First Tax Return - Residency Status

[Berty3000]

Hi,

I have been living and working in Canada since 2nd August 2020. I was previously based entirely in the UK, apart from a 2-month soft landing in Canada in 2017 when I didn't work or establish any ties (I did get a SIN number though).

- By the end of this tax year I will have been in Canada for 153 days. I will have completed just over 4 months of paid employment.
- I do not own a car or any property here.
- I have no spouse or children here.
- I have been working, have a bank account, and have been renting a place short-term (no tenancy agreement).
- Home and pensions, etc. all in UK.
- I have already paid income tax in the UK.
- In terms of intent, I do not know whether to stay in Canada or not in the new year. This partly makes it difficult for me to seek an opinion from CRA.

I obviously have to file a tax return for 2020 (my first in Canada). Do I declare myself a resident or a non-resident for this process?

It seems to me that I lack sufficient ties to Canada this year to be deemed a resident for tax purposes, and I assume it is more straight forward for me to just say I am non resident and only declare my Canadian income on the tax return.

Thoughts? Does this seem reasonable? Am I missing out on anything if I file as a non resident?

 

[steaky]

If you have a provincial healthcare coverage (such as BCMSP), you are probably a resident for tax purposes.

 

[Berty3000]

If you have a provincial healthcare coverage (such as BCMSP), you are probably a resident for tax purposes.

Thanks for the response.

Is that even if I've only had the coverage since November 2020? - so less than two months of the tax year?

 

[steaky]

Thanks for the response.

Is that even if I've only had the coverage since November 2020? - so less than two months of the tax year?

Yes

 

[Berty3000]

Yes

Is this based on your experience? I've read a lot of the guidance provided by the Canadian government about this and have looked over the residency determination forms. The question of health care coverage and a drivers licence are just one of many factors that would be taken into consideration. Of greater significance would seem to be:

- Time spent in the country. In my case, less than 183 days this year.
- Ownership of property or significant items. In my case, no.
- Significant familial relationships. In my case, none at all in Canada.

On a related note, what would be the real significance of being a resident for tax purposes or not? I know that if I am considered a resident here (and presumably also a resident of the UK where there is stronger evidence for that) I have to declare world income on my Canadian tax return. However, I have already paid tax on my UK income this year. So what is the point? Is it just for the Canadian government to see if they can get any more tax from income I earned abroad?

 

[steaky]

Is this based on your experience? I've read a lot of the guidance provided by the Canadian government about this and have looked over the residency determination forms. The question of health care coverage and a drivers licence are just one of many factors that would be taken into consideration. Of greater significance would seem to be:

- Time spent in the country. In my case, less than 183 days this year.
- Ownership of property or significant items. In my case, no.
- Significant familial relationships. In my case, none at all in Canada.

On a related note, what would be the real significance of being a resident for tax purposes or not? I know that if I am considered a resident here (and presumably also a resident of the UK where there is stronger evidence for that) I have to declare world income on my Canadian tax return. However, I have already paid tax on my UK income this year. So what is the point? Is it just for the Canadian government to see if they can get any more tax from income I earned abroad?

See the comment by this poster in this thread:

https://www.canadavisa.com/canada-immigration-discussion-board/threads/pr-with-both-u-s-canadian-address-cross-border-commuting-to-the-u-s-for-work-physical-presence-for-citizenship-healthcare-car-import-taxes.711859/#post-9025795

 

[Berty3000]

See the comment by this poster in this thread:

https://www.canadavisa.com/canada-immigration-discussion-board/threads/pr-with-both-u-s-canadian-address-cross-border-commuting-to-the-u-s-for-work-physical-presence-for-citizenship-healthcare-car-import-taxes.711859/#post-9025795

The comment doesn't have anything to do with the questions I've asked and I'm not sure why you've directed me to it. I haven't suggested that I don't want to pay tax - I want to pay the correct tax. That means paying income tax and the other contributions that come out of my pay packet, along with the sales taxes. Related to this is the question of residency. If you don't know the answers, it isn't necessary for you to respond.

 

[canuck78]

The comment doesn't have anything to do with the questions I've asked and I'm not sure why you've directed me to it. I haven't suggested that I don't want to pay tax - I want to pay the correct tax. That means paying income tax and the other contributions that come out of my pay packet, along with the sales taxes. Related to this is the question of residency. If you don't know the answers, it isn't necessary for you to respond.

No it doesn't seem like you're a resident for tax in 2020 but I would suggest getting CRA to determine your residency status just to be safe. There is a form you can fill out in order for CRA to determine your status.