23 August 1991 Ruling 911623 F - Tax Implications Relating to Becoming a Resident of 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.

Dear sir:

Re: Tax implications relating to becoming a resident of Canada

This is in reply to your letter of April 20, 1991 which was forwarded to our Division on May 17, 1991.  We apologise for the delay in replying to your request.

Our understanding of the facts relating to your request for a technical interpretation is as follows.                          

1.     

2.                  24(1)

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Your Question

You have requested that we inform you of the Canadian income tax implications relating to the property which you left behind in Hong Kong.

Our Comments

Generally we do not comment on matters relating to the tax consequences of completed transactions as these matters must generally be referred to your District Taxation office.  Further, as outlined in Information Circular IC 70-6R2 (dated September 28, 1990) we can only issue an advance income tax ruling which is binding on the Department with respect to proposed transactions.  We are prepared, however, to make some general comments which might be of assistance to you.

As mentioned previously, we are assuming that you became a resident of Canada for income tax purposes when you received your landed immigrant status in Canada.  The determination of whether or not an individual is resident of Canada for income tax purposes is based on a review of the relevant facts.  We are enclosing a copy of our interpretation bulletin, IT-221R2 Determination of an Individual's Residence Status, which outlines the factors relevant in determining the residence of an individual.

The balance of our comments will assume that you became a resident of Canada for income tax purposes when you became a landed immigrant in this country.

It is a question of fact whether a particular property is capital property or not, this determination can only be made based on a review of all the relevant facts. Generally speaking, when an individual becomes a resident of Canada in a taxation year, he is considered to have acquired certain capital properties owned on that date at a cost equal to their fair market values at that time. This cost must be calculated in Canadian dollars and will represent the relevant cost for determining the capital gain or loss from disposing of the property in the future.  For example, if a capital property was initially acquired in 1982 for HK$1,000 and its fair market value at the date when the individual became a resident of Canada was HK$2,000, for Canadian tax purposes the cost of the property will be equal to HK$2,000 multiplied by the relevant Canada-Hong Kong exchange rate at the date that the individual became a resident of Canada.  This matter is explained in greater detail in our interpretation bulletin IT-451 Deemed Disposition and Acquisition on Ceasing to Be or Becoming Resident in Canada, a copy of which is enclosed.

We are also enclosing a copy of the Tax Guide for New Canadians (1990) which outlines other matters which might be of relevance to you.  The 1991 version of this guide will be available shortly, and you will be able to obtain a copy of it at your District Taxation Office.

The above comments are general in nature and may not be applicable to a specific fact situation.  Further, as mentioned in paragraph 21 of Information Circular IC 70-6R2 (dated September 28, 1990) , the above opinions are not advance income tax rulings, and consequently are not binding on the Department.

We trust that the above comments will be of assistance to you.

for DirectorBilingual Services and Resource Industries DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch

Enclosures (3)