Principal Issues: [TaxInterpretations translation] Determination of provincial residence status.
Position: Dual residence with the province of Quebec as the principal place of residence.
Reasons: Facts and Regulations 2607.
XXXXXXXXXX Danielle Bouffard
2004-010412
February 28, 2005
Dear Sir,
Subject: Request for technical interpretation: Provincial residency status
This is further to your letter of November 15, 2004 requesting our opinion on the determination of your residence status on December 31, 2004.
You have been working in Ontario since August 2004, where you maintain an apartment. Your wife and children have remained in your home in the province of Quebec. For personal and family reasons, your family was unable to move to Ontario.
You visit your family on average twice a month over the weekend. You are considering changing your driver's licence and car registration to the province of Ontario.
Question
You wish to know your province of residence on December 31, 2004 in order to select the T1 tax form that applies to you.
Position of the TSO
The XXXXXXXXXX Tax Services Office informed you in a letter dated November 10, 2004, that they were of the opinion that you were a resident of the province of Quebec.
Our Comments
As stated in paragraph 22 of Information Circular 70-6R5 dated May 17, 2002, it is the practice of the Canada Revenue Agency (CRA) not to issue written opinions on proposed transactions otherwise than through advance rulings. Furthermore, when it comes to determining whether a completed transaction has received appropriate tax treatment, that determination is made first by our Tax Services Offices as a result of their review of all facts and documents, which is usually performed as part of an audit engagement. However, we can offer the following general comments. These comments may not, however, apply to your particular situation in certain circumstances.
Our general position on the determination of an individual's residence status is expressed in Interpretation Bulletin IT-221R3, in which we state that many of the comments in the Bulletin apply to determinations of residence status for both provincial and federal tax purposes. An individual is considered to be resident in the province where he or she has significant residential ties. Although in some cases an individual may be considered resident in more than one province on December 31 of a particular taxation year, for purposes of computing his or her provincial tax liability, the individual will be considered resident in the province with which he or she has the most significant residential ties.
Section 2607 of the Income Tax Regulations provides that in cases of dual provincial residence, the individual is deemed to have resided on the last day of the taxation year in the "province which may reasonably be regarded as his principal place of residence.”
In paragraph 5 of IT-221R3 it is stated that:
The residential ties of an individual that will almost always be significant residential ties for the purpose of determining residence status are the individual's
(a) dwelling place (or places),
(b) spouse or common-law partner, and
(c) dependants.
Paragraph 7 of IT-221R3 provides the following clarification. This commentary also applies to the determination of the residential connection with a province:
If an individual who is married or cohabiting with a common-law partner leaves Canada, but his or her spouse or common-law partner remains in Canada, then that spouse or common-law partner will usually be a significant residential tie with Canada during the individual's absence from Canada. Similarly, if an individual with dependants leaves Canada, but his or her dependants remain behind, then those dependants will usually be considered to be a significant residential tie with Canada while the individual is abroad. …
Generally, secondary residential ties must be looked at collectively in order to evaluate the significance of any one such tie. It would be unusual for a single secondary residential tie with a province to be sufficient in and by itself to lead to a determination that an individual is factually resident of that province while outside the province. Secondary ties are listed in paragraph 8 of IT-221R3 and include, but are not limited to, provincial health insurance, vehicle registration, driver's licence, social and economic ties, and personal property.
The determination of a taxpayer's residence is therefore a question of fact. In your situation, your province of residence is the one where you maintain the most significant residential ties. Based on the information provided, you appear to maintain significant residential ties in Quebec and Ontario. On the one hand, your wife and children live in the family home located in the province of Quebec, and on the other hand, since August 2004, your permanent employment is located in Ontario where you maintain a dwelling. If the province in which you maintain the most significant residential ties cannot be determined, we look at all secondary ties in both provinces. In your letter, you did not provide any information regarding secondary ties you may have established in Ontario (e.g., health insurance, social ties, other economic ties, etc.). However, you have indicated that you regularly visit your family in the province of Quebec and you do not appear to have changed your driver's licence, car registration and provincial health insurance. Based solely on the information available to us, we are inclined to conclude that the province of Quebec was your principal place of residence on of December 31, 2004, and that you should complete your tax return using the 2004 T1 General Income Tax and Benefit Return for Quebec Residents.
These comments are not advance income tax rulings and do not bind the CRA with respect to any particular factual situation.
Best regards,
Ghislaine Landry, CGA
for the Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch