# changing to non-resident in Canada



## trentfrog (Jul 14, 2014)

Hi Everybody

Need some advice on whether or not I should file Canadian Departure Return and cut my ties with Canada. Basically, I have been living in Spain since 2007. I worked as an English teacher from 2007-2012 and payed taxes on that income in Spain. I don´t work anymore in Spain but continue to live here with my husband who I met here. I don´t have any assets in Spain besides a bank account of 100 euros. 

Should I bother severing ties with Canada and filing a Canadian Departure return? I have secondary residential ties in Canada such as a bank account, credit card, health card (but I don´t use it) driver´s license and a very small amount of mutual funds. What is your advice?

Many Thanks


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## Nononymous (Jul 12, 2011)

Personally I don't think there's any good reason to bother if you're not working any more. 

However, technically, all those years you were working in Spain, you should have been filing Canadian tax returns on your worldwide income because you didn't declare yourself non-resident (even though you would have credited the Spanish taxes paid and likely owed nothing). I'm assuming that you didn't, but perhaps you did. 

You might want to do the declaration if you start working again, to save future grief. Once you are non-resident, you are off the hook for filing returns on any non-Canadian income (in the respect being a Canadian is vastly better than being an American).

You can still maintain a Canadian bank account, credit card and some investments (RRSP I believe) after declaring non-resident status.

Note that your health insurance is certainly invalid, and likely has been for many years - depends on the province, of course, but generally it only remains in force for a certain amount of time once you leave the country. The driver's license may also be invalid. Might be worth checking up on both of those things.


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## trentfrog (Jul 14, 2014)

I know it's a little late but thanks so much for your reply.


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## trentfrog (Jul 14, 2014)

Another question regarding my situation. I don´t plan on working again in Spain again but could receive income if I sell a Spanish property or from investments in Europe. But this type of income would be years and years from now. So should I just not bother saying anything to the CRA and just stay tax resident in Canada. 

I just don´t see what the advantage is to saying anything about the spainish income I received in the past since I don´t have any income in Canada and therefore don´t file a Canadian tax return and don't work in Spain.

Your opinion please.

Many Thanks.


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## Nononymous (Jul 12, 2011)

It probably doesn't matter either way, but my question is why would you not declare yourself non-resident, to free up any obligation to report anything to Canada, ever again? In other words, what do you gain by remaining resident? If the effort to become non-resident is minimal, then it reduces risk of having to declare any future Spanish income on a Canadian tax return.

I wouldn't fuss over anything not reported in the past, if you were paying Spanish taxes on it you likely would not have owed Canada.

Unlike us poor Americans, us lucky Canadians have the opportunity to easily become non-resident and escape filing obligations - so why not take advantage of it?


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## trentfrog (Jul 14, 2014)

Thanks Nononymous

You are giving better advice than a professional expat tax expert I spoke to yesterday. He basically wants me to file on NR73, send letters severing my residential ties and then contract an extremely expensive accountant to amend the tax returns I filed after I left Canada to include the Spanish income I received and to apply for foreign tax credits for those years and then file tax returns for all the years after that I didn´t file any returns. 

I think the reason why I have been stalling changing to non-resident status is the shear money that the accountant wants to charge to do the tax filings. I was told something like $600 for year tax filing and $1200 to file a departure return. 

Isn´t there a cheaper way to do this?


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## BBCWatcher (Dec 28, 2012)

Could you prepare your own filings?


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## trentfrog (Jul 14, 2014)

I wouldn't risk filing it myself. I'm looking for an accountant that is fair and doesn't want to bleed my dry.


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## Nononymous (Jul 12, 2011)

I don't think it's complex at all. The one year I didn't do my own taxes was the year my sister-in-law did our departure return for us, but apparently it was quite simple. I would at least look at the instructions, rather than assume that you're not smart enough to do it without a catastrophic mistake. 

Amending all the old returns is a waste of everyone's time and money, though something that accountants are conditioned to advise, I'm sure. (And $600 a year for Canadian returns is ridiculous. I do mine in under an hour.)


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## Nononymous (Jul 12, 2011)

Further thoughts, upon reflection...

You are de facto non-resident, and assuming that the sums are small, the Canadian government has no way of figuring out what you have earned or will earn in Spain, and in any case the likelihood of you owing any money if you did file is close to nil. So there's probably near-zero risk if you don't bother to file a departure return. (We did it once many years ago because of slightly complicated circumstances where it actually saved us a whack of cash.) 

However, as someone saddled with US citizenship and therefore unable to easily free myself of these obligations - though quite willing to ignore them, which is another matter - my feeling is that it's such a small hurdle, why not do it? Because you can!


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## jbr439 (Nov 17, 2013)

Nononymous said:


> It probably doesn't matter either way, but my question is why would you not declare yourself non-resident, to free up any obligation to report anything to Canada, ever again? In other words, what do you gain by remaining resident? If the effort to become non-resident is minimal, then it reduces risk of having to declare any future Spanish income on a Canadian tax return.


To legally become a non-resident he would be immediately subject to the departure tax. So, I'm not so sure that effort/cost is minimal.
go to Dispositions of property


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## Nononymous (Jul 12, 2011)

It sounds as though the OP has little or no property in Canada to dispose of. The only assets described in the first post are "a very small amount of mutual funds" - which would even be exempt if it were an RRSP. So I'm not sure it's that huge a deal, actually.


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## jbr439 (Nov 17, 2013)

Nononymous said:


> It sounds as though the OP has little or no property in Canada to dispose of. The only assets described in the first post are "a very small amount of mutual funds" - which would even be exempt if it were an RRSP. So I'm not sure it's that huge a deal, actually.


Well, I believe gains on the non-Canadian property would be subject to the departure tax. This may or may not be a big deal.


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## Nononymous (Jul 12, 2011)

Aha. Well, that's an argument for doing it immediately upon leaving the country. (Or being quiet about it if you didn't.)


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## trentfrog (Jul 14, 2014)

Thanks some much for your advice. I have finally decided to declare myself non resident.


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