Some General Observations about influence of tax-filing status relative to PR status:
A PR has no more obligation to file a Canadian tax return, or to pay Canadian taxes, than any other Canadian. Who must file a return, generally, and who must file a
resident return in particular, are determined by Canadian tax laws and rules, most of which are applied and enforced by the Canada Revenue Agency.
There are no tax-filing status requirements for PRs. If, under CRA rules, a PR qualifies as a non-resident for tax-filing purposes, the PR may (should) file a non-resident return.
A professional tax advisor should be approaching the question about whether to file a non-resident tax return the same way the advisor would for a Canadian citizen. If a Canadian citizen living abroad in the same circumstances, with the same sources of income, is entitled to file a non-resident return, a PR in those circumstances is also entitled to file a non-resident return.
Where it tends to get confusing is that many of the facts and circumstances which are relevant in determining
residency for taxation purposes can also be relevant when IRCC conducts a Residency Determination to assess a PR's compliance with the PR Residency Obligation.
But as others have pointed out, the issues and conclusions relative to taxation, within the purview of CRA, are totally separate and distinct from PR-status issues within the purview of IRCC. Thus, while many of the same facts are relevant to inquiries and issues for both, particular findings or conclusions are based on different criteria and are made for different purposes.
For example:
For CRA,
residential ties are evidence which tend to indicate where a person is a
resident.
For IRCC
residential ties are evidence which tend to indicate where a person has been
physically present.
For CRA, where an individual has been physically present is evidence to be considered in determining whether that person is a resident of Canada (for the given tax-year). (Presence in Canada for 183+ days during a calendar year leads to a presumption, albeit a rebuttable presumption, that person was a Canadian resident during that year.)
For IRCC, being a resident of Canada is merely evidence which supports a claim of physical presence in Canada.
Regarding a PR's obligation to file and pay taxes:
PRs, like all Canadians, are required to comply with Canadian law. Including Canadian taxation laws. The Canadian Revenue laws and rules impose both tax filing requirements and tax payment requirements.
This leads to what it says at the IRCC website providing information about PR status:
" . . . on the final sentence in the "What permanent residents can do" section on this page:
http://www.cic.gc.ca/english/newcomers/about-pr.asp "
"As a permanent resident . . . You must pay taxes and respect all Canadian laws at the federal, provincial and municipal levels."
But just like any other Canadian, a PR only needs to pay the taxes that Canadian laws and taxation rules require. If no taxes are due for a given tax-year, a PR is not obligated to pay any taxes for that tax year . . . in particular, what taxes a Canadian living outside of Canada needs to pay depends on the source of the income and whether
for taxation purposes the Canadian is a
resident or
non-resident for the particular period of time, usually a
tax-year.
A PR living abroad may or may not be required by
CRA rules to file a
resident tax return for a given tax-year (if a resident return is required, payment of taxes on world-wide income is required). If the CRA rules allow the PR to file a return for that year as a non-resident, this has no impact whatsoever on the PR's status as a PR. None. Period.
That said, as alluded to in my general observations above, the facts and circumstances which establish the PR's
tax-filing-status as a non-resident are also relevant when assessing the PR's claims about days the PR was present in Canada, which is for purposes of assessing the PR's compliance with the PR Residency Obligation: the
Residency Determination.
The obvious example: if a PR's circumstances are such that the PR was a non-resident of Canada
for taxation purposes, for a given tax-year, the odds are high the PR did not spend very much time in Canada during that period of time. That is a matter of fact relevant to assessing compliance with the PR's Residency Obligation. Nonetheless, what really matters for IRCC's assessment of PR RO compliance, is the number of days the PR was present in Canada, not what the PR's tax-filing-status was.
Caution:
CRA rules governing who must file a
resident tax return can be complicated, difficult to interpret, and even more difficult to apply. The CRA information referenced in this topic can be a lot more tricky to apply than is apparent.
This is also subject to international treaties, which to make things even more confusing, the terms of such treaties tend to differ from one country to another.
There are, for example, particular rules which govern persons with ties in both the U.S. and Canada which might subject the individual to taxation in both countries, which rules determine in which of the two countries the person is a
resident for taxation purposes and which in turn allow the person to file a non-resident return in the other country, even if an ordinary residential ties analysis would lead to a different outcome.
To be clear, however, PR status has significance, in this regard, only in that having PR status is a factor, one individual factor among many, many factors which are relevant when CRA questions the tax-filing status of a Canadian filing a non-resident tax return (or while investigating a potential failure to file a required resident return). Many other factors have far greater weight and importance in making a determination as to whether or not a particular individual is obligated to file a resident tax return.
Among the factors which carry the most weight: actual physical presence, place of employment, location of dwelling place, and place where immediate family live.
CRA information to clients regarding Residence Status determinations:
That information is about
CRA rules for determining residence status for taxation purposes and has minimal relevance for any other purpose.
In regards to suggestions that evidence of intention to permanently sever residential ties in Canada has any significance for a PR beyond merely being part of determining tax filing status,
NO.
Canada's PR program totally eliminated any intention requirements for keeping PR status. A PR does not need to intend to reside in Canada in order to keep PR status.
For a PR who has breached the PR RO and who is, in effect, pleading H&C reasons why IRCC should allow the PR to keep status, yes, intentions are taken into consideration.
But for a PR who has met the PR RO, at least two years in the preceding five spent in Canada,
intention is NOT relevant.
Thus, to be clear, CRA's
Income Tax Folio S5-F1-C1, "Determining an Individual's Residence Status," is
ONLY about determining residence status for taxation purposes and no other purpose. And definitely not for purposes of assessing compliance with the PR RO.
Summary:
Follow the rules and instructions. Respectively. The CRA rules for determining tax-filing status. The IRPA rules for meeting PR obligations.
Thus, for deciding whether to file a resident or non-resident tax return, follow CRA's rules and instructions in determining which is the proper way to file. As always, be accurate in reporting facts. While the fact of having PR status is a minor factor in determining which is the proper way to file, other factors will have far greater influence in this.
Thus, for purposes of maintaining compliance with the PR Residency Obligation, and reporting information to CBSA or IRCC attendant a PoE examination or in a PR card renewal application, again the important thing is to
accurately report facts. What matters in this regard are the IRPA statutes and regulations, and of course the accurate facts themselves.
As for the facts, a PR who qualifies for non-resident tax filing status obviously is spending a lot of time abroad, and the more time a PR spends abroad, and indeed the more ties a PR has abroad, the greater the risk that IRCC will have concerns and engage in more probing scrutiny of the PR when there is a Residency Determination to be made. Should be nothing complicated or confusing or obscure about this.
Thus, a PR who is spending enough time abroad to be a non-resident of Canada for tax-filing purposes, would be prudent to carefully keep good records to document actual time in Canada. And this is true whether or not the PR actually files a resident or non-resident tax return . . . declared tax-filing status does not directly affect PR RO compliance determination . . . the PR RO compliance determination will be based on actual presence in Canada, subject to the PR being able to sufficiently document claimed presence with credible evidence of actual presence.
