Regional District of Central Okanagan
Regional District of Okanagan Similkameen
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Kelowna's Best Rock
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OKANAGAN LAKE BC
IMPORTANT INFO FOR SNOWBIRDS
It is very important that Canadian snowbirds don't be deemed U.S. citizens because they exceeded their stay in the United States.
You could be deemed a U.S. citizen if your stay in the U.S. exceeds "physical presence" guidelines. You could also be held liable for worldwide taxes and have to pay income tax twice, once to Canada and once to the U.S. on the same income.
This article below was published in the Forever Young Magazine August 2007 Edition.
The strong Canadian buck might encourage you to extend
your stay in the U.S. this winter but be careful of deemed residency rules.
By Kelley Keehn
As a mature Canadian, just about now is when you might be contemplating a trip
south during our cold winter. And this year the strong loonie makes the U.S.
south more affordable for greater numbers than in many years.
But here's a word of advice - if you are thinking that the extra value of the
Canadian buck might translate into a longer stay, make sure you don't fall afoul
of Canadian residency rules.
The first rule for the prospective snowbird is, plan ahead as much as possible,
looking around for good early-bird deals on travel health insurance and keeping
your eye on relative real estate prices down south.
If you are eyeing the United States, you may be planning to move permanently or
else spend long months of the year south of the border as an integral part of
your retirement. But did you know that your time spent in the U.S. might cause
you to be deemed a resident of the U.S. for income taxes, estate taxes or both?
Conversely, you may be deemed to no longer be a resident of Canada, and could be
risking government benefits, income tax breaks, deductions, and credits. Those
wanting to take advantage of lower income-tax rates in another country may find
that the CRA (Canadian Revenue Agency) still considers them to be residents of
Canada for income-tax purposes.
And in worst-case scenario, one may be deemed to be a resident of both
countries.
Deemed residency is an income-tax classification used in both Canada and the
U.S. to determine whether an individual pays income tax in a particular
jurisdiction on income streams.
The opportunity of double taxation exists where snowbirds are subjected to
income tax in Canada and the U.S. on the same income. There are different
treatments for income not just at the federal level of each country but at a
provincial and state levels as well.
Certain exemptions and reductions are available to minimize unfairness to
taxpayers.
The Canadian income tax system is based on residency, not citizenship. As such,
Canadian residents are liable for income tax on their worldwide income. Canada
only taxes non-residents on Canadian-source income. In the U.S., both citizens
and residents are taxed on their worldwide income.
Canadian residents can be deemed to be U.S. residents according to the 183 day
rule or "physical presence" test.
To see if your residency status will be affected, use the following calculation.
Add up the total number of days spent in the U.S. in the
current year, one/third of the days spent in the U.S. in the previous year, and
one/sixth of the days spent in the U.S. the year the year before that. If your
"physical presence" in the U.S. totals 183 days or more, you will be deemed to
be a U.S. resident.
A key question to ask when travelling for extended periods is whether there is
an intention to leave Canada or whether there is a risk of being deemed to be a
resident of the U.S.. In either case, ensure that documentation regarding such
items as directives is recognized in the new domicile. This can be
problematic even if moving between provinces, let alone countries.
There are steps you can take to avoid being deemed a U.S. resident after meeting
the physical-presence test. The tax and estate-planning issues are complex and
based on the facts of each particular case. Use the services of a qualified
financial or tax professional to help you explore the use of corporations and
trusts to protect assets both in tax and estate-planning processes.
Kelley Keehn is a financial speaker, elder-planning counsellor
and author. Sources for this article included the Canadian Initiative for Elder
Planning Studies. See www.kelleykeehn.com
| SNOWBIRD CHECKLIST (Sources include RDC
Insurance, Douglas Gray/snowbird.ca) As an essential part of planning a trip for the winter, snowbirds should review the following matters: Re: Travel Insurance Does the plan cover emergency hospital and medical care, trip, cancellation or interruption coverage, and insurance for flight accident and travel accident and baggage and personal effects? Does the plan make payments directly to hospitals and doctors at the destination point or does it reimburse the client later? Does the plan offer a customer service claims centre? Does it co-ordinate benefits with the provincial health plan?
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Mexican prisoners let out to kill: prosecutors CBC News - cbc.ca - Sunday, July 25, 2010
The Associated Press |
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