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QUESTION:
I landed in Canada(PR) in Jan 2003 and left canada to usa on H1 on oct 2003.
I was not present on 31st Dec. 2003 in canada.
1) Do I need to file tax for canada under Resident or non-resident ?
While filing tax on H&R block web site, One question arise- "Select the province or territory you were a resident of on December 31, 2003"
2) If i file under non-resident, will it be any problem for my Permanent Residency maintain?
3) Do I need to fillup "Determination of Residency form" is it necessary ?
4) Do I need to show US income, If I dont show is there any problem ?
5)Where & how to file a tax in USA for canada.
Your help will be most appreciable.
Thanx
RXXXXX
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david ingram replies:
There are differences of opinion here as to what you "should" do, "have to" do and will likely do.
First of all, if you are working out of the country for a Canadian employer, your time out of the country still qualifies as days in Canada for your PR card status.
If you are working out of the country for a non-Canadian employer, you will lose your PR card if you are not in Canada for 730 days out of five years. So you have about 270 days already and will have to live in Canada for another (730-270) 460 days in the next 44 months.
If you miss those days, you will lose your PR status and if you lose your job in the USA, will have to return to your country of origin. You will NOT be allowed back into Canada to live.
The following can be found at the CIC website but here it is "lifted" in its entirety. Tax information follows the PR information.
http://www.cic.gc.ca/english/newcomer/res-oblig.html
Residency Obligations for
Permanent Residents
Permanent residence status gives a non-Canadian the right to live in Canada. You must meet certain residency obligations to maintain your status as a permanent resident.
Rights and Entitlements
As a permanent resident, you have a right to enter Canada. You also have most of the rights that Canadian citizens have under the Canadian Charter of Rights and Freedoms. You cannot, however, run for political office or vote until after you have been granted Canadian citizenship.
Find out more information on the Permanent Resident Card.
You can apply for Canadian citizenship after three years of residence in Canada. Find out more about how to become a Canadian citizen.
Permanent Residency Obligations
Here is what you must do to comply with your residency obligations.
You must accumulate two years of physical presence in Canada in every five-year period. You can also count Canadian residency days if you are outside Canada for an extended period of time for one of the following reasons:
a.. You are accompanying your Canadian-citizen spouse or common-law partner.
b.. You are a child accompanying a Canadian-citizen parent.
c.. You are employed on a full-time basis by a Canadian business, the Public Service of Canada or the public service of a Canadian province.
d.. You are accompanying your permanent resident spouse or common-law partner who is also outside Canada and who is employed on a full-time basis by a Canadian business, the Public Service of Canada or the public service of a Canadian province.
e.. You are a child accompanying a permanent resident parent who is outside Canada and employed on a full-time basis by a Canadian business, the Public Service of Canada or the public service of a Canadian province.
Please note that you are complying with your residency obligations only if:
a.. your accompanying permanent-resident spouse, common-law partner or parent is complying with their residency obligations; and
b.. you ordinarily reside with your accompanying Canadian-citizen or permanent-resident spouse, common-law partner or parent.
A child is someone under the age of 22 who has never been married or in a common-law relationship.
Returning Resident Permit
If you became a permanent resident of Canada before June 28, 2002 you may still be the holder of a Returning Resident Permit issued to you under the previous legislation.
Under the transitional provisions, if you are a permanent resident who is in possession of a Returning Resident Permit, you will be able to count time spent outside Canada towards satisfying your residency obligations. The time period covered by the Returning Resident Permit must apply to the period being examined.
Failure to Comply with Residency Obligations
You may lose your permanent resident status if you fail to comply with your residency obligations.
It is up to you to provide all required information and to provide evidence of your compliance with these obligations.
Examinations and Appeals
If you have not been able to comply with your residency obligations, officers can take humanitarian and compassionate concerns into account when making residency determinations. Officers will consider the best interests of a child directly affected by the decision.
If you have been a permanent resident for more than five years, the assessment of your residency obligations will be limited to the five years immediately before your examination.
You may appeal determinations of non-compliance with your residency obligations to the Immigration Appeal Division (IAD) of the Immigration and Refugee Board.
In Canada
When a permanent resident fails to meet their residency obligations, officers may issue a departure order that requires that person to leave Canada. The decision to issue a departure order may be appealed to the IAD within 30 days of receiving the notification.
Permanent residency status will be lost if the decision is not appealed.
Abroad
When a permanent resident does not meet their residency obligations while abroad, officers may inform that person in writing that they have failed to meet their residency obligations. Information on appeal procedures will be provided at the same time.
Permanent residency status will be lost if an appeal of the determination is not received by the IAD within 60 days of receiving the written non-compliance notification.
For the US for 2003, you will file a 1040NR dual status statement and a 1040 Dual status return.
If you are married and depending upon how much money was earned in Canada, you might want to elect to report your world income for the entire year and file a joint return with your wife, claiming (on form 1116) foreign tax credit for the tax paid to Canada on the Canadian earnings (This will likely be the least tax to the US if you are married).
You should be filing a tax return in Canada for the period you were a resident from January to October. Your province of Residence is / was the province you were in. You have to put the date of leaving Canada on the return.
Do NOT fill in the NR73 or NR74 forms about determination of residency but you do have to fill in a form T1161 if your assets are over $25,000 Canadian. Filling in the form T1161 might also trigger a form T1243 and form
You cannot logically do the returns yourself using any software available without knowing the answer you are looking for.
I hate to tell you how many times we have to overwrite the answer in our computer tax programs because the programs just will not cope with the variable our client is dealing with.
We, of course, are quite happy to deal with this for you in our West Vancouver office. We can look after you by fax, email, snailmail or courier.
contact information follows:
David Ingram's US/Canada Services
US/Canada/Mexico Tax Immigration & working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321
[email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
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