MountainLife said:
From my accountant:
"I have heard back regarding your tax status and why you are considered a non-resident for tax purposes in 2016;
You are deemed a tax resident of Australia for the 2016-2017 Australian tax year as you will be spending approximately 1 year in the country. You can’t be considered a tax resident for 2 countries in the same year, meaning you will be filed as a non-resident (for tax purposes only) in Canada for 2016"
Do they have it wrong? She went on to say this is part of CRA's Rules and Regulations, not theirs.... can anyone shed more light on this?
Tax return filing and Citizenship application:
For clarity, whether you should file a resident or non-resident Canadian tax return has no impact on your application for Canadian citizenship. The qualifying requirement for citizenship is that the applicant must have
complied with CRA tax filing requirements (whatever they are and however they apply to the applicant) for four of the tax-years within the relevant six years.
Since you were employed and had income in Canada, you are required to file a return for that tax-year. Having properly filed a return, you can then check "yes" to both parts of the question for that year, "yes" you were required to file a return, and "yes" you filed a return. Whether that should be a resident or non-resident return is a totally separate question, a CRA question
not a citizenship qualifying question.
Technically the requirement is that you
complied with the CRA filing obligations, so technically an improper filing would not meet the requirements for citizenship. But it is hard to imagine this becoming an issue
in processing the citizenship application, the main thing being whether you were required to file a return, "yes," and whether you filed a return, for which "yes" should suffice.
Resident or non-resident tax return:
That is entirely a Canada Revenue question.
I tend to share the skepticism expressed by others about the accountant's advice. But, I am not an accountant. I am no expert or even much informed about the particulars of Canadian tax law and filing requirements. So I do not know.
One reason for my skepticism is that declaring yourself a resident of Canada
for tax purposes, and for a specific calendar year, is not inconsistent with declaring yourself a resident of another country for what is a
different tax year, even if there is some overlap in the respective tax years. In particular, it makes sense to me that a person was a resident of Canada for
tax purposes during the calendar year 2016, and is
required to file a Canadian tax return as a resident for that year, even though that individual was a resident of Australia for
tax purposes during the
tax year July 2016 through June 2017, and required to file a resident tax return in Australia for that tax year.
That noted, I believe Canada and Australia are parties to treaties which have particular rules and guidelines governing these matters respectively, and those will govern. I am not familiar, not at all, with those in particular. In contrast, and perhaps similarly, between Canada and the U.S., for example, there are particular rules governing when an individual should file as a resident of one country which, in turn, will allow that individual to file as a non-resident of the other, with an overlay of other rules governing primary tax payment obligations subject to obligations to the secondary country, with provisions specifically intended to minimize any double taxation.
Beyond that, while there are many contexts in which a person is presumed to be a resident of only one place at a time, and indeed for some contexts cannot be considered to be a resident of more than one place at the same time, different jurisdictions can impose tax obligations which treat a person as a resident of that jurisdiction at the same time another jurisdiction treats that person as a resident of the other jurisdiction. In other words, while I am not familiar with Canadian tax law in this regard, I do know, with confidence, that generally persons can be deemed to be resident of more than one jurisdiction at a time for tax purposes even though
for other purposes they can only be a resident of one jurisdiction or the other, not both.
And, I am quite sure that Canada's rules can require a person to file a return as a resident of Canada even if another country's laws require that person to file there as a resident of that country. I just do not know what the treaties between Canada and Australia require in this regard.
Be aware of collateral issues: Impact on health care coverage, for example.
