Temporarily outside Canada

• Residency status
  • What are residential ties?
  • Types of factual residents
• Your tax obligations
  • Which tax package?
  • Filing due date
  • Changes in residency status
• Foreign tax credit
• Overseas employment tax credit
• For more information...
  • T4131, Canadian Residents Abroad
  • P151, Canadian Residents Going Down South
  • IT-270R, Foreign Tax Credit
  • IT-497R, Overseas Employment Tax Credit
  • IT-221, Determination of an Individual's Residence Status

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Residency status

You're considered a factual resident of Canada for tax purposes if you keep residential ties with Canada while travelling or living abroad.

• The term factual resident means that although you're not in Canada, you're still considered a resident of Canada for income tax purposes.

If you also establish residential ties in a country with which Canada has a tax treaty and you're considered to be a resident of that country for the purposes of that tax treaty, you may be considered a deemed non-resident of Canada for tax purposes.

What are residential ties?

Residential ties include:

• a home in Canada
• a spouse or common-law partner (see the definition in the General Income Tax and Benefit Guide) and dependants who stay in Canada while you are living abroad
• personal property in Canada, such as a car or furniture
• social ties in Canada.

Other ties that may be relevant include:

• a Canadian driver's licence
• a Canadian bank account or credit cards
• health insurance with a Canadian province or territory.

For more information, please see IT-221, Determination of an Individual's Residence Status.

If you would like an opinion about your residency status, please complete and submit Form NR73, Determination of Residency Status (Leaving Canada).

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Types of factual residents

You may be a factual resident for tax purposes if you:

• work temporarily outside Canada
• teach or attend school in another country
• commute daily or weekly to the United States to work
• vacation outside Canada.

If you're conducting missionary work in another country and you meet certain requirements, you may choose to be a factual resident even if you don't keep residential ties with Canada.

• In this case, contact the International Tax Services Office for more information.

Your tax obligations

For the tax year you leave Canada and for each year you're a factual resident while living outside Canada, your income is taxed as if you never left Canada. You'll continue to:

• report "world income" (income from all sources, both inside and outside Canada) for the entire tax year
• claim all deductions, non-refundable tax credits, and refundable federal, provincial, or territorial credits that apply to you
• pay federal tax and provincial or territorial tax for the province or territory where you keep residential ties
• be eligible to apply for the GST/HST credit (goods and services tax/harmonized sales tax), the Canada Child Tax Benefit and the Universal Child Care Benefit.

For more information, please see T4131, Canadian Residents Abroad.

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Which tax package?

For each tax year that you're a factual resident of Canada for tax purposes:

• use the General Income Tax and Benefit Guide and the forms book for the province or territory where you keep residential ties.

Filing due date

Generally, your income tax return must be filed on or before:

• April 30 of the year after the tax year; or
• 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), the return must be filed on or before June 15 of the year after the tax year.

Note: 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.

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Changes in residency status

If your circumstances change, you may no longer be a factual resident of Canada for income tax purposes. For example, you could:

• decide to stay permanently in the country where you're working
• sell your house in Canada
• move your spouse or common-law partner and dependent children with you to your new country.

You're usually considered an emigrant in the year that you sever your ties with Canada. For all following years, you will be a non-resident of Canada.

Foreign tax credit

You may be able to claim a foreign tax credit (FTC) on your Canadian income tax return if you:

• paid an income tax or a profits tax to a foreign country on foreign income that you're reporting on your Canadian 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 amounts:

• the foreign income tax you actually paid; or
• the tax due to Canada on your net income from that foreign country.

For details on how to calculate the foreign tax credit, please see IT-270R, Foreign Tax Credit.

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Overseas employment tax credit

You may be able to claim an overseas employment tax credit if you meet all of these requirements:

• You work outside Canada for a period of more than six months in a row, and the six-month period began before the end of the tax year and includes any part of the tax year for which you're claiming the credit.
• You're employed throughout that period by one of the following:
  • a person residing in Canada
  • a partnership in which Canadian residents or Canadian-controlled corporations own more than 10% of the fair market value of all interests in the partnership
  • a corporation that's a foreign affiliate of a person residing in Canada.
• You work during all or most of the six-month period to secure a contract for your employer or in connection with a contract your employer had previously entered into.
• The contract relates to one of the following:
  • exploring for or exploiting petroleum, natural gas, minerals, or similar resources
  • construction, installation, agricultural, or engineering activities
  • an activity performed under contract with the United Nations.

Note: If you're employed under a program sponsored by the Canadian International Development Agency (CIDA), you do not qualify for this credit.

To claim this credit, both you and your employer must jointly complete Form T626, Overseas Employment Tax Credit.

• You must then file Form T626 with your income tax return.

For more information, please see IT-497R, Overseas Employment Tax Credit.