Are you entering Canada for the first time and plan to reside here for more than half a year? Or are you leaving Canada to reside in another country? Here are some things to take note of.
- If you are in Canada for 183 days or more in a calendar year (January to December), you are considered a resident of Canada for tax purposes. Make sure to count the days if you are visiting Canada multiple times for long durations.
- The criteria for determining the residency for tax purposes is different than the immigration or visitor status you have in Canada. You could be a visitor and still be a resident of Canada for tax purposes under certain circumstances. If you are immigrating to Canada, you are considered a resident of Canada for tax purposes on the date of landing.
- If you still own foreign assets upon landing, it will be important to determine the fair market value of your foreign assets. The fair market values will be used in the calculation of Canadian taxes when you eventually sell the assets.
- As a tax resident of Canada, you are required to report all of the income earned in Canada and in other countries (i.e. worldwide income). Any foreign taxes that you’ve paid may be claimed as a foreign tax credit on the Canadian income tax return. If you own foreign assets over $100,000 CAD, you are also required to make additional disclosure to Canada Revenue Agency.
- If you are leaving Canada to reside in another country, there may be a deemed disposition on certain assets such as foreign real property and non-registered investments. Any capital gains resulting from the deemed disposition will be subject to income tax. Canadian real property, registered investments and Canadian business property are exempted.
The Canadian tax system is complex. Careful attention is required to ensure you do not run into tax problems.
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