28 January 2004 Internal T.I. 2004-0054681I7 - Provincial Residency

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.

Principal Issues: Determination of provincial residence status.

Position: Dual resident with primary residence in Alberta.

Reasons: Facts and regulation 2607.

Ms. Kiera Macfarlane

Individual Client Services & Benefits
Surrey Tax Centre 2004-005468
9755 King George Highway Eliza Erskine
Surrey, BC

January 28, 2004

Dear Ms. Macfarlane:

Re: Provincial Residency Determination

This is in reply to your memorandum of December 30, 2003, requesting our comments on the residency status of a taxpayer whose wife and children live in British Columbia while the taxpayer's job and other day-to-day activities are in Alberta. We also acknowledge our telephone conversation with you of January 27, 2004 (Macfarlane/Erskine). We understand that you have reviewed a number of provincial residency situations and that you are inquiring in particular as to the weight to be given to the ties of spouse and dependants in the provincial residency context. You refer to IT-221R3, Determination of an Individual's Residence Status ("IT-221R3"), as stating that a spouse or dependent is a significant residential tie.

Facts

The taxpayer moved from British Columbia to Alberta to work three years ago and he has worked full-time in Alberta since that time. The taxpayer's spouse and children stayed in British Columbia. The taxpayer may continue working in Alberta indefinitely and has no plans to return to British Columbia at this time. The employment is not temporary in nature. The taxpayer has a townhouse in Alberta (either rented or owned) which we assume he regularly occupies. The taxpayer only returns to British Columbia to visit, however, the taxpayer and his spouse still consider themselves to be married.

Our Comments

In our view, based on the facts you have provided, the taxpayer is likely a dual-resident of British Columbia and Alberta. As indicated in IT-221R3, a spouse and children constitute significant residential ties in the absence of strong evidence to the contrary (see the court's decision in Shih v. The Queen, 2000 D.T.C. 2072 (TCC), for an example of a situation where an individual was considered not to be resident where his spouse, children and family home were located). On the facts of the present situation it appears that the taxpayer is resident in British Columbia based on the location of his wife, children and a residence that could presumably be considered a "family home". As a general rule, an individual whose spouse and dependants reside in a particular province will be considered to be resident there. However, such an individual may also be resident in another province if he has sufficient residential ties to that province. In our view, based on the facts provided, the taxpayer is resident in Alberta as well as British Columbia based on the strength and number of his residential ties to Alberta. In particular, the full-time, permanent job and the townhouse (given that it is regularly occupied by the taxpayer), are strong ties to Alberta, and indicate that the day-to-day routine of the taxpayer's life is conducted in Alberta.

Section 2607 of the Income Tax Regulations ("Regulation 2607") provides that an individual who is resident in more than one province on the last day of the taxation year is deemed to have resided on that day only in that province "which may reasonably be regarded as his principal place of residence". The term "principal place of residence" is not defined in the Income Tax Act (the "Act") or Regulations, however, our interpretative position (as set out in IT-221R3) is that determining "principal place of residence" is a matter of evaluating the strength and number of the residential ties to each province. The "principal place of residence" will be the province where the individual has the most significant residential ties. On the facts set out above, the taxpayer's "principal place of residence" is probably Alberta for purposes of the deeming rule in Regulation 2607.

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We trust that our comments will be of assistance to you. If you have questions regarding the content of this letter please contact the officer noted above at (613) 952-1361.

Yours truly,

Jim Wilson, Manager
International Section I
for Director
International and Trusts Division
Income Tax Rulings Directorate