How can I become a tax-free resident in Canada?

Non-resident for tax is a non-resident in the tax sense, and is usually called non-tax resident. It refers to a special resident who has completely cut off his residence relationship with Canada and has not lived in Canada in the latest tax year or stayed in Canada for less than 183 days. According to Canada's tax system, your tax liability in Canada depends on your living conditions. If you are a resident, you must pay taxes on your income from all over the world, including China. If you are a non-resident, you only need to pay tax (or be deducted) on your (specific) income from Canada. Your income from other countries does not need to be declared in Canada, and your income from outside Canada does not need to be taxed, such as China.

Prerequisites for applying to become a non-tax resident:

If someone wants to become a non-tax resident in Canada, he can apply to become a non-tax resident according to the "tie rule" in the tax treaty. One of the prerequisites for the application is that there must be a tax treaty between the country and Canada. At present, there is a tax treaty between Chinese mainland and Canada, but not between Taiwan Province Province and Canada. The tax treaty between Hong Kong and Canada has not been formally determined, so friends from China in Hong Kong and Taiwan Province Province cannot apply.

Tax treaties have advantages and disadvantages for mainland immigrants with overseas assets. The advantage is that you have the opportunity to apply to become a tax-free resident; The danger is that the IRS can access China's financial information database through tax agreements and investigate someone's assets.

To become a non-tax resident, you can't have a spouse (or cohabiting relationship) and relatives who need your support, such as parents, grandparents and children, to stay in Canada. This is often misunderstood. Many people have to work outside Canada for a long time because of their work needs, and only their wives and children live in Canada. I came to Canada with a visiting visa because I lost my maple leaf card, so I don't think I am a tax resident. This idea is wrong. When the tax bureau checks the main important residential connections, the first thing it knows is the residence. Whether it is rented or bought, as long as it is a place where this person can legally live, it belongs to the residence. Because the house under the wife's name is legally habitable for astronauts, it belongs to the "residence" of astronauts. In addition, spouses and even children live in Canada, and the three main living relationships of "astronauts" are consistent, so they will naturally be classified as "tax residents". Only from this point of view, "astronauts" cannot become non-tax residents. Although they paid taxes in China, they had to pay the difference in Canada.

Of course, this "residential contact" mode of the Canadian Taxation Bureau (that is, any conclusion of spouse/housing/dependent) is not stipulated in the statutory law, and the explanation in official website is only a guide. Now, some practitioners put forward that the "ordinary resident" model of case law and the "deadlock breaking rule" model of Canada-China tax treaty have legal effect. From this model, a person can have a spouse/housing/dependent in Canada and may be a non-Canadian resident for tax purposes. The relevant disputes have not yet settled, but there is no doubt that whether the "astronaut" is a non-resident in Canada, whether his spouse is in Canada, and whether his income reaches the tax level, it is best not to apply for any benefits for tax declaration.

Meet the requirements of becoming a non-tax resident, submit the application form, and after about one month, you will receive a reply from the tax bureau about the identity of the applicant. It is worth noting that the tax bureau's reply to the applicant's identity is based on the information provided by the applicant. If one day the tax bureau finds that the applicant does not meet the requirements of becoming a tax-free resident, the tax bureau will conduct a comprehensive review of the applicant's previous tax forms and return all taxes, as well as interest and fines.

When you apply to become a non-tax resident, you need to submit the last tax return. In addition to your income, you should also fill in the list of global assets and the form of treating global assets as sales. The global assets list includes global real estate, stocks, bonds, stocks, personal items, collectibles, etc. The list of global assets deemed for sale shall list the tax cost and value of all listed assets at the time of departure. On the day when the tax bureau recognizes you as a tax-free resident, these assets are recognized as being sold, and the value-added part needs to pay VAT. Although this tax is not as good as the "departure tax" in the United States, it has the same significance.

For new immigrants in Canada, it is relatively simple to apply to become tax-free residents; If immigrants who have filed tax returns in Canada for more than two years apply to become tax-free residents, they need careful planning. It is best to consult an accountant or lawyer first. In case the application of non-tax residents attracts the attention of the tax bureau, it will be a headache if the tax planning in the early stage is not done well.