Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Taxpayer would like to know:
1. When will he be considered to be resident in Canada for tax purposes, and
2. Will his pension from the XXXXXXXXXX be taxable to him once he is resident in Canada?
Position: We can't say, although the questions may be re-submitted as a request for an advance income tax ruling.
Reasons: Both are questions of fact, although we gave some general information on both points.
XXXXXXXXXX 2003-001907
S. E. Thomson
December 16, 2003
Dear XXXXXXXXXX:
Re: Canadian Residence and XXXXXXXXXX Pension
This is in reply to your letter of May 10, 2003 in which you ask for an advance ruling regarding your residence status and your pension. We apologize for the delay in responding to your letter.
You have provided to us the following information:
1. You are a Canadian citizen and have been resident in the XXXXXXXXXX area since XXXXXXXXXX. You plan to move back to Canada in XXXXXXXXXX. You intend to buy a house in Canada and rent it out before you return, and will send some of your personal effects to Canada before you actually occupy the house. You would like to ensure that you do not become a Canadian resident when your personal effects are moved to Canada.
2. You are currently a full-time employee of the XXXXXXXXXX in the U.S., and will start drawing a pension from them in XXXXXXXXXX. You would like to confirm that the portion of your pension that is not taxable in the U.S. would likewise not be taxable in Canada or a province.
Information regarding obtaining an advance income tax ruling can be found in the current version of our Information Circular 70-6R5, Advance Income Tax Rulings, available on our website at www.ccra-adrc.gc.ca/E/pub/tp/ic70-6r5/README.html. In particular, paragraph 5 provides the fee structure, and paragraph 16 provides the information that we will need in order to commence work on your request.
In the meantime, we are able to offer the following general comments regarding the income tax provisions that may be relevant. Note, however, that since this information is meant to be general, it may or may not apply to your situation, and as such, these comments are not binding on the Canada Customs and Revenue Agency.
1. Information regarding the determination of an individual's residence status for Canadian income tax purposes can be found in the current version of our Interpretation Bulletin IT-221R3, Determination of an Individual's Residence Status, available on our website at www.ccra-adrc.gc.ca/E/pub/tp/it221r3-consolid/README.html. To obtain assistance with the determination of your residence status, please refer to paragraph 27 of the bulletin.
2. Pursuant to paragraph 56(1)(a) of the Income Tax Act (the "Act"), a Canadian resident taxpayer who receives a payment of pension must include the entire amount in computing his income for the year it is received, regardless of the source of the pension, or whether or not the payment is subject to tax in another country.
However, by virtue of paragraph 1 of Article XVIII of the Canada-U.S. Income Tax Convention (available at http://www.fin.gc.ca/treaties/USA_e.html), any portion of your pension payment arising in the U.S. will be exempt from taxation in Canada, if that portion would not be included in your U.S. taxable income if you were a resident of the U.S. Whether or not the XXXXXXXXXX pension "arises" in the U.S., and whether or not it would be included in your U.S. taxable income if you were a resident there, are questions of fact that would have to be examined.
The provinces of Canada are not bound by the Canada-U.S. Income Tax Convention, although, generally speaking, the provinces do respect the provisions of Canada's income tax treaties. This too would have to be examined for the province in which you become resident.
We presume that our comments will provide you with most of the information that you require. If our comments do not provide you with the certainty you need, we would be pleased to reconsider your questions if your request is resubmitted in the format outlined above.
We trust that we have been of some assistance.
Yours truly,
Olli Laurikainen, C.A., Manager
for Director
International & Trusts Division
Income Tax Rulings Directorate
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