Transcript - International Students and Income Tax, Segment 3: Residency and why it's important

Host: Welcome to the segment called Residency and why it's important, part of the International Students and Income Tax video.

This segment mentions links where you can get more information. You can find all these links in the Related links for this segment.

Joining me at the table today is Nicole Bélanger. Welcome.

Subject matter expert: Pleased to be here.

Host: Let's say I am an international student studying in Canada. What determines whether I will be subject to tax in Canada?

Subject matter expert: Well Sarah, under Canada's tax system, your liability for income tax in Canada is based on your status as a resident or non-resident of Canada. Your residence status must be established before your tax liability to Canada can be determined.

Host: So how do I determine my residence status?

Subject matter expert: The concept of residency for an individual can be quite complex.

The simplest way to explain it is to say that an individual is a resident of Canada if this is the place where he or she normally lives in the regular routine of life.

You can find more information on residency in the CRA's income tax folio S5-F1-C1, Determining an Individual's Residence Status.

Host: Is an international student's residency status for tax purposes the same as for immigration purposes? 

Subject matter expert: No, it's not.

Residency for tax purposes is based on residential ties as well as the individual's intentions.

Therefore, someone can be a resident for tax purposes but not a citizen or resident for immigration purposes.

Citizenship and Immigration Canada has its own definition for immigration purposes that you can see at www.cic.gc.ca.

Host: You mentioned residential ties, what can you tell me about that? 

Subject matter expert: The most important thing to consider when determining your residency status in Canada for income tax purposes is whether or not you maintain, or you establish, residential ties with Canada.

First there are significant residential ties. They almost always include a home in Canada, a spouse or common-law partner, and dependants who live with you in Canada.

Then there are secondary residential ties. These ties, when looked at together, may contribute to having significant residential ties. Secondary residential ties include having personal property in Canada, social ties, a Canadian driver's license, a Canadian bank account or credit cards, and health insurance with a Canadian province or territory.

For more information on residential ties, go to the CRA's webpage on residency for individuals. Also check out www.cra.gc.ca/internationalstudents.

Host: Is there more than one type of residency status? If so, what are international students generally considered as?

Subject matter expert: Yes, there are. The most common residency statuses for international students are: residents, non-residents, deemed residents, and deemed non-residents.

Host: Let's start with residents; can you explain a little bit more about what a resident is?

Subject matter expert: Of course. Generally you are a resident of Canada for tax purposes if you have more significant residential ties in Canada than in your home country.

Host: And what is a non-resident? 

Subject matter expert: You are a non-resident of Canada for tax purposes if you don't establish significant residential ties with Canada and you stay in Canada for less than 183 days during the year.

Host: The other two you mentioned were deemed residents and deemed non-residents. Can you tell me about them?

Subject matter expert: If you don't establish significant residential ties with Canada but you stay in the country for 183 days or more in a calendar year, then you're a deemed resident of Canada for tax purposes, unless you are considered a resident of your home country under the terms of a tax treaty between Canada and that country. In this situation, you'd be considered a deemed non-resident.

For more information on tax treaties, go to www.cra.gc.ca/treaties.

Host: Why is residency so important? 

Subject matter expert: When you are considered a resident of Canada for tax and benefit purposes, you have to report your income from all sources, both inside and outside of Canada, and you have the right to certain credits and benefits.

Host: I'm an international student and I'm not sure if I have any residential ties in Canada. How can I be sure of my residency status?

Subject matter expert: You can ask for an opinion on your residency status by filling out and submitting Form NR74, Determination of Residency Status (Entering Canada).

Host: Am I responsible for finding out my residency status for tax purposes?

Subject matter expert: Yes. It is your responsibility to determine your residency status and tax obligations under Canada's self-assessment system.

Host: Where can I read more about residency status?

Subject matter expert: More information on residency status is available in the CRA income tax folio S5-F1-C1, Determining an Individual's Residence Status.

Host: Thank you, Nicole.

This concludes the segment called Residency and why it's important, part of the CRA's International Students and Income Tax video.

Thank you for watching.

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