Canada

Quick Facts

• Tax residency threshold: Determined by having significant residential ties with Canada (factual residence) OR spending 183+ days in Canada without those ties (deemed residence)
• What counts as "day": Any day or part of a day spent in Canada counts toward the 183-day sojourn
• Consequence: Residents are taxed on worldwide income; nonresidents taxed only on Canadian-source income
• Key difference from other countries: Canada focuses on ties (home, spouse, dependents) first, then falls back to day counting. Having a home or family in Canada keeps you resident even if you leave
• Immigration vs tax residency: Visa status (work permit, permanent resident, visitor) does not determine tax residency — residential ties matter more

Residency Rules Explained

• Maintaining a dwelling in Canada (owned or rented)
• Spouse or dependents residing in Canada
• Personal property in Canada (vehicles, investments, bank accounts)
• Social and economic connections (employment, professional memberships, community ties)

Visa vs Tax Residency

Key Dates

• Tax year: Calendar year (1 January – 31 December)
• Filing deadline: April 30 following the tax year (June 15 for self-employed, but tax owing due April 30)
• 183-day counting: Each day or part of a day in Canada counts; commuting days from U.S. may be excluded
• Residency change: To cease being a Canadian resident, you must sever significant residential ties (sell/rent home, relocate spouse/family, close Canadian accounts)

Common Pitfalls

• Keeping a home in Canada or having family there while abroad — this maintains residency even if you spend under 183 days
• Assuming spending under 183 days ensures non-residency — ties override day counts
• Not understanding the deemed resident (183-day sojourn) rule
• Failing to notify CRA when entering or leaving Canada (use form NR73 or NR74)
• Not applying tie-breaker rules when both Canada and another country claim residency
• Retaining secondary ties (bank accounts, driver's license) without realizing they don't establish residency alone

Before You Reach 183 Days

• Track entry/exit dates with DayVA if you're close to the 183-day threshold
• Document your residential ties in Canada (or lack thereof)
• If you're leaving Canada, formally sever ties (sell property, notify CRA, relocate dependents)
• If becoming a resident, establish documentation of ties
• Consider notifying CRA via NR73/NR74 forms if your status changes
• Understand which province/territory you're considered resident in (matters for provincial tax)

Offshore & Expat Considerations

• Worldwide income taxation: Canadian residents must report all global income; may be eligible for foreign tax credits on amounts taxed abroad
• Double taxation & treaties: Canada has tax treaties; tie-breaker rules apply when another country also claims you as resident
• Certificate of Residency: You can apply to CRA for a certificate to claim treaty benefits (reduced withholding abroad)
• Provincial residence: Your province or territory of residence is determined as of December 31 of the tax year (affects provincial tax rates)
• Continuing obligations as nonresident: Even if you're not a Canadian tax resident, you must file if you earn Canadian-source income (employment, rental income, business)
• Moving out planning: Severing residential ties and notifying CRA properly is critical to ending tax residency