S5-F1-C1: Determining an Individual’s Residence Status

1.3 In some cases, an individual will be considered to be resident in more than one province on December 31 of a particular tax year. This situation usually arises where an individual is physically residing in a province other than the province in which the individual ordinarily resides, on December 31 of the particular tax year. For example, an individual might be away from his or her usual home for a considerable length of time on a temporary job posting or in the course of obtaining a post-secondary education. An individual who is resident in more than one province on December 31 of a particular tax year will be considered to be resident only in the province in which the individual has the most significant residential ties, for purposes of computing his or her provincial tax payable.

1.4 Taxpayers who live in Canada throughout the year requiring assistance in determining their province of residence for provincial tax purposes should contact their local Tax Services Office. Taxpayers who live outside Canada for all or part of the year who require assistance in making this determination should contact International tax and non-residentenquiries. See also Tax Alert: Working away from home? and Tax Alert: Where you live matters!

Meaning of resident

1.5 The term resident is not defined in the Act, however, its meaning has been considered by the Courts. The leading decision on the meaning of resident is Thomson v Minister of National Revenue, [1946] SCR 209, 2 DTC 812. In this decision, Rand J. of Supreme Court of Canada held residence to be “a matter of the degree to which a person in mind and fact settles into or maintains or centralizes his ordinary mode of living with its accessories in social relations, interests and conveniences at or in the place in question.”

Meaning of ordinarily resident

1.6 In determining the residence status of an individual for purposes of the Act, it is also necessary to considersubsection 250(3), which provides that, in the Act, a reference to a person resident in Canada includes a person who is ordinarily resident in Canada. In Thomson, Estey J. held that, “one is “ordinarily resident” in the place where in the settled routine of his life he regularly, normally or customarily lives”.

1.7 In the same decision, R and J. stated that the expression ordinarily resident means, “residence in the course of the customary mode of life of the person concerned, and it is contrasted with special or occasional or casual residence. The general mode of life is, therefore, relevant to a question of its application.” Justice Rand also went on to say that, “ordinary residence can best be appreciated by considering its antithesis, occasional or casual or deviatory residence. The latter would seem clearly to be not only temporary in time and exceptional in circumstances, but also accompanied by a sense of transitoriness and of return.” The meaning given to the expressions resident and ordinarily resident as stated by the Supreme Court of Canada in Thomson, have generally been accepted by the Courts.

1.8 To determine residence status, all of the relevant facts in each case must be considered, including residential ties with Canada and length of time, object, intention and continuity with respect to stays in Canada and abroad.

1.9 An individual who is ordinarily resident in Canada as described in ¶1.6 – 1.7 is considered to be factually resident in Canada. Where an individual is determined not to be factually resident in Canada, the individual may still be deemedto be resident in Canada for tax purposes by virtue of subsection 250(1) (see ¶1.30 – 1.36). In certain situations, an individual who would otherwise be factually or deemed resident in Canada may be deemed not to be resident in Canada, pursuant to subsection 250(5) (see ¶1.37 – 1.39).

Factual residence – leaving Canada

Residential ties in Canada

1.10 The most important factor to be considered in determining whether an individual leaving Canada remains resident in Canada for tax purposes is whether the individual maintains residential ties with Canada while abroad. While the residence status of an individual can only be determined on a case by case basis after taking into consideration all of the relevant facts, generally, unless an individual severs all significant residential ties with Canada upon leaving Canada, the individual will continue to be a factual resident of Canada and subject to Canadian tax on his or her worldwide income.

Significant residential ties

1.11 The residential ties of an individual that will almost always be significant residential ties for the purpose of determining residence status are the individual’s:

• dwelling place (or places);
• spouse or common-law partner; and
• dependants.

1.12 Where an individual who leaves Canada keeps a dwelling place in Canada (whether owned or leased), available for his or her occupation, that dwelling place will be considered to be a significant residential tie with Canada during the individual’s stay abroad. However, if an individual leases a dwelling place located in Canada to a third party onarm’s-length terms and conditions, the CRA will take into account all of the circumstances of the situation (including the relationship between the individual and the third party, the real estate market at the time of the individual’s departure from Canada, and the purpose of the stay abroad), and may consider the dwelling place not to be a significant residential tie with Canada except when taken together with other residential ties (see ¶1.26 for an example of this situation and see ¶1.15 for a discussion of the significance of secondary residential ties).