# Is a Canadian tax return necessary if no Canadian income, but have US income



## mungbeans (Mar 14, 2012)

My wife and I moved from Canada to the US in 2011 and for 2012 we spent no time in Canada nor had any Canadian income with the exception of some bank interest.
I work for a US company and have US income.

I still have ties to Canada (a property and bank accounts, though no relatives) and have not applied to sever residential ties so I presume I am still a Canadian resident from a tax point of view if not a physical pov.

Do I therefore still need to file a Canadian tax return?


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## MoneyGal (Apr 24, 2009)

Yes! Residents of Canada (including tax residents) have to pay tax on the income they earn no matter where in the world they earn it. You may not owe any income tax but you are still required to file a return so your U.S. income can be integrated with your Canadian taxes due, if any.


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## AltaRed (Jun 8, 2009)

I don't think it is that clear the OP is a tax resident of Canada, even with a property in Canada in which case, if not a tax resident of Canada, no T1 filing is necessary. When I was an expat, I was considered a US tax resident in the equivalent year the OP is talking about. One must take a close look at the tie-breaking rules of the US-Can treaty to be sure. If a tax resident of the USA and not of Canada, the OP's only taxobligation to Canada would be withholding tax (if any - I think bank interest is now excluded from withholding in the tax treaty). I presume the OP's Canadian bank has the OP's US mailing address on file, and if so, would have already been withholding if necessary.

P.S. I would assume the OP's cross-border tax accountant would have already made this determination and is ready to file US tax returns tomorrow (Apr 15th).


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## MoneyGal (Apr 24, 2009)

All good points! I was speaking (typing) in generalities. AltaRed's post is much more specific and useful.


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## mungbeans (Mar 14, 2012)

AltaRed said:


> I don't think it is that clear the OP is a tax resident of Canada, even with a property in Canada in which case, if not a tax resident of Canada, no T1 filing is necessary. When I was an expat, I was considered a US tax resident in the equivalent year the OP is talking about. One must take a close look at the tie-breaking rules of the US-Can treaty to be sure. If a tax resident of the USA and not of Canada, the OP's only taxobligation to Canada would be withholding tax (if any - I think bank interest is now excluded from withholding in the tax treaty). I presume the OP's Canadian bank has the OP's US mailing address on file, and if so, would have already been withholding if necessary.
> 
> P.S. I would assume the OP's cross-border tax accountant would have already made this determination and is ready to file US tax returns tomorrow (Apr 15th).


Thanks AltaRed.

If I am deemed to be a tax resident of the US and I sold the Canadian property (without making any capital gains on the sale), what is the situation regarding withholding tax on its sale? Is withholding tax only applicable to any gains on the sale?


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## Guban (Jul 5, 2011)

mungbeans said:


> Thanks AltaRed.
> 
> If I am deemed to be a tax resident of the US and I sold the Canadian property (without making any capital gains on the sale), what is the situation regarding withholding tax on its sale? Is withholding tax only applicable to any gains on the sale?


I was under the impression that the purchaser should withhold a percentage of the sale, but can't find a reference for that. There are forms to fill out. Surprise, surprise! See:
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/dsp/menu-eng.html#nrcp


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## AltaRed (Jun 8, 2009)

mungbeans said:


> Thanks AltaRed.
> 
> If I am deemed to be a tax resident of the US and I sold the Canadian property (without making any capital gains on the sale), what is the situation regarding withholding tax on its sale? Is withholding tax only applicable to any gains on the sale?


I don't know but think Guban's ilink is your direction. It seems notification is a requirement regardless of taxes owing or not.


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