Residency Status

Your residency status determines how you submit and pay your annual Canadian income taxes and the benefits to which you are entitled. This can have a significant financial impact if you are unaware of how your residency status affects your taxes, as well as normal Canadian benefits such as Child Tax Credits, contributing to TFSAs, etc. This has been an ongoing challenge to address the residency issues that many families have faced and honestly, still face with CRA.

You should read Income Tax Folio - S5-F1-C1: Determining an Individual’s Residence Status to make yourself aware of the tax laws and implications. However, to provide some clarity, any information listed on this page came from CRA officials in 2015 with representation from the offices of Minister of Defense and Finance. (Taken verbatim from their notice).

CAF Members

According to Income Tax Folio - S5-F1-C1: Determining an Individual’s Residence Status, specfically Section 1.34a, a deemed resident includes individuals who were members of the Canadian Forces at any time in the year.

CRA Information Sheet – Deemed Residents
T1 Return Page 1 Example – Deemed Residents 

Spouses that Intend to Return to Canada and maintain their Canadian Residency

"The spouse of a Canadian Government employee that is moving with said government employee to another country to carry out a foreign assignment for the Government of Canada, who’s intention is to return to Canada following the assignment, will be considered a factual resident of Canada. This factual residency is based on your intention to return to Canada as well as your secondary residential ties maintained with Canada, as described in paragraph of Folio S5-F1-C1.”

T1 Return Page 1 Example – Factual Residents

In this situation, CRA advises that you should not complete a Form NR73, Determination of Residency Status (when you leave Canada). As a factual resident, you will have to complete and file your Canadian Personal Income Tax Return, from the province that you moved from or the province you hold significant residential ties to, and you will meet the residency requirement for Canadian benefits administered by the CRA.

See the CRA Information Sheet – Factual Residents for more details. 

Spouses that do not expect to maintain their Canadian Residency 

If you are choosing to not return to Canada, according to the CRA notice provided to CAF families, you should fill in the NR73 and submit to CRA to determine your residency status, as per the CRA direction in the attached document. If it is determined that you will be a non-resident of Canada, you should know the tax implications and research them on Government of Canada – CRA Site.