12 February 2003 External T.I. 2003-0001645 - Canadian Citizen Working in US

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: General question from Canadian citizen working in United States.

Position: Question of fact. Contact ITSO.

Reasons: n/a

XXXXXXXXXX 	2003-000164
		Eliza Erskine
February 12, 2003

Dear XXXXXXXXXX:

Re: Canadian Citizen Working in United States - Requirement to File Tax Return

This is in reply to your letter of January 9, 2003, requesting information with respect to whether you need to file a Canadian tax return for the 2001 and 2002 taxation years. In your letter, you explain that you are a Canadian citizen who has been working in the United States since February 2001. You add that you have no house or other properties in Canada and that you also have no relatives or dependants in Canada.

Our Comments

The circumstances outlined in your letter relate to a specific fact situation. We note that written confirmation of the tax implications arising out of a particular fact situation are given by this Directorate only where the circumstances or events are the subject matter of an advance income tax ruling request. Our Directorate also provides non-binding technical interpretations at no charge with respect to hypothetical scenarios. We do not provide information in the nature of tax advice, however. As a result, we cannot give you a detailed response to your question, and we advise you to consult with a Canadian tax professional. We can offer the following general comments, however, which may be helpful to you.

As you may be aware, Canada imposes tax on the basis of residence, not citizenship. Generally, if you are a resident of Canada, then you are subject to tax in Canada on all of your income from whatever source. For a detailed discussion of how residence status is determined for Canadian tax purposes, please refer to Interpretation Bulletin IT-221R3, Determination of an Individual's Residence Status ("IT-221R3") which can be obtained from our website at www.ccra-adrc.gc.ca under income tax technical publications.

We strongly recommend that you consult this publication and then contact the International Tax Services Office (ITSO) with any further questions regarding your tax obligations and any filing requirements. We also recommend that you obtain and complete Form NR73, which is available from the website noted above. Once complete, this form should be sent to ITSO, to assist them in determining your residence status. Contact information for ITSO can be found toward the end of IT-221R3.

It is possible to be a resident of Canada while working in another country. It is also possible to be a dual-resident, that is, a resident of both Canada and another country. However, if an individual severs all of his or her significant residential ties to Canada upon leaving Canada, then the individual will generally be a non-resident of Canada after the date that he or she leaves Canada. Please refer to IT-221R3 for more detailed information. An individual who severs all of his or her significant residential ties to Canada and leaves Canada will generally be a part-year resident in the year of departure. Very generally, an individual who is a part-year resident is only subject to tax in Canada on all sources of income up to the date of his or her departure from Canada. After that date, and for as long as the individual remains a non-resident of Canada, the individual is only subject to tax in Canada on income that is sourced in Canada, such as income from Canadian investments, income from employment performed in Canada or services rendered in Canada, and income from disposing of taxable Canadian property. A part-year resident is generally required to file a Canadian income tax return for the year of departure. It will depend on the facts of each case (including the nature of any income received from Canada) whether any Canadian income tax return is required after that year. As a final note, individuals who cease to be resident in Canada are deemed to dispose of all of their property (with certain exceptions) upon leaving Canada. Any gains that arise as a result of this deemed disposition are taxable in Canada in the year of departure.

Please contact ITSO for further information or to discuss the tax implications of your particular emigration situation. Please note that the Canada Customs and Revenue Agency does not provide tax advice, although we will respond to any specific questions you may have concerning your Canadian tax liability and filing requirements. For general tax information as well as access to useful pamphlets and guides designed specifically for persons emigrating from Canada, please visit our website at www.ccra-adrc.gc.ca and go to the link "Non-Residents" followed by the link "Leaving Canada (Emigrants)". We refer you in particular to pamphlet T4056, Emigrants and Income Tax.

We trust that our comments will be of assistance to you. If you have further interpretative issues regarding residence status determinations, or if you have comments with respect to IT-221R3, please write to the International and Trusts Division of this Directorate.

Questions regarding administrative procedures, as well as requests for non-binding residence status determinations, should be directed to ITSO.

Yours truly,

Jim Wilson
Section Manager
for Division Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch