Chapter 1: Deemed Residency under ITA 250(1) Flashcards
What is a deemed resident under ITA 250(1)?
A deemed resident is an individual who is not a factual resident but has other connections to Canada that are sufficient for them to be treated similarly to factual residents.
How are deemed residents taxed in Canada?
Deemed residents are taxed on their worldwide income for the entire taxation year, unlike part-year factual residents who are only taxed on the part of the year they are considered residents.
Are deemed residents subject to provincial or territorial income tax in Canada?
No, deemed residents are not subject to provincial or territorial income tax. Instead, they pay an additional federal tax equal to 48% of the basic federal tax payable under ITA 120(1).
Who qualifies as a deemed resident under ITA 250(1)?
Individuals who sojourn in Canada for more than 183 days in a calendar year.
Members of the Canadian Armed Forces stationed outside of Canada.
Ambassadors, ministers, officers, or servants of Canada or a province, and their families.
Individuals performing services under an international development program.
Children of deemed residents who meet specific criteria.
Individuals who were exempt from foreign income tax due to their relationship with a Canadian resident.
What is the significance of sojourning in Canada for more than 183 days?
If an individual sojourns (temporarily stays) in Canada for more than 183 days in a calendar year, they are deemed to be a resident of Canada for the entire calendar year.
How does the concept of sojourning apply to cross-border workers?
Individuals who commute daily to Canada for work but do not have a temporary place of residence in Canada are not considered to be sojourning for residency purposes, even if they are physically present in Canada for over 183 days.
In the case of Suzanne Blakey, who has never visited Canada but is the daughter of a Canadian high commissioner, is she considered a resident of Canada for tax purposes?
Suzanne Blakey could be considered a deemed resident of Canada due to her family relationship with a Canadian diplomat, even though she has never visited Canada.
