Non-resident Canadian,NZ PR being sent to Canada by NZ firm

[morganjones388]

I am a Canadian citizen and permanent resident of NZ. I am single, never married with no dependents. I have a letter from
Revenue Canada declaring me non-resident for tax purposes in Canada from July 3, 1996. I am tax resident of NZ. I will be
maintaining social and economic ties with NZ and will have a NZ driver license, and a credit facility with Chifley Suites in Auckland
that will give me immediate access to accommodation in NZ indefinitely while I am in Canada. The only asset I have in Canada is my RRSP
which I have not contributed to since July 3, 1996. The only other thing I have is a Canadian passport. At present I do not have any
provincial health coverage since it automatically lapsed last July 3, 1996. I will always have a job to return to in NZ so my return
there is foreseen. I am planning to get a letter from the NZ Inland Revenue declaring that I am tax resident of NZ for all tax years
starting 2009-2010. Let us assume that I am successful.

1. My NZ employer wishes to send me to Canada to work for them there for a period that may exceed 183 days. I want to invoke Article
4 paragraph 2(a) or 2(b) of the double taxation agreement between NZ and Canada so that I will continue to be treated as a non-resident
for tax purposes in Canada because I am tax resident in NZ and my centre of vital interests is in NZ or my habitual abode is not in Canada.
How do I do that?

2. Will this be enough to avoid the "deemed disposition of property rules on property outside Canada if and when I return to Canada after staying
in Canada for (a) less than 5 years or (b) more than 5 years?

3. If I take out provincial health coverage while I am in Canada it will automatically lapse when I return to NZ. If I declare this in NR74
will this raise a red flag with the CRA such that they will choose to ignore the DTA with NZ and refuse to let me retain my non-resident
tax status in Canada? I will have NZ government medical care available to me throughout the time I am in Canada because I am a permanent
resident there. Will declaring this make any difference?

4. Does the phrase "permanent home" in Article 4 paragraph 2(a) only mean owned accommodation or does it also include
rental accommodation or else a credit facility that will enable me to avail of immediate access to accommodation in NZ
anytime for an indefinite period even while I am living in Canada?

5. If I work in Canada for my NZ employer it will pay for temporary accommodation while I am there. Since it will be the one
paying for it can I say in NR74 that my employer is providing a dwelling for me even if the Canadian landlord insists that my name
rather than my employer's name be listed as the lesee on the rental contract? Will the CRA treat this as a significant residental tie
in Canada so that I will be ruled tax resident of Canada under local laws notwithstanding the DTA?

6. Similarly I have to take out a Canadian driver license while I am there because it is impossible to get Canadian third party
liability insurance for a vehicle which is required by law. But I will be exchanging that back for a NZ driver license after
I return to NZ. If I declare this in NR74 will this be sufficient to make this secondary residential tie not have any
significance to my non-resident status?

7. I will be opening a bank account in Canada while I am working there for my NZ employer but will close it before I leave
Canada. If I declare this in NR74 will this be enough to make this secondary residential tie not have any significance to
my non-resident status?

8. I have a Canadian passport and a UK passport. A Canadian passport is a secondary tie. Will the fact that I have NZ tax residence and social
and economic ties be enough to ensure that this secondary tie is of no significance for the purpose of retaining my non-residence status in
canada? Will the fact that I have a UK passport help in tipping the scales to my having more ties outside Canada than in Canada?

9. How long will it take?

10. What documents do I supply?

11. Will it be a non-binding ruling?

12. How do I get a binding ruling from the Income Tax Rulings Directorate and will the evidence I supplied previously for the non-binding ruling be enough? If not what else do I provide?

Any help is much appreciated.

Thanks

Morgan Jones

[Michael I. Atlas, CA]

Suddenly it is raining Canadian tax questions!

My general answers are as follows. However, you should retain me or someone else to give you more detailed advice. I am numbering the answers to correspond to your questions:
1) You just take the position when filing your return (indicate that you are a non-resident). If and when CRA questions that position, you provide proof and rationale.
2) Yes, assuming that position prevails
3) I am not an expert on health insurance rules. CRA cannot ignore tax treaty-as long as you meet the test, you would be non-resident. I do not recommend submitting NR74 to CRA-no legal requirement to do so.
4) “Permanent home” can include rented apartment.
5) Your name on lease should have no relevance. The DTA will always override the domestic law-that is the whole purpose of tie-breaker rule in treaty-if local law could override it, what use would treaty be. Again, forget about NR74.
6) Again, the issue of secondary ties is not relevant because it is assumed that you would be resident under domestic law in any event. You would rely on tie-breaker rule (in this case, centre of vital interests tests) to make you deemed non-resident.
7) See previous answers.
8) See previous answers
9) There is nothing to “take”-you just file based on that position.
10) You would only supply proof if you are audited and this issue is questioned by the CRA.

If you want to go beyond above, you can contact me offline and retain me.

[markjaacobs470]

Hello Again,

I read with interest this passage on page 43 of the exerpt of your
book in google on-line books.

"Residential Ties Elsewhere. It is significant to note that
the CRA seems to have retreated from its previous position
that in order for an individual to have ceased to be a
Canadian resident, that individual must have clearly
established residential ties elsewhere. Rather the CRA's
position is now, instead, that the failure to establish
significant residential ties elsewhere may result in the
individual's remaining ties with Canada, if any, taking
on a greater significance."


May I please ask which CRA documents or statements in the public
domain led you to reach this conclusion?

Thanks

Mark Jacobs

[Michael I. Atlas, CA]

IT-221R3, and particular paragraph 14 thereof.

Prior to the release of this version of IT-221 in 2001, they stated in the prior verson that, in effect, to be a non-resident of Canada, you had to be resident elsewhere. The current bulletin, corectly in my view, does not take that position anywhere, and the above noted paragarph deals with that type of issue.

[morganjones388]

Hello,

It is reassuring to know that "permanent home" can include rented accommodation. Rent is usually paid in advance. What my employee has is a credit facility that will allow him immediate access to accommodation in NZ indefinitely during the time he is working for us outside NZ. The difference is that he will be charged in arrears or after the fact but only if he avails of it. For example if he books an apartment for 5 days he will be charged only after he checks out not before. This will work in NZ to get him tax residence status under local NZ tax law from the Inland Revenue Department while he is away. I do not know if this will also be accepted by the CRA for applying the DTA's tie breaker rules so that he will be considered non-resident of Canada.

Thanks again

Morgan Jones

[Michael I. Atlas, CA]

I would have to know all the facts and be retained to give any opinion on that.