Principal Issues: Residential ties with Canada.
Position: If no significant ties with Canada, not a factual resident of Canada.
Reasons: The only ties were RRSP accounts in a Canadian chartered bank.
XXXXXXXXXX 2005-011766 S. Leung March 22, 2005
Dear XXXXXXXXXX:
Re: Residential Status for the 2001 Taxation Year
We are writing in reply to your facsimile correspondence of February 21, 2005 in which you requested our view as to whether during your 2001 taxation year you were merely a deemed resident of Canada subject to only federal income taxes including the federal tax on income not earned in a province referred to in subsection 120(1) of the Income Tax Act (the "Act"), or a factual resident of Canada and a resident of the Province of XXXXXXXXXX subject to federal income taxes and the income taxes of the Province of XXXXXXXXXX.
You mentioned in your facsimile correspondence and the letter of June 4, 2002 that you sent to Diane Lateigne of the International Tax Services Office the following facts with respect to the taxation year of 2001:
1. You were a XXXXXXXXXX.
2. You were on XXXXXXXXXX posting to XXXXXXXXXX from XXXXXXXXXX to XXXXXXXXXX.
3. For the year 2001 your only ties with Canada were through the XXXXXXXXXX where you had several RRSPs.
In addition to the above information, it may be relevant to the issue that you were resident in XXXXXXXXXX before your XXXXXXXXXX posting and apparently (by virtue of the return address on your facsimile transmittal sheet) have resumed residence there after your posting.
Our Comments
All of the facts and circumstances of a particular situation have to be thoroughly examined before a determination of an individual's residency can be made. The Canada Revenue Agency's views on the determination of an individual's residency are set out in Interpretation Bulletin IT-221R3 Determination of an Individual's Residence Status, (a copy of which is attached). We would bring to your attention, the list of secondary residential ties listed in paragraph 8 of that Bulletin and the comments in paragraph 11 of the Bulletin regarding the increased significance of any remaining residential ties where there is evidence that an individual's return to Canada was foreseen at the time of his or her departure.
With some hesitation, we do agree that an individual who is a XXXXXXXXXX posted in a foreign country for a three year term would not be factually resident in either Canada or any province thereof if his only residential tie was one or more bank accounts in a branch of a Canadian chartered bank and at the relevant time, it was not clear where his next posting was going to be. Such person would remain a deemed resident of Canada under paragraph 250(1)(b) of the Act and would not be subject to provincial income taxes. However, as it is unlikely that we have in our possession all of the relevant information pertaining to your residency determination we are unable to provide our views in reference to your particular fact situation.
We hope that our comments are of some assistance.
Yours truly,
Olli Laurikainen
Section Manager
for Division Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Planning Branch
cc.: Diane Lateigne
International Tax Services Office
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