Tax regulations for a non-resident

[shahiniamin]

Hi guys,
I have a few questions regarding CRA taxation rules and how they apply to my situation.
I am currently a PR and have applied for citizenship (I completed my citizenship test and awaiting the ceremony). I, along with my wife and baby, am leaving Canada next month and I am planning to work online with some Canadian companies while away. I AM NOT SURE IF I AM GONNA RETURN TO CANADA due to some family issues. My questions are:
1. When will I be considered non-resident? The moment I leave the country? or after 183 days of staying outside Canada? I ask this question since I am not sure myself what my situation will be like and how many days I am going to be away.
2. Can I inform CRA once I make up my mind about becoming a non-resident after 183 days of being away? Or should I inform them before leaving the country and tell them that it is possible that I become a non-resident.
3. If I file taxes of my Canadian income each year, am I eligible to continue to receive Child Care Benefit as a non-resident?
4. Is it a MUST to inform my Canadian employers that I am travelling and that I might become a non-resident? Isn’t CRA enough to be informed?
I know my case is complicated but I appreciate anyone who can provide me with some reliable information.
Thank you

 

[ExResident21]

Hi - there is unfortunately no simple answer to your question. CRA has lengthy explanations on the subject. You can be deemed resident as well as deemed non-resident independent of where you live.

To get rid of your residence, you must file a departure tax form t1243 and a t1161. Know that Canada is all about taxes and penalties. The ones for forgetting to file either your t1243 or t1161, aside of staying resident when maybe you don't want to, are $25 per day each form.

 

[canuck78]

Hi guys,
I have a few questions regarding CRA taxation rules and how they apply to my situation.
I am currently a PR and have applied for citizenship (I completed my citizenship test and awaiting the ceremony). I, along with my wife and baby, am leaving Canada next month and I am planning to work online with some Canadian companies while away. I AM NOT SURE IF I AM GONNA RETURN TO CANADA due to some family issues. My questions are:
1. When will I be considered non-resident? The moment I leave the country? or after 183 days of staying outside Canada? I ask this question since I am not sure myself what my situation will be like and how many days I am going to be away.
2. Can I inform CRA once I make up my mind about becoming a non-resident after 183 days of being away? Or should I inform them before leaving the country and tell them that it is possible that I become a non-resident.
3. If I file taxes of my Canadian income each year, am I eligible to continue to receive Child Care Benefit as a non-resident?
4. Is it a MUST to inform my Canadian employers that I am travelling and that I might become a non-resident? Isn’t CRA enough to be informed?
I know my case is complicated but I appreciate anyone who can provide me with some reliable information.
Thank you

You need to inform yoyr employer of your plans to leave Canada because how thry pay you will be impacted. w
Whether you will still qualify for CCB will be dependent pn CRA. You gave to advise them that yoy and your child are no longer living in Canada even if you still file Canadian taxes. Purpose of CCB is tp help with high costs of raising a child in Canada

 

[Naheulbeuck]

...

1. When will I be considered non-resident? The moment I leave the country? or after 183 days of staying outside Canada? I ask this question since I am not sure myself what my situation will be like and how many days I am going to be away.
This depends on many factors not just physical presence so it is hard to answer, it really depends on other circumstances. For the physical residence check though, it is not having spent 183 days outside Canada, it is in one calendar year, therefore spending 95 days in 2022 and 100 days in 2023 would not meet the 183 day test.
Most likely, CRA will consider that you work outside of Canada temporarily if you stay with your company (as that would likely be the company's point of view unless they have offices there or are that open (but since you kinda consider hiding it from your employer, I think it is safe to say they wouldn't see it as permanent move....). This would be a significant tie, you would remain a resident for tax purposes.

2. Can I inform CRA once I make up my mind about becoming a non-resident after 183 days of being away? Or should I inform them before leaving the country and tell them that it is possible that I become a non-resident.
It is not going to be your decision/making your mind. They will determine your status regardless of what you "decide". You should however take measures to maintain your health coverage if you think you may (not wait until you are sure) be away for too long as you could lose it and not know about it which could have devastating consequences for a family.

3. If I file taxes of my Canadian income each year, am I eligible to continue to receive Child Care Benefit as a non-resident?
Again, not your choice. Contact CRA to know what they think of your status and your elligibility. Better to know and plan, than be blissfully ignorant and have to repay.

4. Is it a MUST to inform my Canadian employers that I am travelling and that I might become a non-resident? Isn’t CRA enough to be informed?
This is crucial, you MUST inform your Canadian employer. There are serious consequences for lying to your employer about working remotely from Canada while being outside of Canada. They have legal obligations depending on your location.

 

[shahiniamin]

1. When will I be considered non-resident? The moment I leave the country? or after 183 days of staying outside Canada? I ask this question since I am not sure myself what my situation will be like and how many days I am going to be away.
This depends on many factors not just physical presence so it is hard to answer, it really depends on other circumstances. For the physical residence check though, it is not having spent 183 days outside Canada, it is in one calendar year, therefore spending 95 days in 2022 and 100 days in 2023 would not meet the 183 day test.
Most likely, CRA will consider that you work outside of Canada temporarily if you stay with your company (as that would likely be the company's point of view unless they have offices there or are that open (but since you kinda consider hiding it from your employer, I think it is safe to say they wouldn't see it as permanent move....). This would be a significant tie, you would remain a resident for tax purposes.

2. Can I inform CRA once I make up my mind about becoming a non-resident after 183 days of being away? Or should I inform them before leaving the country and tell them that it is possible that I become a non-resident.
It is not going to be your decision/making your mind. They will determine your status regardless of what you "decide". You should however take measures to maintain your health coverage if you think you may (not wait until you are sure) be away for too long as you could lose it and not know about it which could have devastating consequences for a family.

3. If I file taxes of my Canadian income each year, am I eligible to continue to receive Child Care Benefit as a non-resident?
Again, not your choice. Contact CRA to know what they think of your status and your elligibility. Better to know and plan, than be blissfully ignorant and have to repay.

4. Is it a MUST to inform my Canadian employers that I am travelling and that I might become a non-resident? Isn’t CRA enough to be informed?
This is crucial, you MUST inform your Canadian employer. There are serious consequences for lying to your employer about working remotely from Canada while being outside of Canada. They have legal obligations depending on your location.

Hi and thanks for your replies. So you mean even if I am away for a few months I need to tell my employer? I used to travel for months and didn’t inform my employers I was away because I thought it is OK as long as I am doing my duties. Can I know what those serious consequences are? And why serious consequences if you are doing the same quality job from some other location?

 

[Naheulbeuck]

Hi and thanks for your replies. So you mean even if I am away for a few months I need to tell my employer? I used to travel for months and didn’t inform my employers I was away because I thought it is OK as long as I am doing my duties. Can I know what those serious consequences are? And why serious consequences if you are doing the same quality job from some other location?

This is all due to employment, tax and immigration laws. It is not just a concern of the quality of your work. That is the main reason why many employers post covid are fine with employees working remotely but still refuse them working from outside the country, some even limit working from a different province due to the complexities of employment and tax laws even between different Canadian provinces.

Employment standards and taxes not only impact you as an employee (for example the potential taxes you have to pay in another country if you reside there or the rights you have as an employee) it impacts your employer, there are additional deductions and taxes they may have to pay due to having an employee working from a country for a certain period. That's why you should be forthright with your employer any time you work from abroad, so that they can also assess their liabilities in those circumstances.

There are also immigration issues where you may require permits or visas to work remotely in another country.

Working from another country without informing your employer is often determined to be a breach of the employment contract and may justify (with cause) the termination of said employment. Further you could be held liable for any penalty the company would face for not abiding by employment, tax or immigration laws if it comes to that.

Most people will be fine to a certain extent and it is mostly about ethics for most, but especially if you think you would become a non resident for tax purposes, it is likely that sooner rather than later your company will find out. If you are trying to hide it from them, I doubt it is because they'd be fine with it so that would be a quick termination with cause.

 

[canuck78]

Would add there can be security issues when it comes to working in other countries. Some company servers will also not allow you to log in if you are out of country. The primary issues are usually around taxation, immigration, etc. In general not informing your employer that you are leaving Canada is considered a bad faith move. In many cases it won’t be an issue but employers expect that you will ask first and then make plans to leave. If your employer finds out that that you have been out of Canada for months that will create trust longterm issues when it comes to your employer or your boss.

 

[akheya]

Hi guys,
I have a few questions regarding CRA taxation rules and how they apply to my situation.
I am currently a PR and have applied for citizenship (I completed my citizenship test and awaiting the ceremony). I, along with my wife and baby, am leaving Canada next month and I am planning to work online with some Canadian companies while away. I AM NOT SURE IF I AM GONNA RETURN TO CANADA due to some family issues. My questions are:
1. When will I be considered non-resident? The moment I leave the country? or after 183 days of staying outside Canada? I ask this question since I am not sure myself what my situation will be like and how many days I am going to be away.
2. Can I inform CRA once I make up my mind about becoming a non-resident after 183 days of being away? Or should I inform them before leaving the country and tell them that it is possible that I become a non-resident.
3. If I file taxes of my Canadian income each year, am I eligible to continue to receive Child Care Benefit as a non-resident?
4. Is it a MUST to inform my Canadian employers that I am travelling and that I might become a non-resident? Isn’t CRA enough to be informed?
I know my case is complicated but I appreciate anyone who can provide me with some reliable information.
Thank you

Hi
i can help answer only some of the questions here

1. for purpose of taxation, you have to let them know you are a non resident whenever you are ready to do so, or you are going to be taxed on worldly income. Example: if you move to USA and are still a resident of Canada, you will have to file taxes at both places and subject to pay the difference which ever country has higher income tax ( Canada in this case). - To become a non resident, you have to prove that you have no assets in canada and there is no source of income. So in your situation this might not be true since you will have income coming in from Canada.
2. You can make up your mind at a later date and file for non residency, your health benefits will be no longer valid after 3 or 6 months of you being out of the country.

 

[YVR123]

Hi guys,
I have a few questions regarding CRA taxation rules and how they apply to my situation.
I am currently a PR and have applied for citizenship (I completed my citizenship test and awaiting the ceremony). I, along with my wife and baby, am leaving Canada next month and I am planning to work online with some Canadian companies while away. I AM NOT SURE IF I AM GONNA RETURN TO CANADA due to some family issues. My questions are:
1. When will I be considered non-resident? The moment I leave the country? or after 183 days of staying outside Canada? I ask this question since I am not sure myself what my situation will be like and how many days I am going to be away.
2. Can I inform CRA once I make up my mind about becoming a non-resident after 183 days of being away? Or should I inform them before leaving the country and tell them that it is possible that I become a non-resident.
3. If I file taxes of my Canadian income each year, am I eligible to continue to receive Child Care Benefit as a non-resident?
4. Is it a MUST to inform my Canadian employers that I am travelling and that I might become a non-resident? Isn’t CRA enough to be informed?
I know my case is complicated but I appreciate anyone who can provide me with some reliable information.
Thank you

On top of tax issues and immigration law, security is a big issue.
Also if you are using any equiment provided by your company (laptop, USB, any other devices) bringing them to another country can be a big security breach. Be honest to your employer before any move.

 

[dpenabill]

I have a few questions regarding CRA taxation rules and how they apply to my situation.

As @Naheulbeuck noted, your query relates to more than just taxation questions and issues, since there are employment relationship implications, and to some extent perhaps immigration rules or laws (albeit in the context here that is more about laws in other countries, not Canada immigration law).

My comments are ONLY about aspects directly related to Canadian tax obligations. And mostly a warning that you are not going to find adequate answers here. It is worth emphasizing distinctions between (1) tax filing obligations, (2) what is required attendant filing obligations (such as what must be reported including which forms must be filed), and (3) tax payment obligations. Not that I will or even could offer guidance in regards to what YOUR obligations are in respect to these, but to CAUTION that you are not likely to get sufficiently reliable information here about YOUR obligations.

Some of the responses here have offered relevant and useful information, as far as it goes. The response by @Naheulbeuck for example, and at least one, @ExResident21, pointed (and linked) you toward the primary source of information to consider first and foremost: CRA's website.

Some of the observations, however, are misleading (including some which bear the scent of being agenda driven).

Mostly, however, the problem with how tax matters are addressed in this forum is about what is left out, what is missing.

It is important to recognize that tax matters can be complicated, and indeed often if not usually are quite complicated, subject to a wide range of complex elements that can and typically do vary considerably from one person to the next, one situation to another . . . AND THIS FORUM tends to be less than helpful and too often wrong in regards to particular tax matters, but again the biggest problem is what is missing.

Summary conclusions are prone to error. The main thing is to determine what tax forms must be filed, when, and to properly complete those forms, providing the required information, and follow the instructions.

So, in this forum, foremost, any tax questions should generate a response that steers one toward relevant CRA information online. If that information is sufficient to guide you, good. If not, if you still have questions, better to at least find a credible source of what is specifically taxation information, and better still to consult with a certified accountant.

For your situation, for example, you should BEGIN (with emphasis on it is just where to BEGIN) with the following CRA web pages:

Individuals – Leaving or entering Canada and non-residents:
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents.html

Leaving Canada (emigrants):
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

Non-residents of Canada:
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/non-residents-canada.html

Determining your residency status (also linked above by @ExResident21):
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/determining-your-residency-status.html

NR73 Determination of Residency Status (leaving Canada):
https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/nr73.html
Note: this is webpage with link to the PDF form NR73 for a determination of residency status upon leaving Canada; just a glance at the form illuminates the range of individual factors at play.

Income Tax Folio S5-F1-C1, Determining an Individual’s Residence Status:
https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-5-international-residency/folio-1-residency/income-tax-folio-s5-f1-c1-determining-individual-s-residence-status.html
Note: This probably contains more than you want or need to know (but also may not be enough to sort out your questions). It is one of the more comprehensive explanations provided by CRA covering many aspects of how tax residency is affected in various circumstances, including leaving Canada and circumstances in which a person may be a "deemed" resident of Canada (for tax purposes).

Also consider perusing further CRA information about taxation obligations for non-residents. Such as --

Non-Residents and Income Tax:
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4058/non-residents-income-tax.html


Again, I am NOT trying to answer your questions. I am mostly trying to illuminate how important it is to find a better source of information and guidance than this forum. Consider, for example, the brief reference to a "departure tax" and related forms by @ExResident21, which is important if you are totally severing residential ties in Canada and you own certain kinds of property in Canada . . . that subject alone is complicated. And the terms used can be confusing (for example, not everyone refers to the tax payment obligations in connection with severing residential ties in Canada and arising from the sale or deemed sale of certain types of property in Canada, a "departure tax").

 

[SecularFirst]

I am curious after reading this discussion and have few questions.
1- If a Canadian citizen is living and working outside Canada, has investment properties in Canada and have zero net income in Canada (mortgage+expenses =rent), do they have to pay any income tax?
2- If they are required to pay income tax, will be paying just the federal income tax or also required to pay provincial income tax?
3- if they are required to pay federal and provincial tax in the above case, will they be eligible to keep their healthcare benefit even though they are not living in Canada but paying the federal and provincial tax? I mean if they are paying the full tax, will they be keeping the full benefits given to tax residents as well?

 

[canuck78]

I am curious after reading this discussion and have few questions.
1- If a Canadian citizen is living and working outside Canada, has investment properties in Canada and have zero net income in Canada (mortgage+expenses =rent), do they have to pay any income tax?
2- If they are required to pay income tax, will be paying just the federal income tax or also required to pay provincial income tax?
3- if they are required to pay federal and provincial tax in the above case, will they be eligible to keep their healthcare benefit even though they are not living in Canada but paying the federal and provincial tax? I mean if they are paying the full tax, will they be keeping the full benefits given to tax residents as well?

You need to contact CRA so they can determine if you are a tax resident or not. Whether you qualify for healthcare is dependent on whether you meet the residency requirements for the provincial health program. Most require you to be in Canada for at least 5 months out of the year (longer during the first year).

 

[SecularFirst]

You need to contact CRA so they can determine if you are a tax resident or not. Whether you qualify for healthcare is dependent on whether you meet the residency requirements for the provincial health program. Most require you to be in Canada for at least 5 months out of the year (longer during the first year).

So they want someone in that situation to pay full tax but do not want the give them the benefit (healthcare). Thats pretty good.
Also, how would that work for returning Canadian citizen. Lets say a Canadian citizen returns to Ontario from abroad after 5-6 years, will they get health care on first day? Will they get after 90 days waiting period? Or they need to be in Ontario for 5 months first before they get it?

 

[canuck78]

So they want someone in that situation to pay full tax but do not want the give them the benefit (healthcare). Thats pretty good.
Also, how would that work for returning Canadian citizen. Lets say a Canadian citizen returns to Ontario from abroad after 5-6 years, will they get health care on first day? Will they get after 90 days waiting period? Or they need to be in Ontario for 5 months first before they get it?

In many cases the person will likely be paying taxes in another country so would only pay the difference between the 2 taxes if there is a tax treaty. They could even have dependent family members in Canada so paying taxes while not personally having access to healthcare right away isn’t a crazy concept. In general you will be benefiting in some way to be considered a tax resident. If you plan on returning to Canada and meeting the residency obligations to qualify for healthcare in that province you will qualify for healthcare right away or in up to 3 months depending on the province. In the situation described you may be a non-resident for tax purposes.

If you return to Ontario you currently have no wait time to receive OHIP but otherwise you have to wait 3 months and plan on meeting the residency obligations to receive OHIP. This prevents people from only returning to access healthcare and if you haven’t been in Canada for 5-6 years you haven’t been paying taxes and will only start paying non-sales taxes taxes for quite some time.

 

[SecularFirst]

In many cases the person will likely be paying taxes in another country so would only pay the difference between the 2 taxes if there is a tax treaty. They could even have dependent family members in Canada so paying taxes while not personally having access to healthcare right away isn’t a crazy concept. In general you will be benefiting in some way to be considered a tax resident. If you plan on returning to Canada and meeting the residency obligations to qualify for healthcare in that province you will qualify for healthcare right away or in up to 3 months depending on the province. In the situation described you may be a non-resident for tax purposes.

If you return to Ontario you currently have no wait time to receive OHIP but otherwise you have to wait 3 months and plan on meeting the residency obligations to receive OHIP. This prevents people from only returning to access healthcare and if you haven’t been in Canada for 5-6 years you haven’t been paying taxes and will only start paying non-sales taxes taxes for quite some time.

I am presently living and working in Canada for little over 900 days without a single absence. Waiting to finish 1100 days without a single absence, sending in citizenship application and will likely leave for a better job and weather in the US. I know some might not like it but over a million Canadian citizens live and work in the US. If they are able and chose to do it, I dont see why that would be an issue for PR becoming citizen by completing all formalities.
Someone can argue that citizenship application might take long to put a person out of RO. To which I would say if you spend 1100 continues days inside before submitting application, there is no way you fail RO for the next 3 years.