Overview
These CRA interpretations explain how an individual’s residency status affects:
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Canadian tax liability
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access to federal and provincial tax credits
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application of foreign tax credits
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eligibility for moving-expense deductions
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tax obligations for non-residents receiving Canadian-source income
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deemed residency and treaty tie-breaker rules
CRA emphasizes that residency is always a question of fact, based on a person’s overall connections to Canada and, where applicable, treaty rules.
1. Factual vs. Deemed Residency
Factual residents
Individuals who maintain significant residential ties with Canada, such as:- a home in Canada
- spouse or dependants in Canada
- personal possessions or social ties
Deemed residents
Individuals with limited Canadian ties may still be deemed residents if they are:
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Canadian citizens working abroad for certain entities,
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individuals sojourning in Canada for 183+ days, or
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individuals covered under specific deeming rules in ITA 250(1).
2. Non-Residents and Canadian Tax Obligations
(Relevant: ITA 2(3), 115, 212, 215)
CRA states:
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Non-residents generally pay tax only on Canadian-source income.
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For many types of income (pensions, annuities), non-resident withholding tax is the final tax obligation.
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A non-resident is not required to file a Canadian return unless:
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electing under s.217 for pension income,
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earning employment income in Canada, or
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disposing of taxable Canadian property.
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If no significant Canadian ties remain, CRA typically considers the individual non-resident.
3. Treaty Tie-Breaker Rules
(Relevant: ITA 250(5); Treaty Residence Article)
Where a taxpayer is a resident of both Canada and another treaty country:
CRA applies tie-breaker tests:
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Permanent home
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Centre of vital interests
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Habitual abode
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Nationality
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Mutual agreement between tax authorities
A person may be treated as a deemed non-resident of Canada under ITA 250(5) if the treaty deems them resident elsewhere.
CRA emphasizes that a spouse in Canada is almost always a significant tie, often resulting in continued factual residency.
4. Residency and Eligibility for Tax Credits
(Relevant: ITA 118, 118.5, foreign tax credit rules)
CRA explains:
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Residents of Canada are taxed on worldwide income and may claim:
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federal and provincial non-refundable tax credits
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tuition and education credits
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foreign tax credits for taxes paid abroad
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Non-residents may claim limited credits, usually only against Canadian-source earned income, if filing a return under specific provisions such as section 217.
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Expenses related to foreign professional certification generally do not qualify for tuition credits unless paid to a recognized institution.
5. Residency and Moving Expense Deductions
(Relevant: ITA 62(1), 248(1))
CRA confirms:
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Moving expenses are deductible only for an eligible relocation, which includes:
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moving at least 40km closer to a new work location, and
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ordinarily residing at both the old and new residences.
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A taxpayer temporarily working abroad who maintains a family home in Canada is generally not considered to “ordinarily reside” abroad.
Therefore, moving expenses to a temporary foreign residence are not deductible.
6. Residency in a Province
(Relevant: ITA 2(1), Interpretation Act 35(1))
CRA clarifies:
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A person who is factually resident in Canada will normally also be a resident of a specific province at the same time.
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Provincial residence determines which province’s tax rates and credits apply.
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Every person resident in Canada at any time in the year must pay Canadian income tax on taxable income.
Key Takeaways
- Residency is determined by facts, not citizenship or intention alone.
- Maintaining significant ties—especially a spouse, dependants, or a home—often means continued Canadian residency.
- Non-residents generally pay tax only on Canadian-source income.
- Treaty tie-breakers can deem an individual non-resident even if they have some Canadian ties.
- Foreign tax credits help avoid double taxation for Canadian residents earning foreign income.
- Only individuals who “ordinarily reside” in a new location can deduct moving expenses.
- Residents of Canada are typically also residents of a province for tax purposes.
Disclaimer
This summary is based on a redacted CRA technical interpretation. While believed to be accurate at the time of original publication, CRA positions may change and may not represent current administrative policy. This content is provided for general information only and should not be relied upon as tax, legal, or financial advice.
Redaction Notice
All names, phone numbers, office locations, signatures, and confidential identifiers from the original CRA documents have been removed to protect privacy and comply with publishing guidelines.
