PR Card vs Tax Residency: Leaving Canada as a Permanent Resident

Does a PR card make you a Canadian tax resident?

No. Permanent resident status and tax residency are two separate tests run by two separate bodies, and neither decides the other. Immigration officers apply the residency obligation in the Immigration and Refugee Protection Act, s. 28. The CRA decides tax residency from your residential ties to Canada, and it treats immigration status ("landed immigrant status or appropriate work permits") as only a secondary tie (Folio S5-F1-C1, para 1.14). The Folio adds that a single secondary tie is rarely enough on its own.

What makes a case not simple: a home kept in Canada, a spouse or children who stay, long visits back to protect your PR days, a job abroad with a Canadian employer, or investments bought while you lived here. Gather the date you first moved to Canada and your PR landing date, a travel log of every day in and out of Canada, where your spouse and children live, and what you own in Canada and abroad.

The PR 730-day rule and the CRA's residency test: why they can give opposite answers

The two tests count different things. Under IRPA s. 28, a permanent resident needs at least 730 days in each five-year period. The Act also counts some days abroad, such as days accompanying a Canadian citizen spouse or partner, or a full-time assignment abroad for a Canadian business or public service, under conditions set in the regulations; IRCC applies them. The CRA's test has no day count for a factual resident: it looks at ties, treats length of stay abroad as only one factor, and says "there is no particular length of stay abroad" that alone makes you a non-resident (Folio S5-F1-C1, para 1.17).

So the answers can split both ways:

• Days abroad that count for PR status (if IRCC accepts them) do not make you a tax resident: you can be a non-resident for tax if you cut your ties.
• You can be a tax resident while failing the 730-day rule, if your spouse, children or home stay in Canada.

Whether you keep PR status is a question for Immigration, Refugees and Citizenship Canada; this page covers only the tax side. The full ties test is in Canadian tax residency.

Can you live abroad, keep your PR card and be a non-resident for tax?

Yes. If you leave and cut your significant ties (home, spouse or partner, dependants) and most secondary ones, such as a provincial health card, a driver's licence, a car registered here, and Canadian bank accounts and credit cards (Folio, para 1.14), you are usually a non-resident for tax even though you still hold PR status (CRA: Determining your residency status). As a non-resident you pay Canadian tax only on Canadian-source income (CRA: Leaving Canada). If you rent out a home you keep here, 25% non-resident tax applies to the gross rent (Income Tax Act, s. 212(1)(d)). A Canadian agent who collects it must withhold and remit that tax and is liable if it does not; an individual tenant renting a home to live in does not withhold, so with no agent you remit it yourself (s. 215(1.2), (1.3), (6)). A section 216 return can tax net rent instead; see non-resident landlords.

Form NR73 asks the CRA for its opinion on whether you would be a non-resident (CRA). Whether to file it is in asking the CRA to decide your residency.

Do trips back to keep your 730 days make you a tax resident again?

Occasional visits do not, on their own: the CRA says your status "will not be affected by occasional return visits to Canada" (Folio, para 1.20). Two things change that:

1. 183 days in one calendar year. A person without enough ties to be a factual resident who sojourns in Canada for 183 days or more in a year is deemed resident for the whole year (Income Tax Act, s. 250(1)(a); Folio, para 1.32). The CRA counts any part of a day (Folio, para 1.33). This is the trap for anyone who banks PR days in long blocks: spread evenly, 730 days over five years is about 146 a year, under 183, but one long stay can push a single calendar year over 183.
2. Rebuilding ties. Moving back into a home kept for you, or bringing your family back, can make you a factual resident again.

If you are also resident in a country that has a tax treaty with Canada, the treaty's tie-breaker may place you there, and you are then deemed not resident in Canada (s. 250(5)). Without a treaty, the 183-day rule applies as written. More on this group is in deemed residents of Canada.

Does departure tax apply to permanent residents?

Yes. When you stop being a tax resident, you are treated as selling most of what you own at fair market value, whatever your immigration status (Income Tax Act, s. 128.1(4)(b)). Three exclusions matter most to permanent residents (CRA: Dispositions of property):

The 60 months count the time you were resident in Canada for tax, including years on a study or work permit before you landed, not years since you became a permanent resident (s. 128.1(4)(b)(iv)). That third row is why a recent permanent resident's house or shares back home are often spared while a Canadian brokerage account opened after arrival is not. If all your property is worth more than $25,000, you also file Form T1161 (CRA: Leaving Canada); see the list-of-properties form. The short-residence rule in depth is in leaving Canada within five years of arriving; forms and payment are in leaving Canada.

Moving back to the country you came from: what is your departure date?

Usually the day you leave Canada. The general rule makes you a non-resident on the latest of the day you leave, the day your spouse or partner and dependants leave, or the day you become resident in the new country. But if you lived in the other country before coming to Canada and are going back to re-establish residence there, you usually become a non-resident on the date you leave, even if your spouse stays for a while to sell the home (CRA: Leaving Canada; Folio, para 1.23).

For that year you report world income up to the departure date and only Canadian-source income after it. More on choosing the date is in the date you become a non-resident.

Spouse and children stay in Canada for status or school: what does that do to your tax?

It usually keeps you a Canadian tax resident. A spouse or partner and dependants in Canada are significant ties that almost always count (Folio, para 1.11). If you are still a resident, you report your pay abroad on a Canadian return and may claim a foreign tax credit for tax paid there, unless a treaty tie-breaker places you in the other country, which makes you a non-resident for Canadian tax, with departure tax from that date (s. 250(5); s. 128.1(4)). The narrow exception is a temporary stay to wind things up when you are returning to your former country, covered above. Who files what and how to avoid double tax is in family stays in Canada while you work abroad.

Working abroad for a Canadian employer: PR days and tax

Days working abroad count toward PR days only in narrow cases: IRPA s. 28 and the regulations, s. 61 require a full-time assignment outside Canada by a qualifying Canadian business, and IRCC decides. Either way, the CRA still decides tax residency from your ties. If you are a non-resident, Canada taxes employment income for work you do in Canada (Income Tax Act, s. 115(1)(a)(i)). Payroll withholding and work trips back are in working for a Canadian employer from abroad.

Does PR status keep the child benefit or the GST/HST credit going?

No. The Canada child benefit needs you to be a resident of Canada for tax purposes; PR status only meets a separate condition about you or your spouse's immigration status (CRA: CCB, before you apply). If your spouse or partner stays in Canada with the children and is still a tax resident, the benefit can continue in their name. Non-residents generally cannot receive the child benefit or the Canada Groceries and Essentials Benefit (formerly the GST/HST credit), and the CRA asks you to contact it right away if payments keep arriving (CRA: Leaving Canada). Stopping them and repaying are in benefits after leaving Canada.

Example

These examples are illustrative and use Canadian dollars.

Back to her former country, condo rented out

A permanent resident of four years, who first moved to Canada when she landed, leaves Vancouver for the country she lived in before. Her spouse goes with her, and she rents her condo to an unrelated tenant on a long lease. She keeps her PR card. For tax, she is likely a non-resident from the day she leaves. The condo is Canadian real estate, so it is not deemed sold, but its rent stays taxable in Canada while she is a non-resident; with no agent, she remits the tax on it herself. A Canadian investment account worth C$50,000 that cost C$40,000 is deemed sold, giving a C$10,000 capital gain on her departure return, half of which (C$5,000) is added to her income. Her flat abroad, owned before she arrived, is spared because she was resident in Canada for 48 months, no more than 60 of the last 120. Because her condo and account together are worth more than $25,000, she also lists them on Form T1161 by her filing due date; the flat abroad is left off.

Working abroad, family kept in Toronto

A permanent resident takes a job abroad paying C$150,000. His spouse and children stay in their Toronto home to keep their status and stay in school. For tax, he is likely still a factual resident: the C$150,000 goes on his Canadian return, with a foreign tax credit for tax paid abroad, unless a treaty tie-breaker places him in the other country.

Long visits to bank PR days

A permanent resident lives in a country with no tax treaty with Canada and has no home or family in Canada. To catch up on his 730 days, he spends 190 days in Canada in one year. He may be a deemed resident for that whole year and report his C$80,000 of world income on a Canadian return.

Different for you?

• You kept a home in Canada or your family is split across countries: your residency is a judgment call on ties; see Canadian tax residency and get individual tax help.
• You rent out your home in Canada after leaving: see non-resident landlords and get individual tax help for the yearly filing.
• You spent long stretches in Canada to keep PR days, or the CRA has asked about your residency: see deemed residents of Canada and the CRA residency questionnaire, and get individual tax help.
• You left in an earlier year and filed no departure return or T1161: see late departure forms and penalties and get individual tax help.
• You hold investments bought while in Canada: see leaving Canada for the departure return and individual tax help for the values.
• You arrived within the last five years: see leaving Canada within five years of arriving.
• Your spouse and children stay in Canada: see family stays in Canada while you work abroad and get individual tax help.
• You work for a Canadian employer from abroad: see working for a Canadian employer from abroad.
• Benefits kept arriving after you left: see benefits after leaving Canada.
• You are coming back after years away: see returning to Canada after years abroad.