Tax for non-resident

[RR_11]

If a Canadian citizen leaves Canada and shifts his life to another country where he works (he didn't return to Canada at all during the tax year). He still only owns his house in Canada which he is renting. Is this still considered a strong primary tie and he cannot be considered a non-resident. i.e. he will have to pay taxes on his worldwide income in addition to the rental income?

I also read that non-residents are subject to tax on any income or gains resulting from the sale of a taxable Canadian property and this amount is 25% of the gross selling price. So if a house sells for $400,000, a $100,000 will be paid as tax? So does that mean if he decides to sell his property her will be subject to this tax or non-resident here refers to non-citizens??

 

[Naheulbeuck]

This is a complex situation, for the tax status, only CRA can determine it, the home is a strong tie, you most likely still have a bank account in Canada for the rent income which would be a secondary tie, if it is rented the whole time, it becomes a rental property, but only CRA can determine specifics.

You must pay taxes no matter what on your rental income as you hinted at. For the sale of your house, no matter your status, it is now a rental property and therefore you will have capital gains on it (only principal residence are exempt, and it cannot be yours now). The capital gain is calculated based on the selling price less the cost of the property. In your situation that calculation is quite complicated. What you refer to is the fact that for a non resident the buyer will give 25% usually to CRA, and you then can get some of that money back once your taxes on the sale are assessed (calculation above).

Furthermore, once a property becomes a rental property it tends to be a depreciable property which is taxed not at 25% but at 50% of the capital gain, and again in your situation, 50% of the sell price would be remitted to CRA by the buyer and you would get some of that money back from CRA but delayed.

To summarize, ahead of your move it would have been best to plan with a tax expert the best course of action for you (that is more for other readers), but now you should get one now to plan the best course of action for you and contact CRA to determine your status.

 

[steaky]

@RR_11

You missed a point. Since you are renting it out and being non resident, you have to withhold a certain percentage of your gross rental income and remit to CRA, unless you file an election so you withhold your net rental income instead.

 

[Buletruck]

You are considered a non-resident of Canada, for income tax purposes, if you normally or routinely live in another country, or if you don't have significant residential ties in Canada and you lived outside the country throughout the year or your stay in Canada was less than 183 days.

Except a house is considered a significant residential tie.

 

[canuck78]

You are considered a non-resident of Canada, for income tax purposes, if you normally or routinely live in another country, or if you don't have significant residential ties in Canada and you lived outside the country throughout the year or your stay in Canada was less than 183 days.

Only CRA can determine this. Unless you have no ties to Canada (no homes, no financial accounts, etc.) then it is impossible to comment whether someone is a tax resident or not based on the little info we have.