- Residents vs non-residents
- Residents taxed on world’s income
- Non-residents taxed on Canadian sourced income, such as employment income from Canada, business income from Canada and taxable capital gain from taxable Canadian property etc.
Residency
- Question of facts
- No family ties in Canada
- No residence where you and your family can readily reside
- No Vehicle in Canada
- No Canadian credit card
- Cancel resident bank account
- No telephone, cable and post office mailing address
- Termination of medi-care
- Informing of your change of address to outside of Canada to all sources
- Not to renew driver’s licence
- Investment/bank account – close or change to non-resident account
- Filing of form NR 73
Tax Implications on Becoming a Non-Resident
- Deemed disposition of Canadian property
Exceptions to Deemed Dispositions
- Real property situated in Canada
- Capital property or inventory used in carrying on a business in Canada
- Excluded property such as RRSP, RESP etc.
- You have not been resident in Canada for more than 60 months, property you owned before you became a resident of Canada or inherited while resident
RRSP
- You may collapse an RRSP in the year of departure and pay tax on you marginal rate
- You may collapse an RRSP while being a non-resident, subject to a 25% non-resident withholding tax
Interest Income
- Canadian interest income/dividend income subject to a 25% withholding (treaty country may reduce to 15%)
- Interest on Canadian government bonds or treasury not subject to withholding tax
- Interest on currency other than Canadian currency not subject to withholding tax
Principal Residence
- Sale of principal residence
- Exemption on sale of principal residence
- Renting our of principal residence
Renting Out
- NR6
- NR4
- Filing of income tax return
Selling or Taxable Canadian Property While a Non-Resident
- File a form T2062 to get a Clearance Certificate
- Otherwise taxed on 33 1/3% of the gross proceed, example :-
Sale of a property for a sale price of $400,000.00, cost of property $500,000.00, if no Clearance Certificate, tax of 33 1/3% on $400,000.00
