Table of Contents General Comments Factual Residence Deemed Residence Residency Questions and Answers

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1 Table of Contents Chapter 1 CANADIAN RESIDENT...1 General Comments...1 Factual Residence...1 Establishing Non-Resident Status...2 INCOME TAX FOLIO S5-F1-C1: Determining an Individual s Residence Status...3 Income tax folios (ITF) - a new income tax technical publication...3 Phase-out of income tax interpretation bulletins and ITTNs...3 Permanence of Stay Abroad...3 Residential Ties with Canada...4 Primary Ties with Canada...4 Dwelling...4 Spouse and Dependents...5 Secondary Residential Ties...5 Establishing Ties in Your New Country...7 Visits to Canada...7 When Does Non-Residency Begin?...7 Tax Avoidance...8 NR73, Determination of Residency Status...8 Listed Factual Residents...9 Students...9 Teachers...9 Missionaries...9 Vacationers Commuters Other Employees Tax Relief? Deemed Residence Sojourners Other Deemed Residents Residency Questions and Answers... 14

2 x CANADIANS RESIDENT ABROAD Chapter 2 EMIGRATION Final Tax Return Deemed Dispositions March 4, 2010 Budget Change TCP Providing Security in Lieu of Tax Valuations TCP Non-TCP Non-TCP Deferral of Payment of Tax Security TCP and Non-TCP Acceptable Security Election to Dispose of Taxable Canadian Property Exception Tax Relief Deemed Dispositions Reduction of Canadian Tax Application of Losses from TCP March 4, 2010 Amendment TCP Reduction of Double Taxation Elect to Undo Deemed Disposition Employment Stock Option TCP Declared Unpaid Dividend A Word of Caution Principal Residence Rules Important notice Principal Residence Change of Use Change of Use Deemed Disposition Change of Use Election Deferred Capital Gains Deductions: RRSP RRSP: Home Buyers Plan RRSP Withdrawal for Education TFSA Tax-Free Savings Account Deductions: Moving Expenses Capital Gains Deduction Tax Credits Tax Rate... 47

3 CANADIANS RESIDENT ABROAD xi Other Types of Income Rental Income Other Income Reporting Requirement T Planning RRSP/RRIF/TFSA Planning Emigration Chapter 3 TAXATION OF A NON-RESIDENT Income Tax Non-Resident Tax Return Income from Employment Non-resident Employed as an Aircraft Pilot Income from Business Disposition of Taxable Canadian Property (TCP) Transfer of Taxable Canadian Property Principal Residence Exemption Change of Use and Election Options Capital Losses Other Canadian Source Income Persons Deemed to be Employed in Canada Reduction of Canadian Tax Deductions Support Payments RRSP Contribution Canadian Exploration and Development Expenses Employee Stock Options Amounts Exempt by Treaty or Agreement Losses Tax Credits Donations Disability Student Loan Interest and Tuition Canada Pension and Employment Insurance Medical Personal Non-Refundable Tax Credits... 77

4 xii CANADIANS RESIDENT ABROAD Non-Resident Withholding Tax New Non-Resident Form Limitation of Treaty Benefits Management or Administration Fees or Charges Interest Estate or Trust Income Rent Timber Royalties Support Payments Pensions Death Benefits Retiring Allowances Registered Supplementary Unemployment Benefit Plan Payments RRSP, RRIF, RDSP, DPSP, LIF Registered Education Savings Plans TFSAs, ETFs, Income Trust, Segregated Funds et al Tax Relief Canadian Tax Relief Reduction of Tax on Rental Income Section 217 Election Tax Treaties Foreign Tax Relief Estate Tax Offshore Trusts Non-Resident RRSP/RRIF Planning Non-Resident Locked-in RRSP Planning Non-Resident RCA Planning Chapter 4 TAX TREATIES Overview Dual Residence Status Tie-Breaker Rules Tie-Breaker Rules Application Types of Income Business Income Rental Income... 98

5 CANADIANS RESIDENT ABROAD xiii Dividends Interest Royalties Capital Gains Independent Personal Services (Self-Employed) Income From Employment Pensions Miscellaneous Double Taxation Special Provisions Treaty Withholding Tax Rates Chapter 5 IMMIGRATION Timing Date of Arrival Capital Property Taxable Canadian Property Tax Return Year of Immigration Timing Returning Former Residents RRSP Over-Contribution Withdrawal RRIF Withdrawal Offshore Investments Offshore Trusts Immigration Trusts for Individuals Granny Trusts Testamentary Offshore Trust Exempt Foreign Trust Former Canadian Residents Other Trusts Foreign Accrual Property Income (FAPI) Offshore Investment Funds Foreign Asset Reporting Requirements T1135-Foreign Income Verification Statement

6 xiv CANADIANS RESIDENT ABROAD What Property do you have to Report? Penalties for Non-Reporting Voluntary Disclosures Foreign Affiliates Transfer and Loans to Foreign Trusts Distributions from Foreign Trusts Dual Resident Status What if the Returns Aren t Filed? Addition of a Due Diligence Test March 21st, 2013 Federal Budget February 11, 2014 Federal Budget New Canada USA Border Crossing Rules The Panama Papers The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) Tax Information Exchange Agreements (TIEA) Foreign Account Tax Compliance Act (FATCA) Chapter 6 MISCELLANEOUS TAX RELIEF, RESIDENTS OF CANADA Treaties Employment Income Prescribed International Organizations International Non-Governmental Organizations Foreign Tax Credits/Deductions Relocation Moving Expenses and Relocation Benefits Eligible Housing Loss Home Relocation Loans Non-Accountable Allowances Benefits Counselling Services Educational Allowances For Children Group Term Life Insurance Policies: Employer-Paid Premiums Housing, Board and Lodging

7 CANADIANS RESIDENT ABROAD xv Housing Special Circumstances that Reduce the Value of a Housing Benefit Free or Subsidized Board and Lodging Subsidized Meals Exception to the Rules Interest-Free and Low-Interest Loans Loans Received because of Employment Medical Expenses Premiums under a Private Health Service Plan Premiums under Provincial Hospitalization, Medical Care Insurance and Certain Government of Canada Plans Professional Membership Dues Recreational Facilities Registered Retirement Savings Plans Stock Options Tax Equalization and Protection Chapter 7 SAFEGUARDING YOUR HEALTH Health Insurance Leaving Canada Provincial/Territorial Insurance Contacts Private Health Plans Private Health Insurance While Living Abroad Returning to Canada Safeguarding Your Health Travellers Clinics IAMAT Canadian Medic Alert Foundation Healthy Reading Health Supplies Healthy Pets Canadian Consular Assistance

8 xvi CANADIANS RESIDENT ABROAD Heathy Travel Web Sites Chapter 8 CANADIAN DRIVER S LICENCES Chapter 9 Chapter 10 GOODS AND SERVICES TAX (GST)/HARMONIZED SALES TAX (HST) What is the GST/HST? Who Pays the GST/HST? Taxable Supplies Supplies Taxable at 5%, 13% or 15% Zero-Rated Supplies Exempt Supplies Should You Register? Small Supplier CANADA PENSION PLAN AND OLD AGE SECURITY Canada Pension Plan (CPP) Canada Pension Plan enhancement Effects on CPP retirement pension and postretirement benefit Old Age Security (OAS) Guaranteed Income Supplement Allowance Allowance for the Survivor Canadians working outside Canada for Canadian employers Eligibility Deferring your Old Age Security pension OAS Recovery Tax Proactive Enrolment for OAS Benefits Lived or Living Outside Canada Pensions and Benefits If you have lived or worked in Canada and in another country What is a social security agreement? How can a social security agreement help me qualify for benefits? Canadian benefits

9 CANADIANS RESIDENT ABROAD xvii Foreign benefits Applying for benefits Canada s Social Agreements with other Countries Chapter 11 CUSTOMS AND EXCISE Residents Returning to Canada Before leaving for Canada Who are considered Former Residents? Items you can import duty- and tax-free Value limitation (CAN $10,000) Additional personal exemption Wedding gifts Ownership, possession and use requirements Exceptions to ownership, possession and use requirements Replacement goods Declaring your goods Disposing of goods you imported duty- and tax-free Public health Alcoholic beverages Tobacco products Travelling with CAN$10,000 or more Restrictions Firearms and weapons Explosives, fireworks and ammunition Vehicles Restrictions on temporary importing Goods subject to import controls Prohibited consumer products Food, plants, animals and related products Prohibited goods Health products (prescription drugs) Cultural property Items you import for commercial use Additional information Chapter 12 DEATH AND TAXATION

10 xviii CANADIANS RESIDENT ABROAD Wills Death of a Non-Resident Powers of Attorney APPENDIX INDEX DIRECTORY Addresses, Phone/Fax Numbers Time Zones Foreign Currency Metric/U.S. & Imperial Conversion Important Contacts Notes