Taxes while OUTCAN

Residency Status

Your residency status plays a crucial role in how you submit and pay your annual Canadian income taxes, as well as the benefits you're eligible for. This can have a significant financial impact if you're unaware of how your residency affects things like child tax credits, investment contributions, and more.

• Determining your Residency Status

  The Canadian tax system is based on residency rather than citizenship and follows a self-assessment process. Residency status is determined by specific residential ties, with different classifications depending on these connections. 

  For more information, refer to the CRA webpage - Determining your residency status

  • CAF Members: The CRA has previously confirmed that government employees posted outside Canada are usually considered factual or deemed residents of Canada for income tax purposes, as outlined at Government employmees outside Canada. 

  • CAF Spouses: Spouses of CAF members posted OUTCAN, with the intention of returning to Canada, are typically considered factual residents. For clarity regarding spouses of CAF members, please refer to the CRA Info Sheet: CAF Spouses Posted OUTCAN. 
• Determining your Residential Ties

  The most important thing to consider when determining your residency status in Canada for income tax purposes is whether or not you maintain or establish significant residential ties with Canada.

  Primary (Significant) Residential Ties with Canada:

  • A home in Canada.
  • A spouse or common-law partner in Canada.
  • Dependants in Canada.

  Secondary Residential Ties with Canada:

  • Personal property in Canada, such as a car or furniture.
  • Social ties in Canada, including memberships in Canadian recreational or religious organizations.
  • Economic ties in Canada, such as Canadian bank accounts or credit cards.
  • A Canadian driver's licence.
  • A Canadian passport.
  • Health insurance with a Canadian province or territory.

  Determined on a Case-by-Case Basis
  Your residency status is determined by several factors, including:

  • Why and how long you are staying outside Canada.
  • The ties you establish in your new country.
  • How long and how often you return to Canada.
  • Your residential ties to Canada.

  
  The information above is general in nature. For more information on residential ties, see Income Tax Folio S5-F1-C1, Determining an Individual's Residence Status.
  
   
• Factual Residents

  You may be a factual resident of Canada for income tax purposes if you keep significant residential ties in Canada while living abroad. A "factual resident" means that even though you are not physically present in Canada, you are still regarded as a resident of Canada for tax purposes.

  Your Tax Obligations

  As a factual resident, your income is taxed as though you never left Canada.

  • You must report all income you receive from both Canadian and foreign sources for the year and claim any applicable deductions.
  • Claim all federal and provincial or territorial non-refundable tax credits that apply to you.
  • Pay both federal and provincial or territorial taxes based on the province or territory where you maintain residential ties.
  • Claim any federal and provincial or territorial refundable tax credits that apply to you.
  • You may be eligible for the GST/HST credit (Goods and Services Tax/Harmonized Sales Tax) and the Canada Child Benefit.

  Which Tax Package Should You Use?
  For each tax year that you are a factual resident of Canada for tax purposes, you should use the Income Tax Package for the province or territory where you maintain residential ties. Typically, this is the province or territory where you lived before leaving Canada.

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  Note: If you are a factual resident and also a resident of another country with which Canada has a tax treaty, you may be classified as a deemed non-resident of Canada for income tax purposes.
• Deemed Residents

  You may be a deemed resident of Canada for income tax purposes if you lived outside Canada during the tax year, have severed residential ties in Canada and you were one of the following:

  • a federal or provincial government employee
  • a member of the Canadian Forces (including overseas school staff)
  • a person working under a Global Affairs Canada assistance program

  This could also apply to the family members of an individual who is in one of these situations. For more information, see Government employees outside Canada.

  Your Tax Obligations

  • You must report your world income (income from all sources, both inside and outside Canada) for the entire tax year
  • Can claim all deductions and non-refundable tax credits that apply to you
  • Are subject to federal tax and instead of paying provincial or territorial tax you'll pay a federal surtax
  • Can claim all federal tax credits, but you cannot claim provincial or territorial tax credits
  • Are eligible for the GST/HST credit

  
  Which Tax Package Should You Use?
  If you are a deemed resident, for the tax year you leave Canada and for all following years that you are outside Canada, use the Income Tax Package for Non-Residents and Deemed Residents of Canada.

  _________
  
  As a member of the Canadian Forces stationed outside of Canada, your situation will likely fall under subsection 250(1) of the Income Tax Act. For more information, visit the Justice Laws website.
• Deemed Residents of Quebec

  Did you live in Québec just before you left Canada?
  If you are a member of the Canadian Forces and were a resident of Québec immediately before leaving CanadaYou may be considered a deemed resident under Québec law. As a result, you may be required to pay Quebec income tax while serving abroad.

  Avoid Double Taxation
  To avoid double taxation (surtax for non-residents and deemed residents of Canada plus Quebec income tax), attach a note to your federal return stating the following:

  • You are subject to Quebec income tax
  • You are filing a Revenu Québec Income Tax Return
  • You are asking for relief from the non-resident and deemed resident surtax

  For more information, contact the Canada Revenue Agency.

  The Province of Quebec also grants relief to certain taxpayers who were deemed residents of Canada and Quebec. This includes deemed residents of Canada who are members of the Canadian Forces or, at any time in the year, an ambassador, minister, high commissioner, officer, or servant of Canada, and who were also deemed residents of Quebec. For more information, contact Revenu Québec.
  
  Your Tax Obligations

  • You must report your world income (income from all sources, both inside and outside Canada) for the entire tax year
  • Can claim all deductions and non-refundable tax credits that apply to you
  • Are subject to federal tax and instead of paying provincial or territorial tax you'll pay a federal surtax
  • Can claim all federal tax credits, but you cannot claim provincial or territorial tax credits
  • Are eligible for the GST/HST credit

  
  Which Tax Package Should You Use?
  If you are a deemed resident, for the tax year you leave Canada and for all following years that you are outside Canada, use the Income Tax Package for Non-Residents and Deemed Residents of Canada.

• Deemed Non-Residents
  You are considered a deemed non-resident of Canada if, under normal circumstances, you would have been considered a resident (or deemed resident) of Canada. However, because of a tax treaty between Canada and another country, you are instead treated as a resident of that other country for tax purposes. Additionally, you do not have significant residential ties in Canada and any of the following applies:

  • Live outside Canada throughout the tax year.
  • Stay in Canada for less than 183 days in the tax year.

  
  Your Tax Obligations
  The rules that apply to non-residents of Canada also apply to deemed non-residents of Canada. This means you complete your return the same way as a non-resident of Canada. 

  • As a non-resident of Canada, you pay taxes on income you receive from sources in Canada. The type of tax you pay and the requirement to file an income tax return depend on the type of income you receive.
  • Canadian income received by a non-resident is subject to Part XIII tax or Part I tax.

  
  Part XIII Tax
  Part XIII tax is deducted from the types of income listed below. To make sure the correct amount is deducted, it is important to tell Canadian payers:

  • that you are a non-resident of Canada for income tax purposes
  • your country of residence

  The most common types of Canadian income subject to Part XIII tax are:

  • dividends
  • rental and royalty payments
  • pension payments
  • old age security pension
  • Canada Pension Plan and Quebec Pension Plan benefits
  • retiring allowances
  • registered retirement savings plan payments
  • registered retirement income fund payments
  • annuity payments
  • management fees

  
  Which Tax Package Should You Use?
  If you are a deemed resident, for the tax year you leave Canada and for all following years that you are outside Canada, use the Income Tax Package for Non-Residents and Deemed Residents of Canada.

Information & FAQs

• Points of Contact
  International Tax & Non-Resident Enquiries Office

  • Main Phone: 1-800-959-8281
  • Service in English: 613-940-8495
  • Service in French: 613-940-8496

  
  Canada Revenue Agency (CRA)

  • Individual Tax Enquiries: 1-800-959-8281
  • Business Enquiries: 1-800-959-5525

  
  Revenue Quebec

  • Quebec: 418-659-6299
  • Montréal: 514-864-6299 (Montréal)
• ​​​​​​​Submitting your Return by Mail
  For those in the U.S., Denmark, France, Netherlands, or the U.K.:
  Winnipeg Tax Centre
  Post Office Box 14001, Station Main
  Winnipeg, Manitoba R3C 3M3
  Fax: 204-984-5164
  
  All Other Countries:
  Sudbury Tax Centre
  1050 Notre Dame Avenue
  Sudbury ON P3A 5C2
  Fax: 705-671-3994 or 1-855-276-1529
  
  Revenue Quebec
  3800, rue de Marly
  C. P. 25555, succursale Terminus
  Québec (Québec) G1A 1B9
  Phone: 418-659-6299 (Quebec) or 514-864-6299 (Montréal)
  Hours: Monday - Friday; 8:30am to 4:30pm
  
  We also HIGHLY recommend spouses of CAF members attach the CRA Info Sheet: CAF Spouses Posted OUTCAN to each tax return when filing OUTCAN.
• Filing your Taxes Online

  File your taxes online: Understand NETFILE (CRA)
  
  In the past, the CRA has required all individuals living outside of Canada to submit their tax returns by mail. While some people have used online tax programs and printed their returns for mailing, many of these programs do not offer the option to select “deemed resident” for CAF members. For your appropriate mailing address, please see the mailing address dropdown tab. 
  
  We also HIGHLY recommend spouses of CAF members attach the CRA Info Sheet: CAF Spouses Posted OUTCAN to each tax return when filing OUTCAN.

• Canadian PO Box Address

  These addresses are available to CAF members and families based on their particular affiliation and are to be used for financial related documents ONLY! It is recommended that you maintain a chequing account in a Canadian financial institution during your posting and when changing the address for all your Canadian financial institutions you will use one of the following addresses. Remember to specify whether you are with CDLS(W) or CANELEMNORAD.
  
  PO Box: 
  SN, Rank, Initials, Name
  CDLS(W) OR CFSU(CS) + Your Det Location
  PO Box 5233 STN Forces
  Belleville, ON K8N 5W6
  
  Alternate; PO Box Not Accepted: 
  SN, Rank, Initials, Name
  CDLS(W) OR CFSU(CS) + Your Det Location
  15 Westwin Ave, Bldg 348
  Quinte West, ON K8V 5P8

• Canada Child Benefit

  If you are eligible to receive the Canada Child Benefit (CCB), you will continue to receive it and any related provincial or territorial benefits that you are eligible for during your absence from Canada. However, you will have to file a return each year so that the CRA can calculate your CCB.

  If you have a spouse or common-law partner, they will also have to file a return each year. If your spouse or common-law partner is a non-resident of Canada, they will have to file Form CTB9, Income of Non-Resident Spouse or Common-Law Partner for the Canada child benefit.

  If you have a child while outside Canada, you can apply for the CCB by sending the CRA a completed Form RC66, Canada Child Benefits Application (includes federal, provincial, and territorial programs). For more information, see Booklet T4114, Canada Child Benefit and related provincial and territorial programs.
  
  Phone: 1-800-387-1193
  Yukon, Northwest Territories and Nunavut: 1-866-426-1527 
  Alberta Benefit Programs: 1-800-959-2809 

• Fixing Issues with Residency Status

  Did CRA make an error with your residency status? We have a tip for you!
  
  Go to the following link, Contact the Minister of National Revenue - Canada.ca, and scroll down until you see a green button that says "Write to the minister". Click the button, fill out the required information and summarize why you're writing and what you need help with. Once submitted, you will be assigned a case worker. This case worker should get things sorted within a few weeks and will give you a direct number to reach them at in the future.
  
  You can also call CRA directly at the International Tax Department, 1-800-959-8281, and explain your situation or submit a request to “Change my Return” through your online account - CRA MyAccount.

• Grievances & Audit Letters

  Filing a Grievance:
  
  A Grievance can now be filled out online if you have a CRA online account - CRA MyAccount.

  If you need to file a grievance, ask your Support Unit to provide you with a letter verifying your OUTCAN status. You should also include the same documents included with your original tax return. 
  
  Have you recieved an Audit Letter?
  
  Some Canadians continue to randomly receive Audit Letters from CRA, especially from the Child Tax Benefit department. If you receive this, it is just that - random. Families in Canada will sometimes receive the same type of letter. It is recommended that you respond to the letter with the same documents included with your original tax return (Posting Message, Residency Designation Information Sheet, CRA Cover Letter). 

EAD Holders

• Filing US Taxes with the IRS

  Spouses and dependents holding an Employment Authorization Document (EAD) are legally required to file U.S. taxes with the IRS.
  
  How does this affect your Income Tax with CRA and what do you need to do?
  You will first have to file your personal Income Tax with the Internal Revenue Service (IRS). The deadline for US taxes is usually April 15th. You will then file your personal Income Tax with CRA claiming your world income (reporting your earnings from your employment in the US). You will not be double taxed on your income; however, you are legally required to report it.

  Additional Details from the EAD Protocol Team:

  1. This note is to provide a gentle reminder that it is the obligation of all Employment Authorization Document (EAD) holders who have or are working in the United States to file taxes with the United States Internal Revenue Service (IRS) and applicable State Revenue Departments. EAD holders may file a 1040 or 1040 NR as “Married Filing Separately”.

  2. If an individual possesses an EAD but has not worked, it is recommended to file a NIL tax return with the IRS. This means that your income for the year is below the minimum income tax level, and you are not liable to pay any income tax for the year. This will provide you with a paper trail if/when you must renew your EAD. For example, if you need to renew your EAD (due to expiration, a cross posting or are posted back to the US a few years later) you must be able to show proof you do not owe the IRS money for back taxes.

  3. Individual tax considerations differ greatly, and personal taxes are not the responsibility of the CAF. The CAF does not provide any tax advice to individuals. Further, spouses and dependants possessing “Canadian Residency Status” may also be required to declare World Income to the Canadian Revenue Agency (CRA).

  4. Individuals are urged to consider hiring a tax attorney if circumstances are complicated.