Moving to Canada?

You are required to pay Canadian income taxes on your worldwide income when you become a resident of Canada. There are a number of factors that are used to determine if you are a resident for Canadian tax purposes but generally speaking if you are in Canada for 183 days (24 hour periods) or more in a calendar year. Note that you can be in Canada for much less than the 183 days and still be considered a resident for tax purposes.

Two examples illustrate this:

Mary decides to move to Canada and enters the country on September 15th to take up residence. Mary will be a resident as of September 15th.

Andrew is a U.S. citizen and was in Canada from January 1st until February 28th, May 1st to 15th, and September 1st until January 31st. Since the total days in Canada were 196, he is required to pay Canadian income tax on his world wide income.

Part Year Residency

In the case above, Mary is only required to pay income tax on her worldwide income from September 15th on. Upon becoming a resident for tax purposes:

• All property is deemed to have been disposed of and reacquired on the date you become a resident. This ensures that new residents will only pay tax on gains made after becoming residents and there is no immediate tax consequence.
• Income earned from the point you become a resident of Canada is subject to tax and income earned before you became a resident is not subject to Canadian tax and you may be able to prorate income such as interest on bonds.
• All deductions and tax credits are also prorated for the number of days you are a resident of Canada for tax purposes.

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