My sister became a PR in July 2012. But, she stayed outside Canada from July 2012 - May 2014. Since June 2014, she has been staying in Canada. She is now planning to apply for citizenship. She did not file the Income taxes for 2012 and 2013. Was she required to file them?
Filing Income tax for years not stayed in Canada
- Thread starter dikshab
- Start date
The status of a permanent resident is completely independent from being what is called a "resident for tax purposes".
If your sister
- did not live in Canada in the years of 2012 and 2013
- did not earn any income from a Canadian source in those years
- did not have any Canadian investements/savings accounts (anything producing interest)
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/determining-your-residency-status.html
But again, being a PR or not is irrelevant for the question if someone is required to file taxes.
The tax filling requirement for a citizenship application is:
The relevant (partial or full) tax years for this period are: 2012, 2013, 2014, 2015, 2016 and 2017.
As you long as she filed income taxes in three of those years (if required), then she should be fine.
So I'm assuming she filed for 2014, 2015 and 2016 then?
if she applies, say, on December 15 2017, then the five year period went from December 16 2012 to December 15 2017.
The relevant (partial or full) tax years for this period are: 2012, 2013, 2014, 2015, 2016 and 2017.
As you long as she filed income taxes in three of those years (if required), then she should be fine.
So I'm assuming she filed for 2014, 2015 and 2016 then?
This is incomplete advice. She was not required to file taxes under the act. So a year in which you were not required to file does count as one of those three years, even if you didn't file. The only way a year doesn't count is if you were required to file AND didn't file.
Your sister likely would have to file taxes for years in which she was a PR and owned a home or a business in Canada. She may also be considered a tax resident for those years she was a PR and her spouse lived in Canada.
That is an interesting way to interpret the wording.
The relevant calendar years for the period the OP was talking about was: 2012, 2013, 2014, 2015, 2016, and 2017; six calendar years.
So, hypothetically, if she was not required to file on 2012, and 2013, due to residency, and maybe even 2014 (let's say she moved back to Canada late July 2014, and she has otherwise no ties to Canada).
And let's say that she did have to file in 2015, 2016, and 2017, but she did not.
Then she would still be fine?
So in this case, she would not have to file any taxes at all, just because of the fact that, in the 3 of the calendar years preceding the application, she was not required to?
I'm not sure if I would be comfortable making that argument to IRCC, and I'm not sure if that's how I would read the rule either.
The relevant calendar years for the period the OP was talking about was: 2012, 2013, 2014, 2015, 2016, and 2017; six calendar years.
So, hypothetically, if she was not required to file on 2012, and 2013, due to residency, and maybe even 2014 (let's say she moved back to Canada late July 2014, and she has otherwise no ties to Canada).
And let's say that she did have to file in 2015, 2016, and 2017, but she did not.
Then she would still be fine?
So in this case, she would not have to file any taxes at all, just because of the fact that, in the 3 of the calendar years preceding the application, she was not required to?
I'm not sure if I would be comfortable making that argument to IRCC, and I'm not sure if that's how I would read the rule either.
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Was her "primary residence" in Canada (even if she was resident for less than half a year)? If so, and she earned income (whether in Canada our outside Canada), she may be required to file taxes with CRA.
I guess my contention is with what spyfy said earlier, that "a year in which you were not required to file does count as one of those three years, even if you didn't file". Can we count the year where you don't need to file taxes as one of the three years?
My concern was with incomplete CRA tax filing requirements. "Resident for tax purposes" is not simply a matter of time spent in Canada, but can also include non obvious criteria. A PR who earns a significant enough income and who fails to be resident in any jurisdiction for tax purposes, for example, may be found by CRA to be resident for tax purposes in Canada, even if they were not present in Canada at all.
True. I agree that, depending on your situation, you may need to file income taxes, even if you are not physically present in Canada for over 6 months.
But even if you are required to file for income tax under the Income Tax Act for a particular year, it doesn't necessarily mean that you need it for citizenship application.
Five year period normally spans six calendar years.
If you are required to file taxes on ALL six years, then you need to file only for three of them for citizenship purposes.
The question now is, does a year where you do NOT need to file count as one of these three years?
But even if you are required to file for income tax under the Income Tax Act for a particular year, it doesn't necessarily mean that you need it for citizenship application.
Five year period normally spans six calendar years.
If you are required to file taxes on ALL six years, then you need to file only for three of them for citizenship purposes.
The question now is, does a year where you do NOT need to file count as one of these three years?
You have several misconceptions about the tax filing obligation. Among other things you are interpreting the 6-month rule for tax filing wrong. If someone moved to Canada in late July 2014 and actually took up residence there, they would be required to file taxes for that year. It doesn't matter that they were present for less than half a year. What you are referring to is the rule that decides where you are residing if you move between countries often all the time, i.e. if two countries would like to "call dibs" on your taxes.
Anyways, that's not the core point here.
Here is the direct quote from the Citizenship Act. Please note that no regulations, application forms or instruction guides can override primary law, so this is the first source for any rules:
5 (1) The Minister shall grant citizenship to any person who [...] (iii) met any applicable requirement under the Income Tax Act to file a return of income in respect of three taxation years that are fully or partially within the five years immediately before the date of his or her application;
If you weren't required to file under the Income Tax Act, then, yes of course you fulfilled all applicable requiremets under the Income Tax Act, since there were no requirements. So these years count.
To further clarify, think about this situation: If someone is unemployed or a housewife/househusband, i.e. has no income, they are NOT required to file taxes. You would basically ban these people from applying for citizenship or force them to file taxes although they are not obliged to do so and although they could not - under normal circumstances - file applications for past years to "rectify" the situation.
This does of course not change the fact that even if you are not required to file, it is in fact advantageous for you to file taxes (GSTHST credit and so on). But again, it is a wrongly and often perpetuated story in this forum that only if you have three tax returns can you apply for citizenship. This is not the case.
I've already said that, just because you did not reside more than six months in a year, it may still mean that you still need to file taxes for that year.
That is besides the point.
But consider this scenario: let's say you were NOT required to file taxes in 2012, 2013 and 2014.
And let's say you were required to file on 2015, 2016 and 2017, BUT you did NOT.
Since in three of these years, you satisfied the requirement under Income Tax Act, does that mean that, despite not filing taxes in three years when you were not required to, you can still apply for citizenship?
That is besides the point.
But consider this scenario: let's say you were NOT required to file taxes in 2012, 2013 and 2014.
And let's say you were required to file on 2015, 2016 and 2017, BUT you did NOT.
Since in three of these years, you satisfied the requirement under Income Tax Act, does that mean that, despite not filing taxes in three years when you were not required to, you can still apply for citizenship?
Sorry I noticed that I didn't fully reply to your example. First, please note that only five years are relevant but you are looking at 2012, 2013, 2014, 2015, 2016, 2017 which is six years. But let me adjust your example as follows:
- They were not required to file in 2012, 2013 and 2014 for whatever reason and didn't file.
- They were required to file in 2015 and 2016 but didn't file
Then, yes, they are fine to apply for citizenship according to the law. However please note:
- Your question is very hypothetical. A situation with the five years above would only arise in VERY weird circumstances (it has to be a near perfect mix of physical presence and unemployment)
- There is a difference between what is correct according to the letter of the law and what you actually get. You are of course absolutely right that the IRCC officer would raise his eyebrows, maybe never had to deal with such a weird case before and would start an inquiry simply on this being so weird. That doesn't change that, to the letter of the law, you are entitled to citizenship. But I highly doubt that case would be dealt with in six months
- While in the above situation you are still eligible for citizenship, that doesn change one important thing: You commited an offense according to the income tax act and admitted to that offense on a signed government form (since you would check the "required to file: YES" and "filed: NO" boxes on the form for 2015/2016) and to top that of you give written consent in the citizenship form for IRCC and CRA to exchange data about you. So you sure as hell would raise some red flags at the CRA and get into tax audit trouble, including penalties, interest, fines and what not for breaking your tax filing obligations.
- So yay, you could get citizenship but are in big tax trouble.