3 January 1990 Ruling 74401 F - Tax Guide for International Students Visiting Canada

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.

Subject: Tax Guide for International Students Visiting Canada ("Guide")

This is in reply to your memorandum dated August 14, 1989 wherein you requested our comments with respect to a draft of the above-noted Guide.

Please find attached a copy of the draft Guide to which the following points have been cross-referenced.

1.     We suggest that the word "Present" rather than "Resident" be used here to avoid confusion.

2.     We suggest the word "permanent" be removed.

3.     This assumes that residential ties have not been established.

4.     We also suggest that some comment be made regarding the potential impact of an international tax treaty.  In addition, reference should be made to the tie-breaker rules and the Article in the treaties dealing specifically with students.  The dual residency issue should also be addressed and could be dealt with in the same manner as we suggested for the International Teacher's and Professor's Guide.

5.     Perhaps some mention should be made of the Dependent Personal Service rules (e.g. Article of the Canada-U.S. Treaty) where there may be an exemption of employment income if it does not exceed $10,000.

6.     We suggest this be re-worded as follows:

     "If you are married, and your spouse is also living in Canada, her social insurance number and address should be included.

     However, if your spouse lives outside Canada and depended on you for support you may be entitled to claim additional personal amounts.  You should complete and attach form T1E-NR, "Declaration of Support of Non-Resident Dependent Spouse and Children" to your return.  Please refer to Lines 303 and 304 of the General Guide."

7.     See 1 above.

8.     It should be noted that the definition of "earned income" for the purpose of child care expenses (63(3)(b)) is different from the one for RRSP purposes (146(1)(c)).  Both definitions should be explained in the "Glossary of Terms" section of the Guide.

9.     This example should assume that the taxpayer has at least $950 of 56(1)(n) or (o) type income.

10.     See 1 above.

11.      The word "taxable" should precede the words "Canadian property".

12.     You may wish to add "or through a permanent establishment in Canada of a non-resident employer".

13.     You may wish to mention that taxes payable on rent on real properties in Canada may be reduced pursuant to an election under section 216.  Furthermore, taxes payable on other sources of income such as alimony and pensions may be reduced pursuant to a section 217 election.

14.     The end of the "calendar" year is more technically correct.

15.       Net research grants and the taxable portion of scholarships, fellowships and bursaries are not part of e6rned income as defined for RRSP purposes pursuant to paragraph 146(1)(c).  (Note, net research grants are included in the definition of earned income as defined for child care expenses pursuant to paragraph 63(3)(b)).  See 8 above.

16.     This sentence should be qualified in that if a student returns home to continue his studies in full-time attendance at an educational institution his moving expenses will be deductible.  (See paragraphs 62(1)(b), 62(2) and 115(2)(f)).

17.     For greater clarity we suggest that the first sentence be reworded as follows: ... this income, which is taxable in Canada, is also all or substantially all ....

18.     This is true if a 217 election to report pension income is not file.

19.     Per subsection 227(6) it appears that Form NR7-R must be filed to obtain a refund of non-resident tax withheld in error.

20.     We also have treaties with Austria and Japan. Furthermore, Luxemburg has signed a treaty with Canada which is not yet in force.  China is more properly referred to as People's Republic of China.

21.     See 15 above.

22.     We suggest that the definition be re-worded as follows:

     "An individual who has established or always had residential ties with Canada and individuals who, although physically not present in Canada, have not severed Canadian residential ties.  (To be contrasted with individuals who have not established factual residency in Canada but are "deemed" residents for tax purposes by virtue of the 183 day rule)."

23.     We suggest the words "decide to" be removed.

24.     We suggest this be amended as follows:

     "This tax is assessed on deemed residents of Canada and non-residents of Canada who were neither employed nor carrying on business in Canada during the year."

25.     You may wish to add a comment regarding the 216 and 217 election.

We hope the foregoing is of assistant.

for DirectorReorganizations and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch