Determining Residency Status for Income Tax

[FlamesPuck12]

I can't seem to find any concrete information on this topic for determining my residency status for CRA.

I've read through http://www.cra-arc.gc.ca/tx/nnrsdnts...sdncy-eng.html and couple other pages on the CRA website but it's all very subjective and handwaivy with the terminologies. A lot of "you may be..." and no concrete rules to determine my status.

I'm a Canadian citizen currently working in the States under a TN visa. I don't have significant residential ties (from the above page) but I do have secondary residential ties (bank accounts/credit cards, driver's license, and a passport). For my 2014 US taxes, I was considered a US resident. Also, I don't have any income from Canada in 2014.

In the article, only thing that I can find that is relevant to my situation is:

If you established ties in a country that Canada has a tax treaty with and you are considered a resident of that country, but you are otherwise a factual resident of Canada, meaning you maintain significant residential ties with Canada, you may be considered a deemed non-resident of Canada. The same rules apply to deemed non-residents as non-residents of Canada.

I'm not sure what they mean by "you may be considered...". Am I or am I not a deemed non-resident of Canada. Is there a concrete rule that I can follow somewhere?

Assuming that I'm a deemed non-resident, it seems like I don't have to file my Canadian taxes this year. Is there some step I have to take to declare myself as a deemed non-resident to the CRA? Can I just not file my return this year without any consequences from the CRA?

[squiggs96]

I highly recommend hiring a tax accountant. There are some on here who do just this sort of thing. Much of the advice you read online is worth exactly what you paid for it.

[CorsiHockeyLeague]

The reason it says "you may be" is that it's referring to a treaty country, in your case the USA. The residency tie-breaker rules, which apply where both the Canadian and US tax authorities consider you to be a resident of their country, are in the tax treaty itself. You can find it here:

http://www.fin.gc.ca/treaties-conventions/usa_-eng.asp

For the US treaty, tie breaker rules are in Article IV (2).

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both States or in neither State, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests);

(b) if the Contracting State in which he has his centre of vital interests cannot be determined, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;

(c) if he has an habitual abode in both States or in neither State, he shall be deemed to be a resident of the Contracting State of which he is a citizen; and

(d) if he is a citizen of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

In other words, if you have a house or apartment in the USA, and not in Canada, you're deemed to be a resident of the USA.

[cSpooge]

if you want a formal decision from CRA you need to fill out a residency determination form.

http://www.cra-arc.gc.ca/E/pbg/tf/nr73/README.html

it will take 30-45 days to get a response but it is the only way you will get a concrete answer. The agents on the phones will tell you to fill out the form if you want a concrete answer rather than a general one.

If you are actually a non-resident of Canada you will only have to file a tax return if you have no Canadian sourced income in a given year.

Be careful with using the word deemed as well. A deemed non-resident is not the same as a non-resident.

You also cannot be a resident of 2 countries at the same time. So if the US considers you a resident for tax purposes you most likely will be determined to be a non-resident in Canada. But like I said, if you want a concrete answer fill out the NR73 I linked to above and send it in to the CRA.

[CorsiHockeyLeague]

Also worth noting that CRA isn't bound by a residency determination although it's very unlikely they'll change their minds unless something on the form was wrong.

[mrkajz44]

Have to agree with squiggs here. CP can give you some general guidance, but you'll need a professional to ensure you are doing the right thing. That is the main reason for the "you may be" wording throughout the guidance. Residency is so fact specific, nothing is absolute.

[Phanuthier]

When I did this on TN-1, there was some determination between number of days I was in the USA and days I was in Canada... I forget what I actually did though, I soon moved over to a H1B and cut all my connections to Canada just in case.

TN-1 by definition is "temporary" so you can't say you are actually a resident, I believe...