How would you like to stop paying Income Tax completely?by Peter
How do you become recognized as a non-resident? Obviously if you pack up all that you have and move to another country you are a non resident. That would make sense to most people, right? Well apparently not to the bureaucrats at Revenue Canada. They decided that they should come up with a test to determine whether in fact you are a non-resident. In addition to the Income Tax Act, Revenue Canada writes thousands of Interpretation Bulletins to help explain sections of the Act. It is important to note that these bulletins do not have the force of law. However, they can be helpful in determining how Revenue Canada may respond in various situations. One such bulleting is called â€˜IT-221R3â€™ â€“ â€˜Determination of an Individuals Residency Statusâ€™. You can get your own copy by visiting their website. If youâ€™d rather not surf their whole site, you can go directly to the bulletin by using this link â€“ http://www.ccra-adrc.gc.ca/E/pub/tp/it22r3eq/it221r3-e.html.
In Revenue Canadaâ€™s own words, this is what they say is the purpose of the bulletin;
â€˜The purpose of this bulletin is to explain the position of the Canada Customs and Revenue Agency (CCRA) concerning the determination of an individualâ€™s residence status for income tax purposes and the factors to be taken into account in making that determinationâ€™.
In Revenue Canadaâ€™s opinion you will be considered a non-resident if you meet certain criteria. The primary test is whether you have resident ties with Canada. These are;
ï‚§ Do you have a dwelling or place of residence either owned or leased in your name?
ï‚§ Do you have a spouse or common-law spouse who will be staying behind?
ï‚§ Do you have any dependents who you financially support who will be staying behind?
Elements of a secondary test, which may be used to determine residency include the following;
ï‚§ Personal property in Canada (such as furniture, clothing, automobiles, and recreational vehicles;
ï‚§ Social ties with Canada (such as memberships in Canadian recreational and religious organizations;
ï‚§ Economic ties with Canada (such as employment with a Canadian employer and active involvement in a Canadian business, Canadian Bank Accounts, retirement savings plans, credit cards and securities accounts;
ï‚§ Landed immigrant status or appropriate work permits in Canada;
ï‚§ Hospitalization and medical insurance coverage from a province or territory of Canada;
ï‚§ Drivers license from a province or territory of Canada;
ï‚§ Vehicle registered in a province or territory of Canada;
ï‚§ Seasonal dwelling place in Canada or a leased dwelling;
ï‚§ Memberships in Canadian unions or professional organizations.
As you go through this list, if you feel that Revenue Canada would still consider you to be a resident, donâ€™t worry, now you know what theyâ€™re looking for and you can change youâ€™re current situation to become a non-resident. For example, you could place property in a trust to get it out of your name.
As a non-resident for tax purposes, you can still live (visit) in Canada. And, as long as you spend no more than 182 days per year in Canada you will never regain your â€˜Tax Residency Statusâ€™. This presents a considerable opportunity for retirees who live in Canada in the summer and live in the warm south in the winter. Many retirees already spend less than 182-days per year in Canada. So, if they just satisfy these other requirements they could stop paying Income Taxes completely!
If this strategy interests you, I recommend a good book on the subject. It is entitled; Take Your Money and Run! First published in July 1994 and republished as a revised and updated edition in 2001, written by former Bay Street financial analyst Alex Doulis. The paperback has become one of the best selling books in Canadian history. The book, written in a story format, tells how its central character planned his escape, implemented his strategies, and now lives Tax Free beyond the reach of Revenue Canada.
Created on Jun 4th 2007 17:35. Viewed 2,445 times.
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