Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Is there any information on the taxation of immigrants to Canada?
Position: Yes.
Reasons: Provided general information including reference material available over the internet.
XXXXXXXXXX 2001-008527
M. P. Sarazin C.A.
August 16, 2001
Dear XXXXXXXXXX:
Re: Immigration to Canada and Canadian Taxation
This is in reply to your letter of May 2, 2001, requesting general information regarding the taxation of an individual that immigrates to Canada with his family.
The Canada Customs and Revenue Agency (the "CCRA") pamphlet titled "Newcomers to Canada" (T4055) will introduce you to the Canadian income tax system as it relates to becoming a Canadian resident. Copies of Agency publications, including Interpretation Bulletins, are available on the Internet at the following site - http://www.ccra-adrc.gc.ca/formspubs/menu-e.html.
Under the Income Tax Act (Canada) (the "Act"), each Canadian resident is required to report his or her world income from sources both inside and outside Canada. The CCRA's general views regarding the determination of an individual's residence are found in the latest version of Interpretation Bulletin IT-221 entitled "Determination of an individual's residence status". Primary residential ties include the existence of a home (owned or rented) and the residence of the individual's spouse or common-law partner and dependants. Secondary residential ties include provincial hospitalization and medical insurance coverage, a provincial driver's license, provincial vehicle registration, a mailing address in Canada, a telephone listing in Canada, landed immigrant status or appropriate work permits in Canada, a Canadian post office box and local newspaper and magazine subscriptions sent to a Canadian address. However, whether an individual is a resident of Canada is a question of fact.
You would become a resident of Canada for income tax purposes when you establish sufficient residential ties in Canada. We note that an individual that is only a part-year resident is only required to report his or her world income for the part of the year that the person is resident in Canada. Your world income would include any employment income, pension income and investment income (foreign or Canadian) received during the relevant period. Reference should also be made to the Canada-Netherlands Income Tax Convention (or any other relevant income tax convention) with regard to the taxation of foreign source income for a period that you are considered a resident of Canada. Generally (within specified limits), foreign income or profits taxes in respect of foreign source income will be creditable in the computation of your Canadian income taxes. Please refer to the CCRA Interpretation Bulletins and other publications on the website referred to above for additional information.
When an individual becomes a Canadian resident (i.e., immigrates to Canada), subsection 128.1(1) of the Act generally deems that individual to have disposed of each property owned by him/her immediately before that time for proceeds of disposition equal to the fair market value of the particular property at that time and to have re-acquired each such property so disposed of for a cost equal to the amount of the deemed proceeds. There are also similar deemed disposition rules when an individual ceases to be a Canadian resident (i.e., emigrates from Canada) in subsection 128.1(4) of the Act. The purpose of these deeming rules is to ensure that the appropriate amount of income or gain accrued from holding the property during the individual's Canadian residency period is subject to income tax in Canada.
We trust these comments will be of assistance.
Yours truly,
for Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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