[sunten]

Hi all,

I have moved to Hong Kong since I graduated from university and been working here for almost 2 years now. I reported my HK income for yr 2006, but I didn't declare my departure date with CRA. I would like to declare it this year and appreciate some experienced expats to share with me.

My status:
- no property
- single, no children
- have not-so-active banking account, BC medical, BC driver license

1. To inform CRA of my non-residency, do I only need to fill in the departure date on the front page of T1? Any other forms I need to complete? I have read elsewhere that we should avoid submitting NR 73 and being put "under the radar"
2. Further to Q1, do I just complete schedule D and simply tick "You were non-resident of Canada"?
3. How likely would CRA consider me as resident of Canada based on my secondary ties in CAN (bank a/c, medical, d/l)?
4. Am I allowed to file via NETFILE when filing as non-resident?

Cheers

[Ariakas]

I can comment on a few things.

1. Fill out T1 departure date. Don't fill out NR73.
2. Not sure.
3. You should definitely cancel your BC health care, any kind of provincial health care is a big no no. Bank account is ok. DL, let it expire.
4. No netfile, must mail to International tax office.

Hope this helps.

[HKChigger]

Go to the Canadian Consolate here and fill in the application to declare non residency

[sunten]

HKChigger: What is the name of the form you mentioned? How is it different from indicating departure date on my coming tax return? Any supporting documents required?

Ariakas: Thanks for ur answers. I just wonder why they don't have an official way to let us declare non-residency. I have read CRA website each year and never realized that you can specify a departure date on tax return (until I google).

[Football16]

What was stated at a seminar on Canadian taxes in HK and clearly was how important it was to complete that part of the T1 top left to say you are leaving Canada. This tick off is a must for non-residency.

Also clear from the discussion - never file the NR73 - the determination of residency form, just Google it or if you have complicated tax issues, seek professional tax advice.

Your situation sounds not too complicated and my experience is that the Canadian tax people are okay to ask questions - dont file NR 73 though as you note yourself.

To my surprise at a seminar on this issue, they stated that holding a provincial health care card was not a substantive issue in determining residency or non-residency. Not to my surprise is that residency/non-residency is not defined in the Canada Tax Act however there are a number of tests regarding "primary" and "secondary" ties.

Any one primary tie can make you a resident for tax purposes.

Primary Ties:

Vacant house/spouse left in Canada/family members renting your place - the issue here of renting to a relative is that you have control and thus you are not a non-resident. One example given was a person renting out their home and giving the money to a daughter to rent another place thus avoiding a primary tie.

Secondary Ties:

Bank accounts in Canada, credit cards in Canada, memberships such as professional associations, golf clubs (this is a tricky one as some at the session own cabins in Canada and had memberships at local golf courses in Canada); PROVINCIAL HEALTH CARDS, Canadian Driver Licence.

The Provincial health card is no good after 3 months in most provinces anyways, but is it a secondary test.

If you own property in HK, it is a good thing in that it helps to establish non-residency but be careful if you rent out a house to a relative.

The Tax folks in Canada look at your social, economic and property relationships and if they are severed or not with that home one of the biggies apparently.

The common Canadian issues listed were:

1. Residency.
2. Departure returns - deemed dispositions; defer tax owing to final disposition; Converting of T1 to Departure return - non pension, RRSPs; stocks - tax on purchase price and price on day you left. You can windfall but not claim losses. If you return to Canada you take market value of portfolio only if have say HK stock or poperty.
3. Informing Canadian payers of investment accounts as there is a 25% non-res withholding tax provision. You will then get an NR4 not regular forms. Gov't gets 25%. You can't take T- slips if non-resident.
4. Principal Residence - dont rent to close relatives - issue is close control. If you have a lease agreement that looks better but not if it is your close family. You can exempt out but then your sale is subject to tax when you dispose of it.

Can't answer any of the other questions as they didn't come up.

I will forget the whole host of issues in the year you decide to regain residency.

[sunten]

Football16: You said that tick on top left of T1 is a must. What about schedule D?

Do I still need to report HK income under world income in schedule A?

[HKFella]

Originally Posted by Football16

What was stated at a seminar on Canadian taxes in HK ....

The Provincial health card is no good after 3 months in most provinces anyways, but is it a secondary test........

I will forget the whole host of issues in the year you decide to regain residency.

F16, was that the CanCham seminar several months ago that was sold out (couldn't go)?

Provincial health card - one instruction I got long ago from company's HR when being transferred out of Canada was whatever happens don't actually go and use your health card on a trip back home. Applies to non-res family members too. (Company doesn't want their expats, who are tax-equalized,to jeopardize their Canadian non-res tax status).

F16 - re the last item, see PM

Thanks
HKFella