All individuals are required to determine their country of residence for income tax purposes when filing their personal tax returns. In most countries, including Canada, an individual is subject to tax on their worldwide income in the country in which they reside. While an individual’s residency is a simple determination for many, residency can be difficult to determine if one studies abroad, owns foreign personal property, has family and friends living around the world, and where one spends significant time in multiple countries.
A taxpayer’s residency status can also be challenged by the Canada Revenue Agency (“CRA”) or another foreign government agency, so it is important that the taxpayer consider all of the facts to appropriately determine their country of residence for income tax purposes. Below, we will briefly outline when the CRA may consider an individual to be a resident of Canada. We will also outline the implications where Canada and another country take the view that an individual is resident of each of the respective countries under each country’s domestic rules.
Under Canada’s domestic rules, an individual can be factually resident of Canada or deemed to be resident of Canada: