Past taxes assessed recently - Expert Income Tax Help with cross Border tax and immigration and divorce Experts and RRSP and IRA

XXXX XXXXXXXXX wrote:

Dear David,
I had left Canada in 2001 and had been filing and paying taxes in the US all along. Approx 4 yrs ago I received a letter from the CRA stating that I owed all these taxes and penalties in Canada. I responded that I was a US resident for tax purposes as I lived anmd worked in the US where I am renting a property. However, later I was assessed as a Factual resident in 2007 since I have a significant presence (Wife,Home, Car, bank accounts etc) in Canada. Subsequently I gave them copies of my return and filled out a Canadian Tax return with a net income of zero after subtracting my US income on line 256 of the Canadian Tax return under Article IV of the US-Canada Tax treaty (however they have charged me a surtax and negated this for the 2007-2008 yrs filed). As they are asking for the taxes and penalties for 2002-2006 I have disputed this. As a result the appeals div has sent me the attached form to fill out.
Is it worth disputing this? as I have already been assessed as a factual resident. Furthermore this form asks too many personal details that go back 8 years that I have a hard time coming up with answers, should I fill it out as they have already assessed me as a factual resident recently.
Secondly  Is there a statue of limitations as to how long they can wait to come after me for taxes (If I were informed earlier I would have put money towards RRSPs earlier for those years). In addition if informed earlier that i was a factual resident, I would have paid those taxes and not incurred penalties on those overdue taxes assessed recently.
Thirdly can I dispute those penalties or put money towards my RRSPs for those previous years to reduce taxes. I have paid any due taxes for 2007 and 2008 after filing those years and being charged surtaxes.
My wife is studying in Canada and is living in a Mortgaged property whom I visit periodically, (she also visits me in the US for biweekly visits after every 30 to 60 days).
We have repeatedly applied for the green card as she cannot work here yet.
Please advise
Thank you

 



david ingram replies:

As you have described it, I would say that you are a factual resident entitled to the benefits of Article IV.

Your argument will depend upon how strong your argument is regarding your application for a green card and the length of time your wife spends with you in the US.

If you did not file those years, you should have when your wife is in Canada.  The CRA can go back as many years as you did not file.

However, if you have filed an appeal, you have your chance to straighten it out.  There was no document attached.  I assume that you are referring to an NR-73 form. 

They have already determined that you are a factual resident.  The question is: are you more of a US or more of a Canadian resident under Article IV of the treaty.  You should have got rid of your bank accounts, Canadian Driver's licence and written to BC medical to make sure you are not covered.   The important thing about Form NR-73 is to make sure that there are more American items on the form than there are Canadian. 

For instance, your intent to move to the US as a green card holder  is used by the IRS to tax you as a resident under Article IV.

I want to make it clear to everyone that this is complicated stuff. 

NO ONE should try and do this level of tax work by themselves as you have found.

Your argument is that your wife is only waiting in Canada until you get a green card so that she can work in the USA, etc., etc.

If you look at the Wolf Bergelt case, the judge ruled he was not taxable even though he was only gone four months.

In the Dennis Lee case, the CRA taxed him (and Judge Teskey agreed) because he intended to move to Canada and was not in a Treaty Country.

Good luck.

You know where we are if you need help.

david

 

If your question was not answered fully or you wish to go further, I am available for individual consultations by phone or email or in person for $450 per professional hour. 

Please also note that we prepare Canadian, US, Australian, UK and New Zealand returns on a mail in, email, fax, snail mail or couriered basis. At any time, our clients are in 40 countries or more.  They have every occupation from nuclear Submarine captains to FedEx pilots to Major Bank officers to Politicians, Diplomats and border patrol officers.  My favourite, however, is a penguin catcher in Antarctica among others there..

If you 'really' only have a single question requiring a 'couple' of minutes, you can try phoning me for free as part of the following.

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You might try calling Fred Snyder's own radio program for an answer. 

Fred Snyder's  "IT'S YOUR MONEY" radio show. on CISL,  650 AM on the dial in Vancouver from 9 to 11:00 AM every Sunday  (604) 280-0650 or (877) 280-0650 - You can listen live from anywhere in the world at www.am650radio.com from anywhere in the world. click on the button in the top left hand corner.
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You might try calling Fred Snyder's weekly radio programs for an answer.
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