Canadian residents taxed on worldwide income Resident: pays tax in Canada on worldwide income non-resident: Pays tax in Canada on income earned in Canada from Employment, carrying on Buisness, and from disposal of taxable Canadian property Part Year resident: Year in which status changed: Either became a resident or became a non resident of Canada during the year For period of residency, pays tax in Canada On WorldWide Income For period of non residency, pays tax in Canada on income earned in Canada from Employment, carrying on business and from disposal of taxable Canadian property Common law concept of Canadian resident, residence is determined by application of general princepals that have evolved from common/case law over the years. Facts used to establish residential ties: - Maintaining a house, apartment ETC, whether owned or leased, suitable for year round occupancy and available for occupancy. - A spouse/common law partner and other members of immediate family remaining in Canada - Maintaining personal property and social ties Canada Deemed resident- sojourning - Act may deem an individual to be a resident if one of the conditions of the deeming rule is met If individual sojourned(stay somewhere temporarily) in Canada for 183 days or more he/she deemed to be full time resident of Canada Fresh Start: Non-resident moves to Canada to take up residence but not temporarily Clean Break: Considered on the latest date of when: The individual leaves Canada The individual spouse/common law partner and or dependents leave Canada The individual becomes a resident of the country to which he or she is immigrating to. If existing ties have not been severed then individual remains a canadian resident. LIiability of non residnts - Non resident is liable to pay income tax if at any time in the year or previous year the individual : 1) was employed in Canada 2) Carried on business in Canada 3) Disposed of taxable Canadian property Carrying on business in Canada: no defined in ACT, courts interepration: Continuous business activity, Business is an adventure/concern in the nature of trade, offering for sale in Canada through employee versus independent contractor.
Tax treaties help prevent double taxation and tax avoidance, Canada and U.S Tax convention. Non tax factors to consider when planning residence, Difference in cost of health care, quality of life, employment oppurtunities , cultural differences Steps to addressing resident issue: 1) assess the situation and identify the issues: gather all facts leading up to during and after the move. The facts should be organized into: a) significant residential ties: dwelling place, spouse(including common law) and dependents b) secondary residential ties in Canada: Such as personal property social and economic ties, hospitalization and medical insurance, landed immigrant status.
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- Fall '13