Year of Departure Tax Returns
Leaving Canada can change how your income and property are taxed. Departure-year tax preparation addresses the Canadian reporting required for the year you become a non-resident for income tax purposes.
Moving abroad does not, by itself, establish your tax residency. Residential ties, the timing of the move and other relevant circumstances help determine your Canadian tax position.
Depending on your situation, the work may include:
- Departure-year reporting: Preparing the return using the applicable residency period and income information.
- Property reporting: Reviewing whether departure tax and related reporting apply to property held when residency changes.
- Ongoing Canadian income: Identifying tax considerations for income you expect to receive after leaving Canada.
Relevant records include details of your move, income and property. Seeking advice before departure can help clarify potential reporting requirements and allow time to gather information while it is readily available.
Non-Residents with Canadian-Source Income
Living outside Canada does not necessarily end your Canadian tax obligations. Income received from Canadian sources may be subject to withholding tax, a Canadian income tax return, or both, depending on the type of income and your circumstances.
A review of Canadian employment, business, investment, pension and other income helps establish the reporting that may apply.
Services may include:
- Income classification: Reviewing the source and nature of the income to identify the relevant Canadian tax treatment.
- Withholding and treaty considerations: Assessing whether the withholding rules or an applicable tax treaty affect your position.
- Tax return preparation: Preparing required returns and reviewing whether an available filing election is relevant.
The review identifies Canadian obligations requiring attention and the documents needed. Where tax is also payable in your country of residence, Canadian reporting may need to be coordinated with an adviser in that country.
Non-Residents with Rental Income
Non-residents who rent out Canadian property have withholding and reporting obligations that differ from those of Canadian residents. OVP CPA assists with the relevant Canadian tax filings and explanations of the requirements.
The work considers rental income, expenses, ownership details and arrangements with your Canadian agent or property manager to identify the reporting and supporting records needed.
Depending on your circumstances, services may include:
- Withholding and information reporting: Reviewing remittance obligations and preparing applicable NR4 reporting.
- NR6 applications: Preparing an undertaking where appropriate; CRA approval is needed before withholding can be based on net rental income.
- Section 216 returns: Preparing an elected return to report Canadian rental income and eligible expenses.
Filing and payment requirements need to be considered together. A rental tax return does not replace the separate withholding obligations, and timing is an important part of managing both.
Disposition of Taxable Canadian Property
Selling certain Canadian property while you are a non-resident can involve tax reporting beyond a regular income tax return. Assistance is available with dispositions of taxable Canadian property, including relevant real estate transactions.
A review of the property, ownership history, purchase and sale information, and supporting cost records helps determine whether notification under section 116 and an application for a certificate of compliance are required.
Services may include:
- Transaction reporting: Preparing the applicable notification and certificate application.
- Gain calculations: Reviewing proceeds, eligible costs, and other information needed for the tax calculations.
- Related tax returns: Preparing the Canadian return required to report the disposition and account for tax paid.
Seek advice before the sale is completed where possible, as the reporting is time-sensitive. A certificate of compliance and any withholding at closing do not necessarily settle the final tax liability.