Subject: tax after leaving Canada
Expert: taxman at centa.com
Date: Wednesday January 24, 2007
Time: 12:33 AM -0500
QUESTION:
Thank you in advance for your guidance.
We are US residents/citizens. I am dual, husband was landed immigrant to
Canada. Returned to US after one yr. No intention of returning to Canada.
Lived in 2005 in Ont for 185 days. Paid US & Cdn taxes, received foreign
tax credit from US and paid difffernece of higher CDN rate.
Lived in Ont in 2006 for 177 days. No Canadian income or investments, all
were US generated. Cancelled OHIP & credit cards before departure from
Canada. Upon arrival to US, surrendered ONT drivers license.
Bought US house 4/06 and sold Ont house 6/06 with closing 07/09/06. All
closing documents were signed before we left Canada.
Household belongings returned to US 6/23/06, we physically left Canada
06/27/06. Returned to Canada for 3 days in July to retrieve vehicles.
Since we lived in Canada for less than 183 days and we severd all ties, are
liable for any taxes to CRA for 2006?
The CRA web site is somewhat confusing since we did own a Canadian house as
our primary residence but then we replaced it with our US house to be our
primary residence.
Also to note, we did maintain US health care the whole year we were in
Canada. Our ties always were stronger to the US and not to Canada.
I appreciate your time to clarify this for me.
Sincerly G Whitlow
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david ingram replies
You are taxable in Canada on your world income for the time you lived in
Canada.
You also have to account on your US return fir the sake of the Canadian
house which you lived in for less than 24 months. It is likely that selling
short will be tax free by having a good reason - leaving the country - and
prorating the $250,000 by dividing the number of months you did live in it
by 24 and multiplying by $250,000. It appears you were in it for 12 months
so you would be entitled to a $125,000 each tax free portion. 12/24 x's
$250,000.
The house sale goes on line 8 of schedule D. Any profit is then deducted on
the next line by writing "Section 121 deduction" and putting a negative
amount under the profit.
The fees you paid to US health care was (for 2005) and is a 2006 deduction.
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