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: Whether a person would be considered a resident of Canada by purchasing a house in Canada for the occupancy of his family members?
Position: A question of fact
Reasons: See details in the letter
XXXXXXXXXX 2001-007121
S. Leung
August 9, 2001
Dear XXXXXXXXXX:
Re: Becoming Resident in Canada
We are writing in reply to your letter of February 13, 2001 in which you requested our view on the above-captioned subject matter with respect to the situation outlined below.
The Situation
You have outlined in your letter that while being non-residents of Canada at the present time, you and your family members are contemplating coming back to reside in Canada. Your family members will come back early next year while you will still be abroad. You are contemplating buying a house some time this year for their occupancy before they come back to live in Canada. You requested our view as to when you will be considered a resident of Canada: (i) at the time your family members physically reside in Canada, (ii) the date you purchase the house for their use, or (iii) the date the offer to purchase the house is accepted.
The situation described in your letter appears to involve seriously contemplated transactions and identifiable taxpayers. Consequently, we would like to bring your attention to paragraph 22 of Information Circular 70-6R4, dated January 29, 2001, issued by Canada Customs and Revenue Agency ("CCRA") (a copy of which is herewith enclosed) wherein it is stated that when a requested interpretation relates to a specific proposed transaction, a taxpayer should request an advance income tax ruling rather than an opinion. The procedures for requesting an advance income tax ruling are set out in paragraph 16 of the said circular. We are, however, able to provide you with the following general comments, which are based on the facts that you and your family members are not residents of Canada at the present time.
It is a question of fact whether or not a person is a resident of Canada, the determination of which is based on a thorough examination of all the relevant facts and circumstances surrounding a particular situation. Where a person has significant ties in Canada such that Canada is a place where he can be said to have a settled routine of life, such a person would generally be considered to be a resident of Canada. Significant ties include the person's personal, social and economic ties. Where a person owns or rents a house in Canada in which his family members live, that person and his family members are generally considered to have significant ties in Canada such that they will be considered to be residents of Canada for Canadian income tax purposes. However, situations where family members immigrate to Canada prior to other family members are not typical scenarios and the CCRA would require all the facts before a determination of residence status could be made.
It is a question of fact whether a house which is owned or rented in Canada by a person who would otherwise be a non-resident of Canada and which is not immediately occupied by him or his family members constitutes a significant tie in Canada that renders the person and his family members residents of Canada. Other factors must also be taken into account for such a determination. Factors such as whether the person or his family members have any bank or investment accounts in Canada with substantial amount of money before they move back to Canada, how long have they been absent from Canada before returning to Canada, and whether the house was owned or rented by them before they became non-residents, would all contribute to the finding that the house is or is not a significant factor in determining residence status of that person and his family members. In general, a house owned or rented in Canada by a person, in and of itself, is not determinative in deciding whether that person is resident in Canada. Also, depending on the facts of a particular case, it is not necessary for a person to have a house in Canada to be considered a resident of Canada.
The CCRA is presently in the process of revising Interpretation Bulletin IT-221R2 Determination of An Individual's Residence Status. We suggest that you contact the International Tax Services Office (2204 Walkley Road, Ottawa, Ontario, K1A 1A8; telephone: (613) 952-3741; fax: (613) 941-2505) or go to the CCRA's web-site (http://www.ccra-adrc.gc.ca) for a copy when it is available for the public. In the meantime, we have enclosed a copy of the current bulletin, which still represents the CCRA's general views on residence.
With respect to your question whether Taiwan falls under the Canada-China Income Tax Convention (the "Convention"), the answer is negative. For the purposes of the Convention, Taiwan is not considered to be part of the People's Republic of China as defined in subparagraph 1(b) of Article 3 of the Convention.
At this time Taiwan does not have a tax treaty or agreement with Canada and it is not covered by any treaties that Canada has with other countries.
As stated in paragraph 22 of Information Circular 70-6R4 dated January 29, 2001, the opinions expressed in this letter are not rulings and are consequently not binding on the CCRA.
Yours truly,
for Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
Encl.
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