According to the income tax law, residency is very important. Residence for tax and immigration are different. One person can be a resident of Canada but may not be a resident of Canada for tax purposes. An individual is taxed on worldwide income for the full year if he/she resides in Canada.

An individual can be a resident of Canada for the purpose of income taxes if he meets the following conditions:

Primary indicators

  • Having a residence (i.e, owned or rented) that is available in Canada to live in
  • Having immediate family members living in Canada such as a spouse and/or minor children.

Secondary indicators

  • Maintaining social ties and personal property in Canada such as memberships in a Canadian organization, having a driver license, provincial health card, bank accounts, principal residence, etc.

Secondary indicators are less important when determining residence for tax purposes.

Deemed full-year resident of Canada

A non-resident can be a resident for tax purposes if he/she physically present in Canada for 183 days or more in a taxation year and will be taxed on worldwide income. For the purpose of counting the number of days, even a part of the day is considered as a full day.

A part-year resident of Canada

A person that starts fresh in Canada or makes a clean break from Canada is taxed on the worldwide income for a part of the year. All deductions will be applicable for the part of the year in which he/she was present in Canada. All non-refundable tax credits are pro-rated and only allowed for the period of residence in Canada.