In 1989, Denis Lee won part but lost most of his claim for
non-resident status. He was a British Subject who worked on offshore oil rigs.
He maintained a room at his parents house in England and held a mortgage on his
ex-wife's house in England. For the years 1981, 82 and 83 he did not pay income
tax anywhere. in 1981 he married a Canadian and she bought a house in Canada in
June of 1981. On September 13, 1981, he guaranteed her mortgage at the bank and
swore an affidavit that he was "not" a non-resident of Canada. [As I have said
in the capital gains section of this book, bank documents will get you every
time.] During this time he had a Royal Bank account in Canada and the Caribbean
but no Canadian driver's licences or club memberships, etc.
Judge Teskey said:
"The question of residency is one of fact
and depends on the specific facts of each case. The following is a list of some
of the indicia relevant in determining whether an individual is resident in
Canada for Canadian income tax purposes. It should be noted that no one of any
group of two or three items will in themselves establish that the individual is
resident in Canada. However, a number of the following factors considered
together could establish that the individual is a resident of Canada for
Canadian income tax purposes":
- past and present habits of life;
- regularity and length of visits in the jurisdiction asserting
residence;
- ties within the jurisdiction;
- ties elsewhere;
- permanence or otherwise of purposes of stay;
- ownership of a dwelling in Canada or rental of a dwelling on a
long-term basis (for
- residence of spouse, children and other dependent family members in a
dwelling
- memberships with Canadian churches, or synagogues, recreational and
social clubs,
- registration and maintenance of automobiles, boats and airplanes in
Canada;
- holding credit cards issued by Canadian financial institutions and
other commercial
- local newspaper subscriptions sent to a Canadian address;
- rental of Canadian safety deposit box or post office box;
- subscriptions for life or general insurance including health
insurance through a
- mailing address in Canada;
- telephone listing in Canada;
- stationery including business cards showing a Canadian address;
- magazine and other periodical subscriptions sent to a Canadian
address;
- Canadian bank accounts other than a non-resident account;
- active securities accounts with Canadian brokers;
- Canadian drivers licence;
- membership in a Canadian pension plan;
- holding directorships of Canadian corporations;
- membership in Canadian partnerships;
- frequent visits to Canada for social or business purposes;
- burial plot in Canada;
- legal documentation indicating Canadian residence;
- filing a Canadian income tax return as a Canadian resident;
- ownership of a Canadian vacation property;
- active involvement with business activities in Canada;
- employment in Canada;
- maintenance or storage in Canada of personal belongings
including
- obtaining landed immigrant status or appropriate work permits in
Canada;
- severing substantially all ties with former country of
residence.
"The Appellant claims that he did not want
to be a resident of Canada during the years in question. Intention or free
choice is an essential element in domicile, but is entirely
absent in residence."
Even though Dennis Lee was denied residency
by immigration until 1985 (his passport was stamped and limited the number of
days he could stay in the country) and he did not purchase a car until 1984, or
get a drivers licence until 1985, Judge Teskey ruled that he was a non-resident
until September 13, 1981 (the day he guaranteed the mortgage and signed the bank
guarantee) and a resident thereafter.
My point is made. Residency for "TAX PURPOSES" has
nothing to do with legal presence in the country claiming the tax. It is a
question of fact. My thanks to Judge Teskey for an excellent list. The italics
are mine and refer to the items which I usually see people trying to "hold on
to" after they leave and are trying to become non-residents. No single item will
make you a resident, but there is a point where the preponderance of "numbers"
leap out and say, "He / She is a resident of Canada, no matter what he / she
says."
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