Factual residents – Temporarily outside of Canada
This page offers information for Canadians who are temporarily outside of Canada.
- Residency status
Residential ties and situations where you are considered a factual resident
- Your tax obligations
Reporting income, claiming deductions, eligibility for certain credits, and what happens to your residency status if your situation changes
- Entitlements to benefits and credits
Canada child benefit, universal child care benefit, and foreign tax credit
You are a factual resident of Canada for income tax purposes if you keep significant residential ties in Canada while living or travelling outside the country.
The term factual resident means that, although you left Canada, you are still considered to be a resident of Canada for income tax purposes.
If you have established ties in a country that Canada has a tax treaty with and you are considered to be a resident of that country, but you are otherwise a factual resident of Canada, meaning you maintain significant residential ties with Canada, you may be considered a deemed non-resident of Canada for income tax purposes.
You become a deemed non-resident of Canada when your ties with the other country become such that, under the tax treaty that Canada has with the other country, you would be considered a resident of that other country. As a deemed non-resident, the same rules apply to you as a non-resident of Canada.
Situations where you could be considered a factual resident
You may be considered a factual resident of Canada if you are:
- working temporarily outside Canada
- teaching or attending school in another country
- commuting (going back and forth daily or weekly) from Canada to your place of work in the United States (U.S.)
- vacationing outside Canada
- spending part of the year in the U.S., for example, for health reasons or on vacation
If you are a missionary in another country and you meet certain requirements, you can choose to be considered a factual resident even if you do not keep residential ties in Canada. To make this choice, you must satisfy all of the following requirements:
- be a Canadian citizen or a permanent resident of Canada
- be in the service of a religious organization that has its national ministry office in Canada
- be sent out of Canada for 5 years or less
- file an income tax and benefit return and report all income you receive from sources inside and outside Canada for each year you are absent from Canada
In this case, contact the CRA for more information.
Your tax obligations
As a factual resident, your income is taxed as if you never left Canada. As such, you will continue to:
- report all income you receive from sources inside and outside Canada for the year, and claim all deductions that apply to you
- claim all federal and provincial or territorial non-refundable tax credits that apply to you
- pay federal tax and provincial or territorial tax for the province or territory where you keep residential ties in Canada
- claim any federal and provincial or territorial refundable tax credits that apply to you
- be eligible to apply for the GST/HST credit (goods and services tax/harmonized sales tax), and Canada child benefit
You are an industrial designer. Your employer has sent you to work in Hong Kong for 18 months. Your spouse and children stay at the family home in Saskatchewan during your absence. The CRA considers you to be a factual resident of Canada for income tax purposes because of your residential ties in Canada.
When you file your Canadian return, you will report your income from sources inside and outside Canada, and you can claim deductions that apply to you. You will pay federal tax and Saskatchewan provincial tax. You can reduce both federal and provincial taxes by claiming federal and provincial non-refundable tax credits that apply to you.
Which tax package should you use
For each tax year that you're a factual resident of Canada for income tax purposes, use the Income Tax Package for the province or territory where you keep residential ties. Generally, this is the province or territory where you lived before you left Canada.
Filing due date
Generally, your income tax return must be filed on or before:
- April 30 of the year after the tax year
- June 15 of the year after the tax year, if you or your spouse or common-law partner carried on a business in Canada (other than a business whose expenditures are mainly in connection with a tax shelter)
A balance of tax owing must be paid on or before April 30 of the year after the tax year, regardless of the due date of the tax return.
What happens to your residency status if your situation changes
If your circumstances change, you may no longer be considered a factual resident of Canada for income tax purposes. This could happen, for example, if you:
- decide to stay permanently in the country where you are working
- sell your house in Canada
- move your spouse or common-law partner and dependent children with you to your new country
If you think your residency status for income tax purposes may have changed, see Determining your residency status for more information.
Entitlements to benefits and credits
Canada child benefit
If you are eligible to receive the Canada child benefit (CCB), you will continue to receive it and any related provincial or territorial benefits you are eligible for during your absence from Canada. However, you will have to file a return each year so the CRA can calculate your CCB. If you have a spouse or common-law partner, they will also have to file a return each year. If your spouse or common-law partner is a non-resident of Canada, they will have to file Form CTB9, Income of Non-Resident Spouse or Common-Law Partner.
If you have a child while outside Canada, you can apply for the CCB by sending the CRA a completed Form RC66, Canada Child Benefits Application. For more information, see Booklet T4114, Canada Child Benefits.
Foreign tax credit
You may be able to claim a foreign tax credit (FTC) on your Canadian income tax return if you paid tax on income or profits to a foreign country on income from that country that you report on your Canadian income tax return.
The FTC may reduce the federal and provincial/territorial tax you have to pay on the foreign income.
In most cases, the FTC you can claim for each foreign country is the lower of the following two amounts:
- the foreign income tax you paid
- the tax otherwise due in Canada on your net income from that country
You generally cannot claim a foreign tax credit for taxes you paid to a foreign country on income you earned in Canada.
To claim this credit, complete Form T2209, Federal Foreign Tax Credits, and attach it to your return.
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