assist CRA in tax collection from the US if that person was a US citizen when the tax arouse. 


Also from what I have read, by law CRA has 10 years to collect the tax, after 10 years they lose that power.


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## Eclectic12 (Oct 20, 2010)

anon100 said:


> I did file my taxes for the year that I left. But I never marked myself as a non-resident.


Which would make an adjustment to that tax return the easy way to let CRA know you are no longer a tax resident.




anon100 said:


> As for tax-evasion, under reporting or not filing when I should have would be considered tax evasion. CRA does not know that I have left.


Trouble is you want the benefits of CRA knowing you have left where you have skipped the means of getting those benefits as well as documenting for CRA that all taxes triggered by the departure have been taken care of.

Somehow I suspect CRA may see skipping the laid out process as suspicious that may be aimed at tax evasion. After all, should there be departure tax triggered but not reported on the last tax return filed, is that not "under reporting" taxes?
http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/lvng-eng.html


OTOH ... where one went to the effort to determine that there was no departure tax owing - why wouldn't one report the departure date on the tax return?




anon100 said:


> Also if for any reason I owe them tax, if I don't pay them, that would not be tax evasion. That would be not paying a debt. Am I correct?


By what you are written, you seem to think it depends on whether your last return has the same tax number on it (or possibly more). 
I suspect you are not correct but regardless of what I think .... what would matter it what the tax courts have precedent for.




anon100 said:


> ... Also from what I have read, by law CRA has 10 years to collect the tax, after 10 years they lose that power.


The tax book from the library said this would work where CRA ignores the debt for ten years plus one day. Each action by CRA to collect the debt resets the ten year period from the date of the action. 

The example in the book was where the deb was assessed in 2005, a series of letters were sent with the latest letter sent in May 2015. The result is that May 2015 plus ten years is the limit (i.e. around May 2025) ... assuming no further attempts by CRA to collect happen.


Essentially, with little effort the power to keep the debt alive is effectively unlimited.


Cheers


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## AltaRed (Jun 8, 2009)

+1 Good summary by Eclectic12. 

I would suggest the OP is being way too cavalier in his/her approach and is simply inviting trouble. Of course, why would Anon100 be taking the trouble to post the dilemma here if indeed the OP wasn't at least somwhat concerned by the dilemma? 

If it is as Anon100 suggests, a simple T1ADJ with Departure Date should solve the dilemma. It remains a mystery to me why the OP would not have correctly filled out his/her last T1 return with Departure Date in the first place (see Page 1 of http://www.cra-arc.gc.ca/E/pbg/tf/5000-r/5000-r-15e.pdf ). It is highly obvious how that should have been filled out which causes me to wonder what else might have been going on.


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