International Tax Services

If you have ties in Canada then you are considered a resident for tax purposes. There are two type of ties First Primary ties and Second Secondary ties.

Primary ties: If you have a primary residence in Canada, a spouse or common-law partner or a dependent living in Canada, then you are considered a resident of Canada for tax purposes.

Secondary ties: if you have a Driver’s license, Health Card, Furniture and Clothing, Bank account, Credit card, vehicles, pets, memberships in clubs, Pension plan, RRSP’s and TFSA, or other personal possessions in Canada then you MAY be considered a resident of Canada for tax purposes.

Secondary ties are always considered similar to a weighing scale, you are considered a resident depending on whichever country you have more ties.

What are the different types of residency status?

If you don’t qualify to be a proper resident or an ‘ordinarily’ resident/deemed resident then you may fit into the other categories. You may either be a factual resident or a deemed non-resident.

Who can be a factual resident?

A factual resident is a person who does not live in Canada (he/she is traveling etc) but he or she at least maintains residential ties (house, family, etc) with Canada. The residential ties were mentioned in detail earlier in this article.

Some people who may be categorized as factual residents include individuals teaching outside Canada, those vacationing outside Canada, those studying outside Canada, or those working outside Canada as well.

Are you a deemed non-resident?

This is where most people get confused. A deemed resident of Canada or Factual resident of Canada may be a person who maintains residential ties in Canada and they are also considered a resident of a country which has made a tax treaty with Canada. So if you have ties with a country which has made a treaty with Canada, and you also have residential ties in Canada then you may be considered a deemed non-resident. A deemed non-resident generally follows the same tax rules as a regular non-resident.

Are you a deemed-resident?

Anyone who lives in Canada more than 183 days even though he/she does not have ties with Canada but they will become deemed non-resident of Canada and they will be subject to tax on Canadian and worldwide income.

Tax consequences on worldwide income based on above situation:

So what does being a deemed resident, a factual resident, or a deemed non-resident of Canada actually mean for your worldwide income? The answer can vary from case to case but the general ruling is:

Deemed resident: naturally, you will report all of your worldwide income to the CRA and be eligible for all tax credits, refunds, and benefits depending on your qualification.

Factual resident: As a factual resident you will be treated exactly like a deemed resident and will report all of your worldwide income to the CRA and be eligible for all the tax credits, refunds, and benefits depending on what you qualify for.

Lastly, if you are a non-resident or a deemed non-resident then you only have to report your Canadian income to CRA and file your taxes, you do not have to report your worldwide income to CRA for the year.

Should I become a resident, a factual resident, or a non-resident of Canada for tax purposes?

It makes perfect sense to debate the above question when you are thinking of ways to save on your taxes. In order to get the best advice, you should get in touch with an accountant or a tax expert who can help guide you the right way and help you save on your taxes as much as possible.

One of the best traits our team has here at Calgary Tax Consulting is that they always stay by their clients’ side. If you have questions about your taxes or you require consultations from our accountants or other tax experts then we will gladly assist you. We make sure that every client has all their answers and that not a single person is left confused or even slightly puzzled.