24 November 1986 Income Tax Severed Letter 7-1000 - [Determination of Residence Status]

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.

November 24, 1986

To - Toronto District Office Tax Deductions Waivers 10th Floor West

FROM - Specialty Rulings Directorate A. Jane (613) 957-2126 Your File: W.S. 164-33

ATTENTION A. Venables

RE: XXX Determination of Residence Status

This is in reply to your memorandum of September 3, 1986 and attachments regarding the residency status for income tax purposes of the above-named taxpayer.

XXX

On this basis you suggest that the taxpayer was a deemed resident of Canada under paragraph 250(1)(d) of the Income Tax Act during his assignment in Indonesia on the CIDA sponsored project. You ask for our confirmation of your opinion in this respect.

Assuming our understanding of the facts is correct, in our view the taxpayer did not become a resident of Canada for income tax purposes until July of 1984 when he and his family settled in Canada. As stated in paragraph 16 of Interpretation Bulletin 1T-221R2 (the "Bulletin") where an individual enters Canada, otherwise than as a sojourner, and establishes the primary residential ties within Canada that are discussed in paragraphs 6 to 9 of the Bulletin, he will generally be considered to have become a resident of Canada for tax purposes on the date he entered Canada. However, from the above facts it would appear the taxpayer did not establish any of these primary residential ties at the time he obtained landed immigrant status. Thus in our view his stay in Canada for 10 days in 1982 was as a sojourner.

We understand a person may be granted landing under the Immigration Act, 1976 if he can meet certain selection standards which are established for the purpose of determining whether or not he will be able to successfully establish himself in Canada. The mere fact that a person who is not a citizen of Canada has been granted landing means that for purposes of the Immigration Act, 1976 he is a permanent resident. However, the determination of residency is based solely on criteria and objectives set out in the Immigration Act, 1976 and involves a different test than a determination of residency for purposes of the Income Tax Act. Landed immigrant status, or permanent resident status under the Immigration Act, 1976 is a means by which a person may legally enter Canada to enable him to establish ties and become eligible in the future to apply for citizenship. On the other hand, a determination of residency for purposes of the Income Tax Act is based on common law principles of residency and concerns what residential ties a person has in fact established within Canada as discussed in the Bulletin.

We note the following statement in your letter dated June 26, 1986 to XXX attached to your memorandum: "An individual is considered to be a resident of Canada when he/she is a citizen or has obtained landed immigrant status". In our opinion, a person is considered a resident for income tax purposes only if he/she satisfies the tests discussed in the Bulletin which is a question of fact in each case. For immigrants this depends on what use is made in Canada of landed immigrant status i.e., what ties are developed within Canada. In the case of a citizen we would point out that a person may retain his citizenship status and yet cease to be a resident.

for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch