# Income + Residential Taxes



## Suspenc3 (Nov 3, 2015)

Hi,

My wife moved from Alberta to NB last year and we purchased a home there. I have remained in AB, working full time and residing full time here. The CRA ruled I had to pay NB income tax because of our house there and the fact that my wife was there. Now the NB gov is not giving us the residential tax credit, forcing us to essentially pay double what our property taxes should be, because we did not get medicaire and I did not switch my AB license over to NB (because I was still living in AB and needed my healthcare there).

I do not understand how the CRA and provincial tax authority can essentially have contradictory tax rules - how can I be a resident of NB in the eyes of the CRA but not a resident in the eyes of the NB gov simply because I did not switch my license and medicaire over?

Can anyone provide any guidance? Is there anything I can do here?

Thanks,

Kyle


----------



## AltaRed (Jun 8, 2009)

It is fairly easy to be considered one thing by a federal agency under the ITA and quite another thing by provincial agencies. It depends on the specific legislation and accompanying regulations. For example, family law differs by province too. Indeed, the point at which a province considers a couple living common law is completely different than when CRA under the ITA considers a couple common law.

In your specific case, it is relatively common for a household member to work in a different province from which they reside (where home, spouse and dependents are). This is (was) the case for thousands of oilsands workers. Many people here (in BC) work in the oil sands and come home regularly. They may live in camps while in AB or have an apartment there but they don't actually 'live there'. They are residents of BC and pay BC income tax. 

You should have gotten yourself a NB driver's license and signed up for NB healthcare. You would be covered while out of province (in AB) by your NB health insurance. I suggest you do that to avoid this problem for the 2016 tax year.


----------



## Suspenc3 (Nov 3, 2015)

Yes I understand that, it is just frustrating because we lived here for 6 years, and I still live in Alberta, I spent 95% of the year here and didn't use any NB services. I still consider myself an Albertan for what reason would I have changed my medicaire over?

Obviously hindsight is 20/20, I don't mind paying my fair share but in this case I feel like I'm being ripped off.


----------



## AltaRed (Jun 8, 2009)

I do understand how you feel squeezed (ripped off) but I can't see either NB or CRA listening to your arguments. 

If anything, NB should be giving you the break, especially since your wife IS a resident there, presumably with a NB driver's license? If you have not appealed the NB position, I'd suggest it is worth a try (pleading ignorance on the issue). In a way, NB should be happy that you and your wife are actually using AB health insurance (with NB being compensated by AB).


----------



## twa2w (Mar 5, 2016)

AltaRed said:


> In your specific case, it is relatively common for a household member to work in a different province from which they reside (where home, spouse and dependents are). This is (was) the case for thousands of oilsands workers. Many people here (in BC) work in the oil sands and come home regularly. They may live in camps while in AB or have an apartment there but they don't actually 'live there'. They are residents of BC and pay BC income tax.


Not sure whether it is still the case but when I lived in Kelowna, there were a lot of ' albertans' living there, who kept an address in Alberta, car registration etc all in Alberta, to take advantage of the lower taxes, liencse fees, medical premiums. The family and kids were in Kelowna but they paid Albetta income tax, medicare, etc
Some of these were people who worked in Alberta in the oilfields on a time in time out rotation and some worked offshore and never set foot in Alberta.
On some streets 30% or more of the vehicles had Alberta plates.
Maybe the gov has wised up, or some people play the game better.


----------



## Market Lost (Jul 27, 2016)

twa2w said:


> Not sure whether it is still the case but when I lived in Kelowna, there were a lot of ' albertans' living there, who kept an address in Alberta, car registration etc all in Alberta, to take advantage of the lower taxes, liencse fees, medical premiums. The family and kids were in Kelowna but they paid Albetta income tax, medicare, etc
> Some of these were people who worked in Alberta in the oilfields on a time in time out rotation and some worked offshore and never set foot in Alberta.
> On some streets 30% or more of the vehicles had Alberta plates.
> Maybe the gov has wised up, or some people play the game better.


They just got lucky not to be caught, something that worked for Duffy for a while, too. This is like drunk driving, you may get away with it for a while, but when you get caught, you pay a steep price.


----------



## OnlyMyOpinion (Sep 1, 2013)

twa2w said:


> Not sure whether it is still the case but when I lived in Kelowna, there were a lot of ' albertans' living there, who kept an address in Alberta, car registration etc all in Alberta, to take advantage of the lower taxes, liencse fees, medical premiums. The family and kids were in Kelowna but they paid Albetta income tax, medicare, etc Some of these were people who worked in Alberta in the oilfields on a time in time out rotation and some worked offshore and never set foot in Alberta...


So none of these families owned a home in Alberta that they retained as their primary residence? What Alberta address would they be using?


----------



## AltaRed (Jun 8, 2009)

twa2w said:


> Maybe the gov has wised up, or some people play the game better.


I don't know. I also don't know about the timing of your stint in Kelowna, but in the few instances I am aware of, they are residents of BC. Granted, I realize a few instances are mostly anecdotal and may not represent the majority of cases. I'd suggest, if anything, people still using the technique you have described would be committing fraud.

CRA is apparently looking much harder at tax residency in recent years within Canada, probably at the urging of individual provinces. A Google will bring up several links to that effect. Best I can tell, there is no clear answer because the answer is based on where the bulk of the residential ties are and that becomes a matter of judgement. There have been court cases in these matters with outcomes going both ways. But a key one seems to be where one's residence is and where one's family/spouse/children are (although it seems driver's licenses play a major factor too). The question then is..... Why would one take the risk of breaking the law having a driver's license out of province of residence? It is very clear in provincial laws where and when one must change their DL's, change their auto registration and get the right auto insurance. What happens when someone then has a serious auto accident? Seems like foolhardy decisions to me.


----------



## Market Lost (Jul 27, 2016)

AltaRed said:


> I don't know. I also don't know about the timing of your stint in Kelowna, but in the few instances I am aware of, they are residents of BC. Granted, I realize a few instances are mostly anecdotal and may not represent the majority of cases. I'd suggest, if anything, people still using the technique you have described would be committing fraud.
> 
> CRA is apparently looking much harder at tax residency in recent years within Canada, probably at the urging of individual provinces. A Google will bring up several links to that effect. Best I can tell, there is no clear answer because the answer is based on where the bulk of the residential ties are and that becomes a matter of judgement. There have been court cases in these matters with outcomes going both ways. But a key one seems to be where one's residence is and where one's family/spouse/children are (although it seems driver's licenses play a major factor too). The question then is..... Why would one take the risk of breaking the law having a driver's license out of province of residence? It is very clear in provincial laws where and when one must change their DL's, change their auto registration and get the right auto insurance. What happens when someone then has a serious auto accident? Seems like foolhardy decisions to me.


The thought just crossed my mind that this probably has zero to do with taxation. I don't think that the OP know what his neighbours are claiming on their income tax. However, having lived in BC for a few years, I think it's likely that they are doing it for their auto insurance. I know a lot of people in Toronto who claim they live in other cities to avoid paying higher rates, and BC insurance isn't exactly cheap if you are new to the province, if ever.


----------



## Mukhang pera (Feb 26, 2016)

Market Lost said:


> The thought just crossed my mind that this probably has zero to do with taxation. I don't think that the OP know what his neighbours are claiming on their income tax. However, having lived in BC for a few years, I think it's likely that they are doing it for their auto insurance. I know a lot of people in Toronto who claim they live in other cities to avoid paying higher rates, and BC insurance isn't exactly cheap if you are new to the province, if ever.


It probably is primarily motor vehicle insurance rate driven. But, as AltaRed cautions, risky business. All good clean fun until someone then has a serious auto accident. Then the insurer does a bit of checking and discovers that the vehicle was being driven in a locale other than the one for which it was rated. If someone has been injured, the insurer will pay the claim and look to recover from the owner/driver for being in policy breach.



Market Lost said:


> I know a lot of people in Toronto who claim they live in other cities to avoid paying higher rates, and BC insurance isn't exactly cheap if you are new to the province, if ever.


The same game is played here. People living in Vancouver claiming to live elsewhere in the province where rates are lower. Just don't have an accident and let that one come to the surface. Ditto for driving to work in a vehicle rated for pleasure use, etc. The distant address was also a dodge for having to report to the now defunct AirCare annually. Of course, none of this means anything to ultra low let worth individuals. They are judgment-proof in any event. Being poor has its advantages. Perhaps I'll expound on other advantages if I get the Canadian Man of Straw forum online. It will be a place where like-minded folks can exchange ideas of how to achieve judgment-proof status, how to be a professional debtor, how to live off the industry of others and spend a lifetime in retirement, etc.


----------



## Pluto (Sep 12, 2013)

Mukhang pera said:


> if I get the Canadian Man of Straw forum online. It will be a place where like-minded folks can exchange ideas of how to achieve judgment-proof status, how to be a professional debtor, how to live off the industry of others and spend a lifetime in retirement, etc.


That sounds interesting. 

I'm a little annoyed about having to live somewhere specific. What if someone has three places, and they spend about 4 months in each place. And they designate the most advantageous place as their official residence. Are they doing something wrong if they are not at that specific place for 6 months?


----------



## bgc_fan (Apr 5, 2009)

Pluto said:


> That sounds interesting.
> 
> I'm a little annoyed about having to live somewhere specific. What if someone has three places, and they spend about 4 months in each place. And they designate the most advantageous place as their official residence. Are they doing something wrong if they are not at that specific place for 6 months?


Hmm. Where do you stand on the Duffy issue? That was the crux of the matter.

At the end of the day, I believe CRA is pretty flexible on this, but I'm not sure about the provincial side. After all, I'm sure many out-of-province students would retain their place of residence at the more advantageous location.


----------



## AltaRed (Jun 8, 2009)

The starting point is really....where you resided on December 31st, but that is now recognized as a rather arbitrary point in time and thus why CRA has started looking at where one's residential ties are most prominent. Even Pluto's example would have a preferred place for the mailing of critical documents.


----------

