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I'm a Canadian citizen working in the U.S. on a TN visa. My work visa is for 3 years and my wife and both parents are living in Canada.

I fly back to Canada every 2 weeks, and my wife and I own a car in Canada. I have a valid Canadian driver's license, credit card, and bank accounts.

A few questions:

  1. Am I considered a Canadian resident or non-resident for tax purposes?

  2. If considered a non-resident for tax purposes, are there any benefits of continuing to file income taxes with Canada? Are there any costs?

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You are considered a Canadian resident if you have "significant residential ties to Canada". Because your wife lives in Canada, you therefore are a resident. Even by working temporarily in the US, you are still considered a "factual resident" of Canada. Due to that, your second question is irrelevant.

  • What I'm confused about is this bullet in "Step 2: Determine your residency status and its tax implications" - "If you established ties in a country that Canada has a tax treaty with and you are considered a resident of that country, but you are otherwise a factual resident of Canada, meaning you maintain significant residential ties with Canada, you may be considered a deemed non-resident of Canada. The same rules apply to deemed non-residents as non-residents of Canada." So therefore I am a deemed factual resident but I don't have to file taxes in Canada? – A1122 Jan 24 '17 at 4:17
  • Link to above quote: cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html – A1122 Jan 24 '17 at 4:17
  • The US does have a tax treaty with Canada. Here's more information: turbotax.intuit.ca/tips/… – Michael Jan 24 '17 at 15:01
  • I'll warn that the existence of a treaty doesn't necessarily mean all Canadians working in the U.S. are exempt from the determination of tax residency. See the answer I just posted. – Chris W. Rea Jan 28 '17 at 23:57
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The other answer has mentioned "factual resident", and you have raised the existence of a U.S./Canada tax treaty in your comment, and provided a link to a page about determining residency. I'd like to highlight part of the first link:

Residency status

You are a factual resident of Canada for tax purposes if you keep significant residential ties in Canada while living or travelling outside the country.

The term factual resident means that, although you left Canada, you are still considered to be a resident of Canada for income tax purposes.

Notes

If you have established ties in a country that Canada has a tax treaty with and you are considered to be a resident of that country, but you are otherwise a factual resident of Canada, meaning you maintain significant residential ties with Canada, you may be considered a deemed non-resident of Canada for tax purposes. [...]

I'll emphasize that "considered to be a resident of Canada for income tax purposes" means you do need to file Canadian income tax returns. The Notes section does indicate the potential treaty exemption that you mentioned, but it is only a potential exemption. Note the emphasis (theirs, not mine) on the word "may" in the last paragraph above. Please don't assume "may" is necessarily favorable with respect to your situation. The other side of the "may" coin is "may not".

The Determining your residency status page you mentioned in your comment says this:

If you want the Canada Revenue Agency's opinion on your residency status, complete either Form NR74, Determination of Residency Status (Entering Canada) or Form NR73, Determination of Residency Status (Leaving Canada), whichever applies, and send it to the International and Ottawa Tax Services Office. To get the most accurate opinion, provide as many details as possible on your form.

So, given your ties to Canada, I would suggest that until and unless you have obtained an opinion from the Canada Revenue Agency on your tax status, you would be making a potentially unsafe assumption if you yourself elect not to file your Canadian income tax returns based on your own determination. You could end up liable for penalties and interest if you don't file while you are outside of Canada.

Tax residency in Canada is not a simple topic. For instances, let's have a look at S5-F1-C1, Determining an Individual’s Residence Status. It's a long page, but here's one interesting piece:

1.44 The Courts have stated that holders of a United States Permanent Residence Card (otherwise referred to as a Green Card) are considered to be resident in the United States for purposes of paragraph 1 of the Residence article of the Canada-U.S. Tax Convention. For further information, see the Federal Court of Appeal's comments in Allchin v R, 2004 FCA 206, 2004 DTC 6468. [...]

... whereas you are in the U.S. on a TN visa, intended to be temporary. So you wouldn't be exempt just on the basis of your visa and the existence of the treaty. The CRA would look at other circumstances. Consider the "Centre of vital interests test":

Centre of vital interests test

[...]

“If the individual has a permanent home in both Contracting States, it is necessary to look at the facts in order to ascertain with which of the two States his personal and economic relations are closer. Thus, regard will be had to his family and social relations, his occupations, his political, cultural or other activities, his place of business, the place from which he administers his property, etc. The circumstances must be examined as a whole, but it is nevertheless obvious that considerations based on the personal acts of the individual must receive special attention. If a person who has a home in one State sets up a second in the other State while retaining the first, the fact that he retains the first in the environment where he has always lived, where he has worked, and where he has his family and possessions, can, together with other elements, go to demonstrate that he has retained his centre of vital interests in the first State.” [emphasis on last sentence is mine]

Anyway, I'm acquainted with somebody who left Canada for a few years to work abroad. They assumed that living in the other country for that length of time (>2 years) meant they were non-resident here and so did not have to file. Unfortunately, upon returning to Canada, the CRA deemed them to have been resident all that time based on significant ties maintained, and they subsequently owed many thousands of dollars in back taxes, penalties, and interest.

If it were me in a similar situation, I would err on the side of caution and continue to file Canadian income taxes until I got a determination I could count on from the people that make the rules.

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