Personal Finance

Covid 19 and Tax Canadian residency

  • Last Updated:
  • May 16th, 2020 9:08 pm
[OP]
Sr. Member
Aug 25, 2005
600 posts
33 upvotes
Mississauga

Covid 19 and Tax Canadian residency

My friend has returned from overseas due to Covid19 - there are very few medical facilities where he was located. He is a non resident Canadian for tax purposes. He becomes resident for tax purposes if he stays in Canada for more than 183 days. It is very likely he may have to stay more than 183 days. Does he lose his non resident status or is there a special consideration by CRA due to Covid-19?
8 replies
Banned
Dec 28, 2019
1021 posts
644 upvotes
fhirji wrote: My friend has returned from overseas due to Covid19 - there are very few medical facilities where he was located. He is a non resident Canadian for tax purposes. He becomes resident for tax purposes if he stays in Canada for more than 183 days. It is very likely he may have to stay more than 183 days. Does he lose his non resident status or is there a special consideration by CRA due to Covid-19?
Any reason(s) why he cannot leave Canada in the next 6 months?
[OP]
Sr. Member
Aug 25, 2005
600 posts
33 upvotes
Mississauga
His company will not allow travel to any country until October at least
Newbie
Jun 6, 2018
90 posts
80 upvotes
Toronto
According to this article on the CRA site, you may be a deemed resident of Canada if:
You stayed in Canada for 183 days or more (the 183-day rule) in the tax year, do not have significant residential ties with Canada, and are not considered a resident of another country under the terms of a tax treaty between Canada and that country
If the country where you friend is a tax resident has a double tax treaty with Canada (i.e. most developed countries), there may be provisions in the treaty which will nullify tax residency in Canada. Usually in the treaty there is a section which discusses residential ties. For example, if you have a permanent home in a country that has a tax treaty with Canada and don't have a permanent home in Canada, you will be resident of the other country for tax purposes.

If the other country doesn't have a double tax treaty with Canada (e.g. Panama, Somalia, Paraguay), it will be a more difficult to prove to the CRA that you're a non-resident of Canada for tax purposes. In this case, you may have to pay taxes in both countries and will not receive any credits.
[OP]
Sr. Member
Aug 25, 2005
600 posts
33 upvotes
Mississauga
louisevz - thank you for your detailed reply - I will ask him to look into your analysis
Member
Nov 30, 2015
314 posts
376 upvotes
Hamilton, ON
When he becomes a resident after the 183 days will he be eligible for cerb?
Newbie
Jun 6, 2018
90 posts
80 upvotes
Toronto
GroverTime wrote: When he becomes a resident after the 183 days will he be eligible for cerb?
Even if the CERB is still around when he becomes a resident, I doubt he will be able to qualify due to the criteria shown here on the CRA website.

Specifically:
  • You earned a minimum of $5,000 (before taxes) in the last 12 months, or in 2019, from one or more of the following sources: employment income, self-employment income, provincial benefit payments related to maternity or parental leave

There may be loopholes to make a non-resident qualify, however, I hope the government is strict in this regard. I myself am also a non-resident of Canada for tax purposes and am against someone taking advantage of a country's safety net especially if they haven't been contributing tax wise. Holding citizenship of a country shouldn't be sufficient to entitle you to these benefits.
Member
Nov 30, 2015
314 posts
376 upvotes
Hamilton, ON
I agree. Now let’s say someone went abroad for a couple of years working odd jobs and living off of savings. They returned (preplanned) just before the pandemic shut everything down with the intention of working again. But now they have a hard time making ends meet because they can’t find employment. Eligible or not?
Newbie
Jun 6, 2018
90 posts
80 upvotes
Toronto
Based on what you wrote I doubt they would be eligible for the CERB. Just being a Canadian resident is not enough, you need have earned income, filed a tax return, etc.

I suggest reading through this thread for more details on eligibility.

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