# Income tax in Canada - Advise please



## baba10 (Jul 13, 2010)

Hello,

I'll be moving to Abu Dhabi soon, if I'm a non-resident of Canada, are the things listed below impact on this non-resident status :

1- I was told that renting my home is okay,
2- what about RRSP, RESP, do I have to close them?
3- Bank account, credit cards, do I have to close them off?
4- what about if I still have mortgage, do I have to close it, how can I send payment and still consider non-resident, 
5- furniture,..etc.

Thanks for help


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## Elphaba (Jan 24, 2008)

baba10 said:


> Hello,
> 
> I'll be moving to Abu Dhabi soon, if I'm a non-resident of Canada, are the things listed below impact on this non-resident status :
> 
> ...


Suggest you have a look at my blog - useful info on there for Canadian expats.
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## w_man (Apr 16, 2010)

baba10 said:


> Hello,
> 
> I'll be moving to Abu Dhabi soon, if I'm a non-resident of Canada, are the things listed below impact on this non-resident status :
> 
> ...


Generally speaking - you want to cut as many ties from Canada as possible. Try not to leave a car/furniture/clothes in storage. Try not to have any credit cards, bank accounts, drivers license etc BUT there are exceptions. I spoke with PricewaterhouseCooper and they gave me a set of rules from CRA and the idea is to follow as many of them as possible. PM me if you would like me to forward that information to you - I should be able to scan them from work and email them to you. And yes - check out Elphaba's blog.

Elphaba - please correct me if I'm wrong on any of this. This is your area of expertise.


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## Rahulma (Jun 23, 2010)

baba10 said:


> Hello,
> 
> I'll be moving to Abu Dhabi soon, if I'm a non-resident of Canada, are the things listed below impact on this non-resident status :
> 
> ...


Hi Baba,

I am moving there too and I had talked to CRA and some banks since we are all "on the same boat"

1) For residency purposes, you have to be considered by CRA that you are a non resident. However, if you leave family behind in Canada like spouse, kids you will have to pay income tax in Canada. There is a form that you need to fill out from CRA in order to CRA determine you residency status.

Luckily, I already talked to them about this. IF you have a property you need to rent. If you have a car and you want to leave it in Canada you can. You just cannot have family members renting your house your using your car that "sorta" thing. Call CRA and they will tell you which form you need to fill out. This has to be done once you are in Abu-Dhabi.

2) There is no need to close. You can keep it, but you cannot contribute since you cease to be a resident in Canada. So max out if you can your RRSP contributions before you leave. TSFA is the same; the day you become a non resident that day you cannot contribute to TSFA.

3)No you dont need to. Just explain the bank your situation and they will update you accounts with the new address. You can use your Canadian credit card overseas. But local country issued credit cards are better

4) You can keep your mortgage. But Bare in mind that if you plan to stay longer in Abu-Dhabi you might not find lenders to lend you money when your Mortgage comes to renewal since you are not in Canada and will not have income source in Canada. What you can do is to refinance your mortgage for 5 years. That's what I am doing. Do not share with you lender that you are moving out. Your rental should cover your mortgage since your home in Canada becomes an investment property.

5) you can rent your home with furniture or sell and buy there

I am seeing that you have basic questions. I suggest you to start giving some calls and make arrangements

Hope this helps


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## Elphaba (Jan 24, 2008)

DO NOT fill out the form requesting non-residency status. The CRA is really very woolly about non-resident status and you do not want to give them an opportunity to deny it.

In essence, the more ties you break the better.

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## baba10 (Jul 13, 2010)

Thank you all, very usefull information. one more question:

1-If I leave and my family stays after, cutting the ties would be when they leave I guess.
2- If I left and if they stayed less than 183 days in the following taxation year, say they come in Jun next year, will we be taxed as resident for the first months, or treat the whole year as non-resident although there was an income ? I know it is a bit complicated or I didn't explain right.

Thanks again for help


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## baba10 (Jul 13, 2010)

*Tax*



Elphaba said:


> DO NOT fill out the form requesting non-residency status. The CRA is really very woolly about non-resident status and you do not want to give them an opportunity to deny it.
> 
> In essence, the more ties you break the better.
> 
> -


Hi Elphaba, thanks for great advise.

Yes, I was told so, however, I may do different scenario, not sure if it will work.
If my family stays over for sometime till I test the situation, come next school year, staying less than 180 days in next taxation year, then we will be all non-resident, will I be obliged to pay income tax on the period where they were in Canada? or because of the 183 days rule, the whole year will be treated as non-resident?

appreciate any good advise


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## Rahulma (Jun 23, 2010)

Elphaba said:


> DO NOT fill out the form requesting non-residency status. The CRA is really very woolly about non-resident status and you do not want to give them an opportunity to deny it.
> 
> In essence, the more ties you break the better.
> 
> -


What are you talking about Elphaba ? He has to change his residency status; if he is deemed to be resident in Canada; he has to pay income tax in Canada. If he files income tax in Canada with no income in Canada and has been living overseas he is going to get screwed if CRA finds out he has been lying. 

Call CRA and ask questions. I asked and I am pretty comfortable. Elphaba is right when says the more ties you break the better. I would say break the strong ties like: a property (rent it out) + all your family is moving with you. This is a huge break of ties and you should be fine. Banks and car are not considered strong ties. If you feel unsafe you can sell your car or export to UAE. I don't see honestly any problems in filing the non residency status. Fill the forms and provide proof so they can verify. If they deny ask them why (I really doubt they will)......

In regards to non residency it is really up to you to clear your questions with CRA. Do not worry; just call CRA and tell the you have generic questions they are not going to ask your SIN. To help you out, reach the international CRA office.


Remember CRA can pick you for audit (after all you are still living in the country right?) but then you are in UAE. If that happens then I wish you good luck. 

Important: the non residency status has to be filled out when you are in UAE. Wait until all your family has moved;and have your property with a property manager; you should be fine

Take care


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## baba10 (Jul 13, 2010)

*Thanks*



Rahulma said:


> What are you talking about Elphaba ? He has to change his residency status; if he is deemed to be resident in Canada; he has to pay income tax in Canada. If he files income tax in Canada with no income in Canada and has been living overseas he is going to get screwed if CRA finds out he has been lying.
> 
> Call CRA and ask questions. I asked and I am pretty comfortable. Elphaba is right when says the more ties you break the better. I would say break the strong ties like: a property (rent it out) + all your family is moving with you. This is a huge break of ties and you should be fine. Banks and car are not considered strong ties. If you feel unsafe you can sell your car or export to UAE. I don't see honestly any problems in filing the non residency status. Fill the forms and provide proof so they can verify. If they deny ask them why (I really doubt they will)......
> 
> ...



Thanks for the great help. I think we will follow the rules and cut all ties to be safe. Then when filling the income tax for last year will inform of residncy status.

Thanks all, great help


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## w_man (Apr 16, 2010)

Rahulma said:


> What are you talking about Elphaba ? He has to change his residency status; if he is deemed to be resident in Canada; he has to pay income tax in Canada. If he files income tax in Canada with no income in Canada and has been living overseas he is going to get screwed if CRA finds out he has been lying.
> 
> Call CRA and ask questions. I asked and I am pretty comfortable. Elphaba is right when says the more ties you break the better. I would say break the strong ties like: a property (rent it out) + all your family is moving with you. This is a huge break of ties and you should be fine. Banks and car are not considered strong ties. If you feel unsafe you can sell your car or export to UAE. I don't see honestly any problems in filing the non residency status. Fill the forms and provide proof so they can verify. If they deny ask them why (I really doubt they will)......
> 
> ...


It's actually not just Elph - no accountant I have met has suggested to fill out the NR73 Determination of Residency form. PwC suggested against it as well. If you ask CRA - Of course they will suggest you to fill this form out because they are the ones who created it. The problem with it is (from my understanding) - it is known for CRA to reject these applications for random reasons (sometimes based on the number of YES/NO you select). Once they reject your application, you can do whatever you want but you'll never be able to claim non-resident.

This from is NOT required by CRA - It's a risk either way but apparently less of a risk not to fill it out. if you get audited, you simply provide proof that you have been away and have had almost no ties with the country. 

At the end - everyone needs to do what they feel comfortable with. This is just what I have heard.


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## w_man (Apr 16, 2010)

Rahulma said:


> hmmmm Wagas....I had to do some research after reading your comments. And I frankly cannot accept CRA created a form for no use.
> 
> So please check this CRA link. there you have the interpretation that CRA has for residency.
> 
> ...


Rahul - your source is correct. Again - it says no where that you MUST fill in the NR73. When you leave the country, you declare (on your taxes) that you are a non-resident. I will be filing my taxes every year with the correct forms for my property in Canada. I will pay my 25% tax on any earnings from my property. I am not required to pay any taxes on my income in the UAE while I'm not a resident in this country. One option is for you to ask CRA for permission to be a non-resident and the other is claim you are a non-resident.

All I am stating is what I have heard from multiple accountants as well as PwC - who are professionally in this business.

Personally - I don't trust what the government says all the time  Not saying they created this form for no reason, just saying that most professionals have found the form to be a reason for the CRA to refuse a 'no tax' break.


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## Elphaba (Jan 24, 2008)

Rahulma said:


> What are you talking about Elphaba ? He has to change his residency status; if he is deemed to be resident in Canada; he has to pay income tax in Canada. If he files income tax in Canada with no income in Canada and has been living overseas he is going to get screwed if CRA finds out he has been lying.
> 
> Call CRA and ask questions. I asked and I am pretty comfortable. Elphaba is right when says the more ties you break the better. I would say break the strong ties like: a property (rent it out) + all your family is moving with you. This is a huge break of ties and you should be fine. Banks and car are not considered strong ties. If you feel unsafe you can sell your car or export to UAE. I don't see honestly any problems in filing the non residency status. Fill the forms and provide proof so they can verify. If they deny ask them why (I really doubt they will)......
> 
> ...


What am I talking about? You rude man. (& not for the first time). I am providing professional advice for free, that's what. What you are suggesting could potentialy cause a major tax problem for the OP. 

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## Elphaba (Jan 24, 2008)

Rahulma said:


> hmmmm Wagas....I had to do some research after reading your comments. And I frankly cannot accept CRA created a form for no use.
> 
> So please check this CRA link. there you have the interpretation that CRA has for residency.
> 
> ...



It is of no relevance, or interest, what you may think. You are worng as any tax professional will tell you.
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