Hi,
This is one of those questions that requires knowledge in both personal tax and immigration. I hope there are a few people here who can explain the pros and cons of each option. Here is the situation:
My parents got their permanent residence approved in early 2009 and have landed in Canada in mid 2009. They were processed by immigration, reported $10K CDN they had on them and got their PR cards 6 weeks later. Then they returned back to their country in order to liquidate their assets (a house and an apartment), and plan to come back to Canada and establish permanent residence here.
The plan was always for them to sell their assets, get the money and move to Canada. The reason they landed here and then went back is that permanent residence visa allow 6 months for people to land in Canada, otherwise the visa expires and the whole process would have to be repeated, something that takes close to 3 years. So to avoid that, they landed, got the PR cards, and went back to sell the assets.
Because of their short stay (6-7 weeks), and because they don't know when they will come back to settle permanently here (it takes some time to sell assets in bad economy), they never filed their taxes for 2009. Their income was zero anyway considering they are retired and depend on their children for support.
Once they sell their assets, they will come here with approx $250K CDN.
Here are some assumptions for the same of this post:
- When they are establishing permanent residence, new immigrants are allowed to bring their savings, personal possessions and assets (furniture etc.) without being taxed on value of those possessions. There may be limit to this but from what I know it's higher than what we are talking about.
- All Canadian residents are taxed on their worldwide income.
The question I have is this:
- If they come back with $250K (and report it, we would want that to avoid raising eyebrows down the road), will they be hit with "worldwide income" tax? The reasoning here could be that they entered / became permanent residents in 2009 with $10K cash, and everything after that is taxable as far as CRA is concerned. The subquestion is if CRA's definition of new immigrant for tax purposes is different from CIC's definition for immigration purposes?
- If they file a tax return for 2009 with zero income, would that affect above situation? In a sense you (CRA?) could say "you've filed a tax return therefore you were a resident since 2009"
We would want to file a 2009 tax return with zero income as that would help them enroll into BC MSP medical plan with 100% premium assistance - the idea is to save $1,200 a year for two of them (their children really, this would be going out of my pocket)
Looking at CRA's definition of a resident for tax purposes, there is the concept of "establishing significant ties to Canada"; if you have these ties you qualify to pay tax. Ties are family, job, credit cards, assets, existence of same abroad etc. So from there my parents' situation could go either way as far as CRA is concerned.
There you go, I'd appreciate all advices and assessment of this situation.
Thanks
This is one of those questions that requires knowledge in both personal tax and immigration. I hope there are a few people here who can explain the pros and cons of each option. Here is the situation:
My parents got their permanent residence approved in early 2009 and have landed in Canada in mid 2009. They were processed by immigration, reported $10K CDN they had on them and got their PR cards 6 weeks later. Then they returned back to their country in order to liquidate their assets (a house and an apartment), and plan to come back to Canada and establish permanent residence here.
The plan was always for them to sell their assets, get the money and move to Canada. The reason they landed here and then went back is that permanent residence visa allow 6 months for people to land in Canada, otherwise the visa expires and the whole process would have to be repeated, something that takes close to 3 years. So to avoid that, they landed, got the PR cards, and went back to sell the assets.
Because of their short stay (6-7 weeks), and because they don't know when they will come back to settle permanently here (it takes some time to sell assets in bad economy), they never filed their taxes for 2009. Their income was zero anyway considering they are retired and depend on their children for support.
Once they sell their assets, they will come here with approx $250K CDN.
Here are some assumptions for the same of this post:
- When they are establishing permanent residence, new immigrants are allowed to bring their savings, personal possessions and assets (furniture etc.) without being taxed on value of those possessions. There may be limit to this but from what I know it's higher than what we are talking about.
- All Canadian residents are taxed on their worldwide income.
The question I have is this:
- If they come back with $250K (and report it, we would want that to avoid raising eyebrows down the road), will they be hit with "worldwide income" tax? The reasoning here could be that they entered / became permanent residents in 2009 with $10K cash, and everything after that is taxable as far as CRA is concerned. The subquestion is if CRA's definition of new immigrant for tax purposes is different from CIC's definition for immigration purposes?
- If they file a tax return for 2009 with zero income, would that affect above situation? In a sense you (CRA?) could say "you've filed a tax return therefore you were a resident since 2009"
We would want to file a 2009 tax return with zero income as that would help them enroll into BC MSP medical plan with 100% premium assistance - the idea is to save $1,200 a year for two of them (their children really, this would be going out of my pocket)
Looking at CRA's definition of a resident for tax purposes, there is the concept of "establishing significant ties to Canada"; if you have these ties you qualify to pay tax. Ties are family, job, credit cards, assets, existence of same abroad etc. So from there my parents' situation could go either way as far as CRA is concerned.
There you go, I'd appreciate all advices and assessment of this situation.
Thanks
