CRA Residency Questionnaire: Answering a Residency Review

How do I answer a CRA residency review?

Reply by the date in the CRA's letter, answer every question it lists, and make each date and fact match the returns you filed. If you cannot answer in time, call the number on the letter before the deadline and ask for more time (CRA). The CRA decides residency on all the facts, including the length, purpose, intent and continuity of your stay inside and outside Canada (CRA). Your residential ties weigh most: a home, a spouse or common-law partner, and dependants in Canada are almost always significant ties (Folio S5-F1-C1, ¶1.11).

The questions in your own letter are the ones to answer. A case is not simple when:

• a spouse, children or an unrented home stayed in Canada;
• the stay abroad is short or has no end date, or you visit Canada often;
• departure tax was reported, or several years are at stake;
• your new country also treats you as resident;
• your answers could contradict the departure date on your return or your filings abroad.

If your spouse or children still live in Canada and you are not going back to a country you lived in before, the CRA will likely treat you as still resident (¶1.10, ¶1.13), unless a tax treaty's tie-breaker places you in the other country. A spouse you already lived apart from because the relationship broke down is not a tie (¶1.13).

Gather before you reply: the letter and its reference number, your departure-year and later returns, any filing abroad, and proof of the move: a lease or deed abroad, your job contract or work permit, the sale or arm's-length lease of your Canadian home, school enrolment abroad, cancelled provincial health coverage, and travel records.

Why is the CRA asking about my residency?

The CRA checks residency when a return takes a position that depends on it: a departure date on a return, a non-resident return, a refund claim, a treaty claim, or slips that do not fit the status you claimed. The letter says what the CRA wants; answer each point fully and accurately.

An opinion the CRA gave earlier on Form NR73 does not end the matter. The Folio says such an opinion rests entirely on the facts you supplied and may be subject to a more detailed review later, when supporting documents may be required (¶1.54–1.55).

What will the CRA ask about?

Expect questions about the same facts that Form NR73 lists, because those are the facts the CRA weighs (Form NR73).

The full ties test is explained in Canadian tax residency.

Is this the same as filing Form NR73 myself?

No. Form NR73 is a request you choose to make for the CRA's opinion on your status (CRA). A residency review is the CRA checking a position you already took on a return. The facts asked are similar, but now the answers support or undo a filed return. To ask for an opinion before any review, see asking the CRA to decide your residency.

How do I answer each question so it matches my returns?

Use one departure date everywhere, and explain every tie you kept. The Folio says you generally become a non-resident on the latest of the dates you, your spouse or common-law partner, and your dependants leave, or the date you become resident in the new country (¶1.22). If your family followed later, say when and why. One exception: if you lived in another country before coming to Canada and are going back to live there, you generally become a non-resident on the day you leave, even if your spouse stays behind for a while to sell the home or so the children can finish a school year already under way (¶1.23). Then say so and give the date you first came to Canada. For how that date is set, see the date you become a non-resident.

1. Check the departure date on your return, your departure-tax forms and any filing abroad. Fix a conflict before you answer, not after.
2. Answer each listed question in order. If you left Canada more than once, give a list of the dates with a short explanation of each (Form NR73).
3. Explain each tie you kept. A home leased at arm's length on market terms may not be a significant tie on its own (¶1.12). If your spouse or children stayed to finish a school year, their later move usually becomes your departure date unless the exception above applies; if your return used your own exit date, raise this in your answer.
4. Do not leave a question blank. If a document no longer exists, include a written explanation instead (CRA).

A single secondary tie is unusual enough not to make you resident on its own (¶1.14), but several together can matter.

Which documents prove I left Canada?

Send documents that show ties ended in Canada and began abroad, dated around your departure.

Form NR73 notes the CRA may ask for confirmation of residency from the other country's government and proof that your income is taxed there (Form NR73). Include the reference number from the upper right corner of the letter, and upload scanned documents through your CRA account or send them to the address in the letter (CRA). Answering from abroad is covered in CRA letters while living abroad.

I am also resident in my new country: does the treaty matter?

Yes. If a tax treaty makes you resident in the other country and not in Canada, the Income Tax Act deems you not resident in Canada (s. 250(5)). That day is then your departure date: the deemed sale for departure tax and the split of your year run from it (s. 128.1(4)), even if your family or home was still in Canada; see the date you become a non-resident. Most treaties' tie-breaker rules look first at where you have a permanent home; if you have one in both countries, they look at your centre of vital interests, a close review of your personal and economic ties with each country (Folio ¶1.46–1.50).

You carry the burden of showing you are liable to tax in the other country (¶1.43). A certificate of residence or a foreign tax assessment can help show it. Each treaty has its own wording, and a country without a treaty gives no tie-breaker.

What happens after I answer?

Usually one of these: the CRA accepts your position, reassesses you as a resident for some or all of the years in question, or accepts that you left but on a different date. For a return you filed, the CRA can usually reassess only within three years of the original notice of assessment; after that, only for misrepresentation from neglect, carelessness, wilful default or fraud, if you signed a waiver, or in listed cases: three years more for a year you held foreign property, did not file Form T1135 and left its income off your return, and with no limit for a sale of real property you never reported (ITA s. 152(4)(a), (b.2), (b.3)). Think before signing a waiver. A different date can move income between your resident and non-resident periods and change departure tax. If the CRA says you are still resident, see the CRA still thinks you are a resident. For general review steps, see CRA reviews and audits.

I disagree with the CRA's residency decision: what can I do?

File a notice of objection, and if a treaty is involved, consider asking for competent authority help. An individual can object by the later of 90 days after the notice of reassessment and 1 year after the return's filing deadline; a late objection can be requested within one year after the objection deadline (P148). Object online through your CRA account or with Form T400A.

When both countries claim you, the tie-breaker can be settled between the two tax authorities through competent authority assistance. Most treaties set a time limit for asking, usually two years from the first notice of the action; some set none. Even on time, Canada can generally give relief only for years it can still reassess, so ask early (IC71-17R6, ¶31). You can file a notice of objection to protect your right of objection and ask Appeals to hold it in abeyance while the authorities talk (IC71-17R6, ¶11, ¶30, ¶46).

Example

These examples are illustrative; figures are in Canadian dollars.

Contract abroad, family follows later

A manager leaves Mississauga in March for a three-year contract in Riyadh and files as a non-resident from March. The CRA asks about his house and family. The house was the family home until July and has since been rented to strangers on a two-year written lease at C$3,200 a month; his wife and children joined him in July after the school year. He sends the lease, the children's school enrolment abroad and his job contract. From March to July he still had a home and family in Canada, so under the Folio's usual latest-date rule the CRA may treat July, not March, as his departure date, and he did not live in Saudi Arabia before, so the exception does not help. His world income from March to July would then belong on his resident return, and his departure-tax values would be taken in July. He raises this himself in his reply rather than defending March.

Ties kept on both sides

A couple moves to Asia but keeps their Vancouver condo empty for visits, their Canadian credit cards and their provincial health coverage. Their answers show a home available to them in Canada plus several secondary ties. Unless a tax treaty with their new country places them there under its tie-breaker, the CRA may treat them as still resident and tax their world income.

Confirming a departure date

A graduate leaves for Melbourne and the CRA asks her to confirm her departure date. She sends her lease start date, flight record and job offer. All match the date on her departure-year return, so her answer and her return tell the same story.

Different for you?

• The CRA already reassessed you as resident: see the CRA still thinks you are a resident and get individual tax help before the objection deadline.
• You moved to the US and your returns on each side conflict: see left Canada without telling the CRA.
• Departure tax, several years or dual residence are at stake: review the leaving Canada rules and get individual tax help before you reply.
• Your spouse and children still live in Canada: see Canadian tax residency and get individual tax help before you reply.
• You rent out your Canadian home and no tax was withheld on the rent: see non-resident landlords who never withheld before you send the lease.
• You still run a Canadian corporation from abroad: see corporation residency after the owner moves abroad and get corporate tax help.
• You never filed after leaving: see non-resident returns and catch-up.
• You have not been reviewed yet and want certainty: see asking the CRA to decide your residency.