Solution 1 (Basic)
(a) As Anthony has made a fresh start in Canada on March 1, 2011, he is considered a part-year resident.
will be taxed on his worldwide income from March 1 to December 31. Prior to March 1, he would only pay tax on
income from Canadian sources.
(b) Lubie has a continuing state of relationship with Canada. In particular, all of her income is earned in Canada and she
crosses the border each day. She also carries on active trading in Canada as well. All of the facts support that Lubie
has a continuing state of relationship with Canada; therefore, she is a resident in Canada for tax purposes. The 183-
day sojourner rule would not apply because Lubie does not stay overnight. She will also be taxed in the United States;
therefore, she will have to apply for a foreign tax credit on her U.S. return.
(c) Although Ephran spent over 183 days in Canada before severing all of his ties, he is still considered a part-year
This is because he made a clean break from Canada and does not plan to return. Accordingly, he will be
taxed on his worldwide income from January 1 to July 30, 2011. After July 30, he will only be taxed on income from
Canadian sources. (An argument could also be made that Ephran made a clean break from Canada on May 1, 2011.)
(d) Julia has a strong continuing state of relationship with Canada even though she is a U.S. citizen. Accordingly, she will
be considered a resident of Canada and taxed on her worldwide income. Citizenship is irrelevant to a person’s
resident status in Canada, but Julia will also be taxable in the United States. Consequently, Julia will be taxed in both
Canada and the United States and will need to apply for a foreign tax credit.
Solution 3 (Advanced)
Lee v. M.N.R.
, 90 DTC 1014
(A) Full-time resident of Canada after a ―fresh start‖: taxed in Canada on worldwide income for the whole year.
Criterion: ―a continuing state of relationship‖, i.e., continuing ties with Canada after a ―fresh start‖.
Evidence of residence:
— although U.K. passport indicated residence in U.K., can be resident in more than one place,
— room in parent’s house maintained for his use before his marriage, but not likely after that time,
— married in Canada to a person who continued to reside in Canada,