Under Canada’s tax system, your income tax obligations to Canada are based on your residency status. You need to know your residency status before you can know what your tax responsibilities and filing requirements to Canada are.
An individual’s residency status is determined on a case by case basis and the individual’s whole situation and all the relevant facts must be considered.
The relevant facts in determining your residency status include: the residential ties you have in Canada, the purpose and permanence of your stays abroad, and your ties abroad.
The following steps can help you determine your residency status for income tax purposes and your tax obligations to Canada.
Step 1: Determine if you have residential ties with Canada
The most important thing to consider when determining your residency status in Canada for income tax purposes is whether or not you maintain, or you establish, residential ties with Canada.
Significant residential ties to Canada include:
Secondary residential ties that may be relevant include:
- personal property in Canada, such as a car or furniture;
- social ties in Canada, such as memberships in Canadian recreational or religious organizations;
- economic ties in Canada, such as Canadian bank accounts or credit cards;
- a Canadian driver’s licence;
- a Canadian passport; and
- health insurance with a Canadian province or territory.
The residential ties you establish or maintain in other countries may also be relevant.
The information above is general in nature. For more information on your residential ties, see Income Tax Folio S5-F1-C1, Determining an Individual’s Residence Status.
Step 2: Determine your residency status and its tax implications
Your residency status if you left Canada
- If you are working temporarily outside Canada, vacationing outside Canada, commuting (going back and forth daily or weekly) from Canada to your place of work in the United States, or teaching or attending school in another country, and you maintain residential ties with Canada, you may be considered a factual resident of Canada.
- If you left Canada and established a permanent home in another country and you severed your residential ties with Canada and ceased to be a resident of Canada in the tax year, you may be considered an emigrant.
- 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.
- If you left Canada and you are a government employee outside Canada, which includes members of the Canadian Forces posted abroad, you are usually considered a factual resident or a deemed resident of Canada. For more information, see Government employees outside Canada.
Your residency status if you entered Canada
- If you left another country to settle in Canada and you established significant residential ties with Canada and became a resident of Canada in the tax year, you may be considered an immigrant.
- If you have ties in a country that Canada has a tax treaty with and you are considered to be a resident of that country, but you are also a factual resident of Canada because you established 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.
- If you have not established significant residential ties with Canada to be considered a factual resident, but you stayed in Canada for 183 or more days in the year, you may be considered a deemed resident of Canada.
Your residency status if you normally, customarily, or routinely live in another country
- If you did not have significant residential ties with Canada and you lived outside Canada throughout the year (except if you were a deemed resident of Canada), you may be considered a non-resident of Canada.
- If you did not have significant residential ties with Canada and you stayed in Canada for less than 183 days in the tax year, you may be considered a non-resident of Canada.
If you want the Canada Revenue agency’s opinion on your residency status, complete either Form NR74, Determination of Residency Status (Entering Canada) or Form NR73, Determination of Residency Status (Leaving Canada), whichever applies, and send it to the International and Ottawa Tax Services Office. To get the most accurate opinion, give us as many details as possible on your form.
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