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 Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
XXXXXXXXXX (613) 957-8953
October 30, 2018
This is in reply to your letter of June 22, 1994 concerning your contemplated immigration to Canada. You indicate that you are retired and that your income comprises
and you are concerned with the following questions:
- You would like to know if income taxes will be payable on your annual income coming from outside Canada.
- You would like to know the tax regulations to follow in order to invest in a home in Québec.
- You would like to know if there is any tax break for buying the home and business in Québec.
- You would like to know about insurance in Canada.
The following comments are general in nature. For that reason, we cannot be certain that they will be appropriate to your specific situation and for purposes of our response we have assumed that you will become resident of Canada when you immigrate to Canada.
Generally, residents of Canada are taxable on their world income from all sources, whether domestic or foreign. The term "resident" is not defined in the Income Tax Act. However, the Courts have held that an individual is resident in Canada if Canada is the place where he, in the settled routine of his life, regularly, normally, or customarily lives. In making this determination, all of the relevant facts in each case must be considered. If you have any doubt about your residential status and wish to have it determined for you, you can complete form NR74(F) which is included in the attached guide "Nouveaux canadiens" and return it to the address on that form. Also enclosed is a copy of Interpretation Bulletin IT-221R2 which outlines our view of the determination of an individual's residential status.
As mentioned earlier, taxpayers who are resident in Canada are subject to income tax on their world income. Your income or certain parts of it may remain taxable in the United States. We are not able to assist you in this determination. Should you determine this to be the case, you may want to consider the application of the Canada-United States Income Tax Convention which might be of help if there is any double taxation. Also, a taxpayer who is a resident of Canada may be permitted to deduct all or a portion of the tax paid to a foreign jurisdiction (foreign tax credit) in calculating his Canadian taxes. The attached Interpretation Bulletin IT-270R2 provides further details on the calculation of foreign tax credits.
As a general comment, when you immigrate to Canada you are deemed to acquire your capital property at its fair market value at the time you arrive in Canada. This rule would apply to your XXXXXXXXXX your rental property(ies) and any other capital property. If you dispose of these properties after you have established canadian residency, you will be taxable on the capital gain. In general, the capital gain would be the difference between the selling price of the properties and their fair market value at the time you immigrated to Canada. In the event you are taxable on a capital gain in both Canada and the United States (on your rental property(ies) for example), it will be necessary to refer to the Treaty between Canada and the United States to determine which country has the right to tax and to eliminate any double taxation that may arise. We include a copy of the Interpretation Bulletin IT-451R and refer you to paragraphs 24 to 26.
Concerning the purchase of a home, the Canadian tax system permits an exemption of any gain from an eventual disposition as long as the property qualifies as a principal residence. Consequently, any expense in relation to that home will generally not be deductible. The attached Interpretation Bulletin IT-120R4 provides further details.
Insofar as the setting of a business is concerned, we would suggest that you obtain professional advice as we are not in a position to advise you on the law generally and the requirements of every level of government.
We are enclosing the following additional publications to assist you understanding how the Canadian Tax system will affect you.
1. Business and Professional Income Tax Guide
2. Interpretation Bulletin IT-193 "Taxable Income of Individuals Resident in Canada during Part of a Year".
If you are a resident of the Province of Québec, you will have to file, in addition to your Federal Income Tax return, a distinct Income Tax return to the provincial authorities. We suggest that you communicate on this matter with:
Ministère du Revenu du Québec
Direction générale de la législation
3800, rue Marly
For any additional information concerning agencies that might be of assistance to you, we suggest that you communicate with:
They will presumably be able to direct you to the provincial health plan unit responsible for answering your questions.
We trust the enclosed information will be of assistance to you in planning your financial affairs prior to immigrating to Canada.
Reorganizations and Foreign Division
Policy and Legislation Branch
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© Her Majesty the Queen in Right of Canada, 1994
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© Sa Majesté la Reine du Chef du Canada, 1994