a. Evidence of intention to permanently establish residential ties;
b. Residential ties to Canada; and
c. Residential ties elsewhere.
Significant residential ties to Canada would include:
a. Year-round dwelling available in Canada
b. Spouse or common-law partner living in Canada c. Dependants living in Canada
If the significant financial ties are insufficient to establish Canadian tax residency, secondary residential ties such as the following are taken into account:
a. Location of personal property b. Social ties
c. Economic ties (employment, business, investments, etc.)
d. Immigration status
e. Medical coverage
f. Driver’s license and vehicle registration g. Seasonal dwelling
h. Professional memberships
Furthermore, if you spend over 183 days in Canada during any given calendar year, you are deemed to be a tax resident of Canada for that year.
If you are considered to be a dual resident of Canada and U.S. under their respective domestic tax laws, the Canada – U.S. Income Tax Convention (“the Treaty”) provides a series of tie-breaker tests, applied in the following sequence:
1. Location of permanent home (either owned or long-term rental)
2. Center of vital interests (i.e. family, economic and social ties)
3. Habitual abode (i.e. where you physically spend your time)
5. Competent authority ruling
For example, if you have a permanent home available to you only
in the U.S. or only in Canada, you will be considered to be a resident of that country for tax purposes. If you have a permanent home in both countries (or neither country), the first tie-breaker test is not determinative, and you would move to the second tie-breaker test.
Even if you are considered a resident of Canada for tax purposes, if you are a U.S. citizen or green card holder, you will still be required to file a U.S. resident income tax return reporting your worldwide income. For more information, BDO’s publication on the tax consequences for U.S. citizens living in Canada is available on our website.
The remainder of this FAQ has been prepared on the assumption that you will be considered to be a non-resident of Canada for tax purposes.