Canadian but Netherlands resident

My question is: Canadian-specific
QUESTION: We are purchasing a piece of land only in Nova Scotia
and are currently non-residents and will not be returning to
Canada for another 8 years. I am a Canadian citizen and my wife
is Dutch with landed immigrant status. We have a Canadian
non-resident bank account with a line of credit. Would using the
line of credit to finance the property jeopardize our
non-residency status?
Thank you.
david ingram replies:
If you are in Saudi or Kuwait or Dubai or a country without a tax
treaty with Canada, it could certainly cause a problem. GOTO and read the middle of the US/Canada Taxation
section which you will find in the second box down on the right
hand side.  Read the David MacLean, Wolf Bergelt, Dennis Lee and
Frederick Reid cases which you will find in the middle of the 30
or so pages.
However, assuming that you are a resident of the Netherlands,
buying the bare land does not jeopardize your non-resident
status.  If you build on it and spend a couple of months a year
there, you could have a problem but would win under Article IV of
the Canada Netherlands Income Tax treaty which I have reproduced
Following is a copy of Article IV of the Netherlands Canada
Income Tax Convention
Article 4
1. For the purposes of this Convention, the term "resident of one
of the States" means any person who, under the laws of that
State, is liable to tax therein by reason of his domicile,
residence, place of management or any other criterion of a
similar nature.
2. Where by reason of the provisions of paragraph 1 an individual
is a resident of both States, then his status shall be determined
as follows:
a) he shall be deemed to be a resident of the State in which he
has a permanent home available to him; if he has a permanent home
available to him in both States, he shall be deemed to be a
resident of the State with which his personal and economic
relations are closer (centre of vital interests);
b) if the State in which he has his centre of vital interests
cannot be determined, or if he has not a permanent home available
to him in either State, he shall be deemed to be a resident of
the State in which he has an habitual abode;
c) if he has an habitual abode in both States or in neither of
them, he shall be deemed to be a resident of the State of which
he is a national;
d) if he is a national of both States or of neither of them, the
competent authorities of the States shall settle the question by
mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person
other than an individual is a resident of both States, the
competent authorities of the States shall endeavour to settle the
question by mutual agreement having regard to its place of
effective management, the place where it is incorporated or
otherwise constituted and any other relevant factors. In the
absence of such agreement, such person shall be deemed not to be
a resident of either State for the purposes of Articles 6 to 21
inclusive and Articles 23 and 24.
The following Q & A well not on topic does deal with offshore
I read a book called Take Your Money and Run by Alex Doulis
How practical is this? Can I really go and live in the Turks and
Caicos or Bahamas or Costa Rica and escape Canadian Income Tax
and still come back and visit in Canada?
david ingram replies:
This is a very dangerous book.  It is a completely different set
of circumstances to decide to do something like this and research
it and then do it and buy the book and decide, "I can do that".
You can order the book and see more about the subject at his own
web site:
Doulis was able to get Italian Citizenship and then established
residence in the Netherlands which at the time had a treaty with
Canada that allowed his RRSP's to be withdrawn tax free.  He has
spent most of his time on a boat in Europe in countries that have
tax treaties with Canada.  If Revenue Canada had attacked him, he
could claim the benefits of a tax treaty.
The problem is that most people who want to do this want to go
and live in the Caribbean, not the Mediterranean.  In the last
ten years I have had five or six people suggest Spain.  I have
had 1,000 suggest the Caribbean.  In fact as i write this, one of
those people is at my house after spending 15 years in Jamaica
and finally coming back to Canada and Vancouver because he did
not want to raise his son in Jamaica.
The best country to do this with is Mexico so far as i can see.
It's warm, has good medical services and HAS A TAX TREATY WITH
A whole bunch Air Canada and Canadian Air Line personnel have
tried to escape Canadian Income Tax and established residences in
the US, Mexico, Costa Rica, the Bahamas and St Vincent.  They
continued to work for CAIL and/or AIR CANADA and flew
International flights so they would come up to Vancouver or
Toronto and catch a flight to Narita, Hong Kong, England or, or,
or but the point was that they were not working in Canada.
The CRA even produced a special EXCEL Spread sheet with every
flight listed and provided it to us to use to calculate the
flying time over Canada because part of the situation was that
the CRA still wanted tax for the time that the plane was flying
over Canadian Air Space.
However, those that lived in the Costa Rica or the Bahamas or St
Vincent had a problem.  Going home after every flight was time
consuming.  They would stay at their brother's, mother's,
mother-in-law's, friend's or fellow employee's place between
This meant that they are not in their country of residence for
more than 183 days.  Canada insists that if you are a Canadian
and claiming non-resident status, you had better be in your
country of residence more than 183 days.  In other words, if you
spend 140 days flying internationally, 80 days in Canada while
you catch a flight or depart from a flight and only manage 120
days in your country of residence, Canada will say "gotcha" and
tax you.
If you go to and read the US/Canada Taxation
section in the second box down on the right hand side, you will
see some interesting cases.
David Mclean was in Saudi Arabia for seven years but taxed when
he came back because he kept a house available for him in Canada.
Heck, he even had a letter from the CRA saying he was a
non-resident for tax purposes..
Wolf Bergelt  was only gone for four months and left his house
with his wife and kids in it.  The judge ruled him a non-resident
because he intended to leave.
Dennis Lee was not even granted landed status in Canada but was
taxed because he had a Canadian wife and had co-signed a mortgage
for her. He had wanted to come and live in Canada.
Frederick Reed lived in Bermuda but kept a car (in his father's
name) in Nova Scotia.  He was taxed because of a car.
Not put in yet is the case of Air Canada pilot Ray Hauser.  He
lost his Federal Court of Appeal case in July 2006 after losing
his original case in August, 2005. He had stayed at his
mother-in-law's place and kept clothes there as well.  He also
had a car for a while and he was in Canada more than 180 days two
of the years 1998 and 2000. He used Canadian medical services and
his wife spent a lot of time in Canada.
If you want to escape Canadian Taxation, you have to sever almost
every tie if you are not in a Tax Treaty country.
If you do decide to leave, be careful.  It is not easy and the
book you mention is very dangerous without competent advice to go
with it.
Read my November 1995 and March 1996 newsletters on offshore
trusts before you do anything - you can find them at in the top left hand box.
And if you do decide, be careful who you deal with.
Scott Brown ran off with $20,000,000 of other people's money
while advising them how to set up offshore.
Hoffman ran off with $20,000,000 of other people's money while
advising them how to set up offshore.
Nick Masee, the Bank of Montreal's first personal banker in BC
disappeared with anywhere from $10 to $50,000,000.
And Jerome Schneider helped over 1,000 people to set up offshore
and then turned them all over to the IRS after he was arrested.
Read the following
News release
OTTAWA, ONTARIO, August 3, 2006 -- Officials of the Canada
Revenue Agency (CRA) and the United States Internal Revenue
Service (IRS) today announced significant progress in unravelling
an abusive cross-border tax scheme. This effort stems from leads
and information first developed by the Joint International Tax
Shelter Information Centre (JITSIC).
The scheme involves hundreds of taxpayers and tens of millions of
dollars in improper deductions and unreported income from
retirement account withdrawals. Canadian and U.S. promoters have
been marketing the scheme on both sides of the border to
individual investors, ranging from middle to high-income
Leaders of the CRA and IRS said the collaborative effort reflects
the progress being taken by JITSIC in the complex task of
tracking international tax schemes and shelters involving
individuals and corporations.
CRA Commissioner Michel Dorais said, "Tax administrations in many
parts of the world are working together to detect and shut down
abusive tax schemes. Promoters who believe they can play one
country against another in developing tax schemes should beware."
"The real time exchange of information, including the identities
of promoters and hundreds of investors has been critical to this
investigation," said IRS Commissioner Mark W. Everson. "JITSIC is
emerging as an important part of efforts to combat abusive
Under the scheme, investors purchased what appear to be
high-yield offshore investments through offshore corporations and
foreign bank accounts. Typically, investors make these purchases
using cash or proceeds from withdrawals, allegedly tax free, of
retirement funds (RRSPs in Canada, IRAs in the U.S.). Investors
also make purchases through using tax refunds improperly
generated by alleged losses claimed for natural resource industry
CRA and IRS agents continue to identify promoters, participants
and entities involved in the scheme. Promoters and participants
engaged in abusive schemes have routinely been subjected to
strict enforcement action by both tax administrations.
JITSIC was established in 2004 by the tax administrations of four
countries, Australia, Canada, the United Kingdom and the United
States, to supplement the ongoing work of the Australian Taxation
Office, Canada Revenue Agency, Her Majesty's Revenue and Customs,
and the Internal Revenue Service in identifying and curbing
abusive tax schemes. Delegates from each of the four countries
work together in Washington, DC.
For a follow up definition (by the CRA) of the difference between
tax avoidance and tax evasion, see:
For an example of the prosecution by the IRS of a Vancouver
resident, see the New York times articles at:
Jerome Schneider turned over 1,000 of his clients and the lawyers
and accountants who helped over to the IRS as part of a plea
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa
US / Canada Real Estate Specialists
My Home office is at:
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 10 PM 7 days a week  Vancouver (LA)
time -  (please do not fax or phone outside of those hours as
this is a home office)
email to taxman at
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 and the author and any and all non-contractual
duties are expressly denied. All readers should obtain formal
advice from a competent and appropriately qualified legal
practitioner or tax specialist for expert help, assistance,
preparation, or consultation  in connection with personal or
business affairs such as at If you forward this
message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
David Ingram gives expert income tax & immigration help to
non-resident Americans &  Canadians from New York to California
to Saudi Arabia to Mexico to China or Chile - Cross border, dual
citizen - out of country investments are all handled with
competence & authority.
Alaska,  Alabama,  Arkansas,  Arizona,
California,  Colorado, Connecticut,
Delaware, District of Columbia,  Florida,
Garland, Georgia,  Hawaii,  Idaho,  Illinois,
Indiana,  Iowa,  Kansas,  Kentucky,
Louisiana,  Maine,  Maryland,
Massachusetts, Michigan, Minnesota,
Mississippi,  Missouri,  Montana,  Nebraska,
Nevada, New Hampshire,  New Jersey,
New Mexico, New York, North Carolina,
North Dakota,  Ohio,  Oklahoma,  Oregon.
Pennsylvania,  Rhode Island,  Rockwall,
South Carolina, South Dakota, Tennessee,
Texas,  Utah, Vermont,  Virginia,
West Virginia, Wisconsin, Wyoming,
British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, Quebec City,
New Brunswick, Prince Edward Island,
Nova Scotia, Newfoundland, Yukon and
Northwest and Nunavit Territories,
Mount Vernon, Eumenclaw, Coos Bay
and Dallas Houston Rockwall Garland
Texas  Taxman and Tax Guru  and wizzard
wizard - consultant - expert - advisor -advisors consultants -
gurus - Paris Prague Moscow Berlin
Lima Rio de Janeiro, Santaigo Zimbabwe
international non-resident cross border income tax help
assistance expert preparation & immigration consultant david
ingram, experts on rentals mutual funds RRSP RESP IRA 401(K) &
divorce preparer preparers consultants
 David Ingram expert income tax help and preparation of US Canada
Mexico non-resident and cross border returns with rental dividend
wages self-employed and royalty foreign tax credits
This from "ask an income tax and immigration expert" from or or David
Ingram deals on a daily basis with expatriate tax returns with:
multi jurisdictional cross and trans border expatriate problems
for the United States, Canada, Mexico, Great Britain, United
Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan,
China, New Zealand, France, Germany, Spain, Italy, Russia,
Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland,
Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India,
Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba,
Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands,
US, UK, GB, and any of the 43 states with state tax returns, etc.
Rockwall, Dallas, San Antonio Houston
Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and
Immigration Tips, Income Tax  Immigration Wizard Antarctica
Rwanda Guru  Consultant Specialist Section 216(4) 216(1) NR6 NR-6
NR 6 Non-Resident Real Estate tax specialist expert preparer
expatriate anti money laundering money seasoning FINTRAC E677
E667 105 106 TDF-90 Reporting $10,000 cross border transactions
Grand Cayman Aruba Zimbabwe South Africa Namibia help USA US
-------------- next part --------------
An HTML attachment was scrubbed...


Trackback URL for this entry:

No trackback comments for this entry.