91ԭ��

Framework for determining residency

The Income Tax Act (ITA) does not give a specific definition for the term “resident”. The basis of determining residency comes from jurisprudence, with the seminal case being .

 The main principles that came out of that case were:

·        Determining residence is a fact-based investigation; relevant facts in each case must be considered, including residential ties with 91ԭ�� and length of time, object, intention and continuity with respect to stays in 91ԭ�� and abroad.

·        “ordinarily resident” [ITA 250(3)] means, “residence in the course of the customary mode of life of the person concerned, and it is contrasted with special or occasional or casual residence. The general mode of life is, therefore, relevant to a question of its application”.

·        Being physically present in a country is not enough to determine residency; the presence has to be continuous.

·        It is not necessary to be constantly physically present in the country to be considered a factual resident; you can be temporarily absent and still be considered a resident.

A taxpayer can be a resident in two countries at once (treaty tie-breaking rules).

The CRA follows the principles laid out in this case to determine residency status.

Let’s flesh the principles of the Thomson case through that case and historical jurisprudence to arrive at the framework of determining residency in 91ԭ��.

Intention

A taxpayer, with the intention of returning to 91ԭ�� in the future when departing the country, will usually be considered as a resident of 91ԭ�� during their absence. The CRA will consider the departure as temporary in nature.

Length of time (absence)

The length of the absence is not an important consideration when determining residency. The more important considerations are the intention and the residential ties (see below) maintained or cut with 91ԭ��.

Continuity (frequency of visits)

The frequency and duration of visits is an important factor in determining residency. Frequent visits, and long duration of those visits will usually tip the scale towards Canadian residency. However, infrequent and short duration visits do not necessarily mean that there’s no Canadian residency; residential ties have to be taken into account.

Residential ties

Significant residential ties

What the CRA considers are the most important residential ties to 91ԭ�� are:

·        dwelling place (or places);

·        spouse or common-law partner; and

·        dependants.

When a taxpayer leaves 91ԭ��, owning or leasing a dwelling in 91ԭ��, available for his or her occupation, that dwelling place will be considered a significant residential tie with 91ԭ�� during the individual's stay abroad [S5-F1-C1, par. 1.12]. The location of the dwelling place represents the most significant residential tie that the CRA will consider.

The same can be said for a taxpayer leaving 91ԭ�� whose spouse and/or dependants remain, these individuals are also considered a significant resident tie to 91ԭ�� [S5-F1-C1, par. 1.13]. This is especially the case when one spouse leaves the country for a work, and the other spouse/dependant(s) remain in 91ԭ��.

Secondary residential ties

Although not considered as important as the significant ties listed above, secondary ties can tip the scale when determining residency. Some of these ties include [S5-F1-C1, par. 1.14]:

·        personal property in 91ԭ�� (such as furniture, clothing, automobiles, and recreational vehicles);

·        social ties with 91ԭ�� (such as memberships in Canadian recreational or religious organizations);

·        economic ties with 91ԭ�� (such as employment with a Canadian employer and active involvement in a Canadian business, and Canadian bank accounts, retirement savings plans, credit cards, and securities accounts);

·        landed immigrant status or appropriate work permits in 91ԭ��;

·        hospitalization and medical insurance coverage from a province or territory of 91ԭ��;

·        a driver's licence from a province or territory of 91ԭ��;

·        a vehicle registered in a province or territory of 91ԭ��;

·        a seasonal dwelling place in 91ԭ�� or a leased dwelling place

·        a Canadian passport; and

·        memberships in Canadian unions or professional organizations.

Secondary residential ties must be looked at collectively in order to evaluate the significance of any one such tie [S5-F1-C1, par. 1.14].

Individuals can complete the questionnaire on either the   (leaving 91ԭ��) or   (entering 91ԭ��) forms to determine their residency status with the CRA.

Source: Jean-Pierre Vidal,