Do I need to file taxes in Canada?

[aa0303]

Hi Everyone,
I landed in QC last month as a PR and stayed there for 2 weeks and applied for SIN and a bank account and returned to US.

I plan to move permanently to Canada by Jan/Feb 2016.

Because I opened a bank account in Canada will I be considered a resident and need to pay Canadian taxes for 2015? If so, I can go ahead and cancel the account as I dont need it and dont want to pay taxes for the year that I will stay in Canada for just 2 weeks.

Thanks for your help.

 

[vasask]

Canada considers how you pay taxes based on WHERE you are when you earn the money.

US considers how you pay taxes based on CITIZENSHIP. If you are a US citizen, you have to file taxes in the US, even if you just do so to indicate that you did not earn the money in the US, and therefore won't be responsible for paying taxes on that money.

As far as I know, (landing soon) as long as I'm a US citizen, I have to file taxes in the US. As long as I am a PR in Canada earning money in Canada (even from clients in the US as I freelance) I will file Canadian taxes as well, and pay my percentage to Canada.

Not sure if this helps. This is how I understand the system.

 

[Rob_TO]

Canada considers how you pay taxes based on WHERE you are when you earn the money.

That is not really correct. Canada considers how you pay taxes based on what ties you have to Canada, not where you physically live. You could live outside Canada for many years, but if you maintain ties to Canada (such as financial accounts, spouse, property, vehicle, etc) then you could still be a deemed or factual resident (even though you don't actually live here), and could be forced to pay taxes.

See here: http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html or http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s5/f1/s5-f1-c1-eng.html . You'll see "Canadian bank account" is one such item that is specifically listed as a "secondary residential tie" to Canada. However on secondary ties they state:
1.14 Generally, secondary residential ties must be looked at collectively in order to evaluate the significance of any one such tie. For this reason, it would be unusual for a single secondary residential tie with Canada to be sufficient on its own to lead to a determination that an individual is factually resident in Canada while abroad.

So just having the single bank account will most likely not require you to pay taxes here, but if you had say multiple secondary ties then CRA could make the case that you are actually a factual resident. Lots of this is not black and white, and can be based on the opinion of any given CRA employee that may happen to look at your file.

Residency for tax purposes can get very confusing so sometimes it's good to ask a professional accountant experienced in these matters. But in your case with just a single bank account that will probably not even be used much, I wouldn't worry about it.

 

[neutral]

Hi Everyone,
I landed in QC last month as a PR and stayed there for 2 weeks and applied for SIN and a bank account and returned to US.

I plan to move permanently to Canada by Jan/Feb 2016.

Because I opened a bank account in Canada will I be considered a resident and need to pay Canadian taxes for 2015? If so, I can go ahead and cancel the account as I dont need it and dont want to pay taxes for the year that I will stay in Canada for just 2 weeks.

Thanks for your help.

Hi, I studied this stuff in my taxes course.

In Canada, having a bank account has nothing to do here.

According to the information you provided, you DON'T have to declare your income because you have not been a resident in Canada. Mostly, you are considered a resident if residing more than 183 days or if you come to stay. Let's say you instead of coming back on Jan/Feb you come back to live permanenty on October so you'be be considered also resident for the whole year .

 

[cooldoc80]

That is not really correct. Canada considers how you pay taxes based on what ties you have to Canada, not where you physically live. You could live outside Canada for many years, but if you maintain ties to Canada (such as financial accounts, spouse, property, vehicle, etc) then you could still be a deemed or factual resident (even though you don't actually live here), and could be forced to pay taxes.

See here: http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html or http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s5/f1/s5-f1-c1-eng.html . You'll see "Canadian bank account" is one such item that is specifically listed as a "secondary residential tie" to Canada. However on secondary ties they state:
1.14 Generally, secondary residential ties must be looked at collectively in order to evaluate the significance of any one such tie. For this reason, it would be unusual for a single secondary residential tie with Canada to be sufficient on its own to lead to a determination that an individual is factually resident in Canada while abroad.



Dear Rob

Thanks a lot for this reply

I really asked on several occasions on this specific points about if opening a Canadian bank as a secondary tie my make me liable for taxation

Please find below my question and I would be grateful if you could help me with this scenario below



I plan to land next month for a short visit , my plan to let my wife settle in canada 6 months a year while i will visit her from time to time ( keeping in mind the 2/5 years Obligation)

my question is regarding the first 3 years after landing which i will only be in canada for approximately 3 months a year and my wife 6 months a year.


I will be working in my country of origin as there is a contract that i cant break for the 3 years , i already know that if my wife is present in canada for more than 6 months that would make me liable for taxation as a primary tie


BUT MY QUESTION IS THE FOLLOWING :
Does opening a bank account in my name with my savings would increase the possiblity of me getting taxted (as a 2ndry tie along with a primary tie ) or this would not have any influence ?


thanks


So just having the single bank account will most likely not require you to pay taxes here, but if you had say multiple secondary ties then CRA could make the case that you are actually a factual resident. Lots of this is not black and white, and can be based on the opinion of any given CRA employee that may happen to look at your file.

Residency for tax purposes can get very confusing so sometimes it's good to ask a professional accountant experienced in these matters. But in your case with just a single bank account that will probably not even be used much, I wouldn't worry about it.

 

[Rob_TO]

"Canadian Bank Account" is specifically listed by CRA as a secondary tie, so while on it's own it's probably not a big deal but when you add on to other existing ties then yes there would be more chance CRA could investigate if you should be filing taxes as a deemed/factual resident.

In your case it sounds like you may have a big primary tie which is a spouse residing in Canada, that the secondary tie would be added to.

As I said none of this is black and white, and there is no easy yes or no answer as much is at discretion of CRA. It's really best to talk to an accountant.

 

[cooldoc80]

Thanks alot my friend , would my wife presence in Canada for 6 months a year as a primary tie(alone) would be enough for canada to consider me as a factual resident ??? in that case would i have to pay tax on world generated income ?


Whatever the answer is for the above i think i will not open a bank account in my name , i will just open a bank account in my wife name and she would be actually studying in order to get a job in canada later and i will try to support her while visiting canada form time to time

looking forward to hearing from you

 

[mrbeachman]

The fact that you have a wife in Canada is a major tie regardless of where you live.

Opening a bank account on your or her name makes absolutely no difference whatsoever.

If your wife lives in Canada, you are responsible for filing taxes in Canada.

Hi, I studied this stuff in my taxes course.

In Canada, having a bank account has nothing to do here.

According to the information you provided, you DON'T have to declare your income because you have not been a resident in Canada. Mostly, you are considered a resident if residing more than 183 days or if you come to stay. Let's say you instead of coming back on Jan/Feb you come back to live permanenty on October so you'be be considered also resident for the whole year .

Sorry, but I would ask for a refund on that course.

 

[Rob_TO]

Thanks alot my friend , would my wife presence in Canada for 6 months a year as a primary tie(alone) would be enough for canada to consider me as a factual resident ??? in that case would i have to pay tax on world generated income ?

The CRA website I posted to is pretty clear on the topic:
1.13 If an individual who is married or cohabiting with a common-law partner leaves Canada, but his or her spouse or common-law partner remains in Canada, then that spouse or common-law partner will usually be a significant residential tie with Canada during the individual's absence from Canada.

However I don't know the right answer. You should really ask the CRA directly or an accountant experienced with residency issues. An accountant should be able to guide you in the necessary steps you would need to do to claim non-residency for tax purposes, and if you can overcome the seemingly strong tie of a spouse/dwelling in Canada.

 

[neutral]

The fact that you have a wife in Canada is a major tie regardless of where you live.

Opening a bank account on your or her name makes absolutely no difference whatsoever.

If your wife lives in Canada, you are responsible for filing taxes in Canada.

Sorry, but I would ask for a refund on that course.

I was answering the OP. The OP has never said anything about a wife.

 

[Gil j.]

Just remove all your ties. That way CRA wont deem you as factual resident.

Funny story. Called CRA to ask about that mater and the taxman was like "I didn't specifically said you should do that" when I found this loophole. But if your gonna do this, do it when your earning mad abroad.

 

[keesio]

I recall reading that the year where you landed and became a PR, CRA considers you to have residency in Canada for that year, even if you haven't lived in Canada for the 183 days. That is because when you land and become a PR, you are declaring that you intent to reside in Canada from that date. It's why CIC is so stuck on "intent to reside" for sponsorship applications.

I'm not 100% sure on this but I'd file taxes just to be safe.

 

[neutral]

I recall reading that the year where you landed and became a PR, CRA considers you to have residency in Canada for that year, even if you haven't lived in Canada for the 183 days. That is because when you land and become a PR, you are declaring that you intent to reside in Canada from that date. It's why CIC is so stuck on "intent to reside" for sponsorship applications.

I'm not 100% sure on this but I'd file taxes just to be safe.

No, it's not like that.

 

[keesio]

No, it's not like that.

NOt sure:
http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nwcmr-eng.html#nwc

You become a resident of Canada for income tax purposes when you establish significant residential ties in Canada. You usually establish these ties on the date you arrive in Canada.

Newcomers to Canada who have established residential ties with Canada may be:

protected persons within the meaning of the Immigration and Refugee Protection Act;
people who have applied for or received permanent resident status from Citizenship and Immigration Canada; or
people who have received "approval-in-principle" from Citizenship and Immigration Canada to stay in Canada.

 

[neutral]

NOt sure:
http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nwcmr-eng.html#nwc

You become a resident of Canada for income tax purposes when you establish significant residential ties in Canada. You usually establish these ties on the date you arrive in Canada.

Newcomers to Canada who have established residential ties with Canada may be:

protected persons within the meaning of the Immigration and Refugee Protection Act;
people who have applied for or received permanent resident status from Citizenship and Immigration Canada; or
people who have received "approval-in-principle" from Citizenship and Immigration Canada to stay in Canada.

Yeah, because more than often the people that come to Canada and become permanent resident is going to stay here, however if after let's say one week you left for 2 years (as I, myself, did ) obviously you are not residing, you don't have ties so you are not a resident for tax purposes.

And according to the law, if you don't have to pay taxes there is not obligation to declare your income neither.