Residence - individual

Question 2

Three concepts of residency:

Answer 2

1. resident
2. deemed resident
3. non-resident

Question 3

Significant residential ties

Answer 3

1. dwelling place
2. spouse or common-law partner
3. dependents

Question 4

Secondary residential ties

Answer 4

1. personal property in Canada
2. social ties with Canada
3. economic ties with Canada
4. landed immigrant status or appropriate work permits
5. hospitalization and medical insurance coverage from Canada
6. driver’s license from Canada
7. vehicle registration in Canada
8. seasonal dwelling place in Canada
9. Canadian passport
10. memberships in Canadian union or professional organization

Question 5

Other residential ties of limited importance

Answer 5

1. retention of Canadian mailing address
2. Canadian post office box
3. Canadian safety deposit box
4. personal stationery or business cards showing Canadian address
5. telephone listing in Canada
6. Canadian newspaper and magazine subscriptions

Question 6

Nature of absence from Canada

Answer 6

1. evidence of intention to permanently sever ties with Canada
2. regularity and length of visits to Canada
3. residence ties outside of Canada

Question 7

Why is the concept of residency important?

Answer 7

The concept of residency

• determines under what Part of the ITA (if any) a person’s income is taxed:
  
  • A person who is resident in Canada is liable for Part 1 tax on his worldwide income.
  • A non-resident is only taxed on income earned in Canada
• Residency is not based on physical presence in Canada (except for deemed residency).
• The main factor for determining if a person is a resident of Canada for income tax purposes is if that person maintains social ties with Canada (IT221R3)

Question 8

Deemed full-time resident

Answer 8

1. if ‘sojourned’ in Canada for an aggregate of 183 days or more.
2. The word ‘sojourn’ has the connotation of a temporary visit.
3. A deemed resident is determined based on physical presence in Canada
4. A deemed resident means that an individual is deemed to be a resident of Canada for the entire year even if sojourned in Canada for only a part of the year (but at least 183 days or more)

Question 9

Common law concept of full-time resident

Answer 9

1. Residence is described as “a continuing state of relationship between a person and a place which arises from the durable concurrence of a number circumstances.
2. A person’s ties to a country need not be manifested in a permanent home.
3. An individual must be resident in at least one country at any moment in time.
4. A degree of permanence and substance has to be present to create the status of “resident”

Question 10

Part-Year Resident

Answer 10

• This describes the position of an individual in the year he or she either became or ceased to be a Canadian resident.
• The year of exit or entry is the year of part-year residence status.
• taxed on worldwide income earned during part of year in which he or she was resident in Canada.

Question 11

Part-year resident: Clean break

Answer 11

Clean break occurs on the latest of the date on which:

1. the individual leaves Canada,
2. the individual’s spouse or common-law partner and/or dependants leave Canada, or
3. the individual becomes a resident of the country to which he or she is immigrating.

Question 12

Part-year resident: fresh start

Answer 12

A fresh start occurs:

• when a non-resident person moves to Canada to take up residence
• the person would be in Canada for more than 183 days. (The part-year consists of more than 183 days.)
• the stay for the period is not temporary (as it is in a deemed full-year resident sojourning an aggregate of 183 days or more).

Question 13

What is a non-resident?

Answer 13

A person who is not a resident or deemed resident.

Question 14

Liability of non-resident person

Answer 14

A non-resident person may be liable for Part 1 tax only if:

1. he was employed in Canada
2. he carried on a business in Canada, or
3. he disposed of a taxable Canadian property [subsection 2(3)