Chapter 1: Part-Year Residency Flashcards
What is a part-year resident?
A part-year resident is an individual who is resident for part of a taxation year and non-resident for the other part of the same taxation year.
This applies to factual residency and not deemed residency.
How does part-year residency affect the taxation year for individuals?
The taxation year is divided into two parts, with the individual being a resident for one part and a non-resident for the other.
For example, if a person severs Canadian residency on May 27, 2024, they are considered a resident from January 1, 2024, to May 26, 2024, and a non-resident from May 27, 2024, to December 31, 2024.
What does the CRA consider when determining the exact day residency is severed or established?
The CRA looks at the later of:
The date the individual leaves Canada,
The date the individual’s spouse or dependants leave Canada,
or
The date the individual becomes a resident of the new country.
How does the CRA determine when a non-resident becomes a resident of Canada?
The CRA considers the date of obtaining landed immigrant status and provincial health coverage as the day the individual becomes a Canadian resident.
How are income and deductions prorated for part-year residents?
Income, taxable income deductions, and personal tax credits must be prorated to account for the part of the year during which the individual is a resident.
This process is specified in ITA 114 and ITA 118.91.
In Mark’s case, who moves to the U.S. on February 1 but whose wife and children remain in Canada until June 15, when will he be taxed in Canada?
Mark will be taxed in Canada from January 1 until August 1, when his Canadian residence is sold, as his wife and children were still present in Canada until June 15, and he sold his personal property in August.
How will Mr. Jonathan Kirsh, who moved to Canada on September 1 but obtained health care coverage on December 10, be taxed in Canada for the year?
Mr. Kirsh will be considered a part-year resident, and his Canadian tax liability will begin from the day he obtained landed immigrant status (September 1), with prorated tax credits and deductions.
