NAPA VALLEY resident receives Demand by Canadian

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Demand by Canadian Government to File a Tax Return for a Non-Resident Cdn. Citizen
Hi David, 
I've been an avid reader of your e-mail advice service but I didn't anticipate sending in my own question until today. I just received a "request" from the Canadian government to file my 2002 tax return. The request says that I "must" file a return if, among various stated tax situations,  "We send you a request to file a return". Pretty encompassing.
I am a Canadian/U.S. dual citizen and have lived in the U.S. since November 2001. I have not maintained any connection to Canada via bank accounts or other residence "trappings". I know you have said, in past advice, that a Canadian/U.S. dual citizen is obligated to file U.S. tax returns, even when living in Canada, but I thought that Canada did not require this. Could you provide me with your take on this? Apparently, I have 30 days to respond to this "request" or.? Thank you!
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david ingram replies:
If the Canadian Government sends a citizen or resident a demand to file, the recipient must file a tax return.  
There are two ways to file:
1.    File a nil return as a non-resident or
2.    File a tax return with world income reported and exempt it all under article IV of the US / Canadian Income Tax Convention (1980) with Amending Protocols.
I favour # 2 because it is a clear declaration that you made money or had income and are exempt from Canadian tax whether it is $10,000, $100,000 or $1,000,000.
Filing Number 1 tends to create more requests for more information.
If we did number 2,  we would also send a copy of the US 1040 to the CCRA or the CRA as they are calling themselves now.  Filing the second option involves the International Treaty and Canada has no reason to try and circumvent the treaty.
You know where we are.  If you want us to look after it, just send me a copy of your 2002 1040.
Answers to this and other similar  questions can be obtained free on Air every Sunday morning.
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