My_question_is: Applicable to both US and Canada
Subject: Moving to Canada (sort of...)
Expert: taxman at centa.com
Date: Tuesday December 21, 2004
Time: 07:50 AM -0800
QUESTION:
I am heading back to Canada to reside about 2/3 of the year for 2-3 years
beginning in 2005.
I am a Canadian/US citizen, US homeowner (file joint tax with my American
wife), and my employment will continue to
be a US employer based in Minnesota (I'll work via Internet/VPN). I may also
pick up occasional work in the entertainment industry (< 10K per year).
Sounds like it may be complicated tax-wise? Thank you for any insight you
may be able to provide.
==================================================
david ingram replies:
It is just numbers and depends on the number of days.
You will be governed by Article IV (2) (a), (b), (c) or (d) of the US
Canada Income Tax Convention (Treaty) which reads as follows:
Article IV - Fiscal Domicile - (it is the same number in most treaties)
For the purposes of this Convention, the term "resident of a Contracting
State" means any person who, under the law of that State, is liable to
taxation therein by reason of that person's domicile, residence,
citizenship, place of management, place of incorporation or any other
criterion of a similar nature, but in the case of an estate or trust, only
to the extent that income derived by the estate or trust is liable to tax in
that State, either in its hands or in the hands of its beneficiaries. For
the purposes of this paragraph, a person who is not a resident of Canada
under this paragraph and who is a United States citizen or alien admitted to
the United States for permanent residence (a "green card" holder) is a
resident of the United States only if the individual has a substantial
presence, permanent home or habitual abode in the United states and that
individual's personal and economic relations are closer to the United states
than any other third State. The term "resident" of a Contracting State is
understood to include:
(a) the Government of that State or a political subdivision or local
authority thereof or any agency or instrumentality of any such government,
subdivision or authority, and
(b) (i) A trust, organization or other arrangement that is operated
exclusively to administer or provide pension, retirement or employee
benefits, and
(ii) A not-for-profit organization that was constituted in that State,
and that is, by reason of its nature as such, generally exempt from income
taxation in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a
resident of both Contracting States, then his status shall be determined as
follows:
(a) he shall be deemed to be a resident of the Contracting State in which he
has a permanent home available to him. If he has a permanent home available
to him in both Contracting States, he shall be deemed to be a resident of
the Contracting State with which his personal and economic relations are
closer (centre of vital interests);
(b) if the Contracting State in which he has his centre of vital interests
cannot be determined, or if he has not a permanent home available to him in
either Contracting State, he shall be deemed to be a resident of the
Contracting State in which he has an habitual abode;
(c) if he has an habitual abode in both Contracting States or in neither of
them, he shall be deemed to be a resident of the Contracting State of which
he is a national;
(d) if he is a national of both Contracting States or of neither of them,
the competent authorities of the Contracting States shall settle the
question by mutual agreement.
-------------------
That gets a little complicated but essentially, it says that you can only be
taxed on your world income in either Canada or the United States. Article
IV(2)(a) states you will be taxable where you have a permanent home
available to you.
We will have to deal with the number of days you are in Canada and what
duties you actually perform in Canada. It would be much easier on you and
your taxes if you were to spend 185 days in the US and less than 183 days in
Canada.
You should likely by an hour of my time with a phone consultation. It would
cost you $350.00 with no GST if you are in USA at the time.
goto www.centa.com, click the US/Canada Taxation section for more ideas.
We can handle it with no trouble no matter what you do but I can guarantee
the situation will be much easier if you are in the USA more than 185 days
and Canada less than 183.
Answers to this and other similar questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Dundee Wealth
Management and I, David Ingram will be hosting an INFOMERCIAL but LIVE talk
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at
www.600AM.com <http://www.600am.com/>
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1( 866) 778-0600
I do not know how far the LD line reaches.
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