13 December 1989 Income Tax Severed Letter AC74363 - Residence

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.

Non-Resident Taxation Division                Specialty Rulings
                                              Directorate
                                              D.Y. Dalphy
                                              957-2117
C. Charette

                                              7-4363

Residence

This is in reply to your memorandum of September 25, 1989 and is further to our (Charette/Dalphy) telephone conversation of September 27, 1989.

We offer the following comments for your consideration:

I. Directive

        l.   Deemed Resident (page 3)
             Delete "maintain" (line 4) and insert "have".

        2.   Deemed Residents of Canada (page 4)
             Delete "did not maintain" (line 2) and insert "do
             not have".  Delete "non-refundable" (line 6) and
             insert "federal".

        3.   Province of Quebec (page 5)
             Insert "for the purposes of the Quebec Income Tax
             Act" after "Quebec" (line 3).

             Revise lines 12 - 14 as such individuals are,
             pursuant to subsection 2601(5) of the Regulations,
             not subject to the federal surtax in the year of
             ceasing to actually reside in Canada.  You may wish
             to list all persons described in section 8 of the
             Quebec Taxation Act (e.g., sojourners present in
             Quebec for 183 days or more).

        4.   Delete last line and insert "a province, but who are
             considered residents of Quebec for the purposes of
             the Quebec Income Tax Act.

II. Federal Surtax & Provincial Tax

        l.   Emigrants (page 1)

The deeming provision in paragraph 2601(5)(a) of the Regulations applies for the purposes of Section 2601 of the Regulations. The taxation year is not deemed to end on the date of departure from Canada; it is deemed to end upon ceasing to reside in Canada. Delete "earned in" and insert "for" in its place (line 3)

2. Non-Residents (page I)

Change (a) to more closely follow paragraph 2602(1)(a) of the Regulations which provides for province-by-province allocations. Delete "to" and insert "by" in its place. You may wish to refer to Part 26 of the Regulations (paragraph (b)). Delete "Canada" and insert "province" in its place (paragraph (b)).

Capital dispositions, including those in the Province of Quebec are subject to the federal surtax. The Quebec Income Tax Act and Quebec Remission Order are relevant for Quebec capital dispositions. The federal surtax is no longer 47%.

3. Sojourners (page 2)

21(1)(b)

4. Deemed Residents

Delete "teachers" (paragraph (a)) and insert wording that reflects the provisions of paragraph 250(1)(d.1) and paragraph 2601(S)(b) of the Regulations which require provincial tax payments, not the federal surtax, for the year of actually ceasing to be resident in Canada.

If residential ties were not severed, the individual would be a factual, not a deemed, resident (paragraph (b)).

III. Ontario Budget 1987 (page 24)

        I.  Visa Student Eligibility

2. 21(1)(b) 24(1) 21(1)(b)

We hope these comments will assist you.

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