Advance planning in order to get non-resident status

[ActuarialExpat]

Hi. Cool site here, been doing some reading and lots of good info about expat work.

I started my career as an actuary this year in Canada, but would like to return to my roots and go work in Asia once I have some experience. Another possibility would be Bermuda. I thought it would be best to plan in advance for the non-resident process.

I won't have any of the major attachments in Canada. So I'm wondering how many of the minor ones I can have without problems.

Firstly, I'm only a Canadian citizen so I will need to retain my passport. Depending on where I go I may also keep my driver's license here temporarily. I may be a member of the Canadian Institute of Actuaries, but this could be easily canceled if it cause problems.

Finally the tricky issue will be RRSPs. I intend to close all my bank accounts here once I leave, but will what do I do with the money in those. Is it worth it putting money in now for the tax advantages or will I get screwed when I leave and try to get the status.

Thanks in advance

[agnelson]

If you move to a country that has a tax treaty with canada, you need do nothing more than move there and become resident there. This will suffice to make you non-resident. All the minor ties will be outweighed by your 'regular abode' and/or 'center of vital interests' being in that country.

If you move where there is no treaty -- or a treaty country where it is almost impossible to be considered resident -- then DL, prov med, memberships, bank accounts have to end and any property needs to leave with you. If all you have is a passport and (maybe) RRSP and you stay out of canada for a couple of years completely, you will be able to declare non-residency on the day you leave. You need to look at CRA form NR73 secondary ties, and cut those to 3 or 4 MAX. as well as establishing as many of those in your new home asap.

[Steven]

You can if you want (or the CRA will ask you anyway) fill in an NR-73 to get a ruling on it, but the basic rule of thumb is to ditch anything only a resident could have which includes a DL. Passport doesn't matter. You can keep your bank accounts and RRSPs, you just need to make sure the bank or whoever is clear that you are no longer resident for tax purposes. A change of address isn't enough, they must have you down as non-resident.

Tax planning for non-residency encompasses more than what you've asked about there. RRSPs take some planning because it can make sense (usually does) to move the cost base up before you leave (i.e. sell the investments in it and reacquire them) so that you're not subject to capital gains tax wherever you live if you close them as they won't recognize the RRSP as a tax shelter. (This only matters of course if the place where you reside has capital gains tax).

Also beware of departure tax: http://www.cra-arc.gc.ca/tx/nnrsdnts/nd ... n-eng.html

If you're just Joe Blow with a house, a car and an RRSP then departure tax shouldn't be a problem for you, but if you have substantial non-registered investments or own your own business it could be.

[ActuarialExpat]

Thanks for the information.

I believe neither of the two countries I am considering has a tax treaty with Canada: Hong Kong (Unless it counts as China) or Bermuda

Reading the secondary ties list: I'll keep my passport and would like to maintain my membership in the Canadian Institute of Actuaries. Beyond that I suppose I could forgo my driver's license, however I have heard that the ones they offer in Bermuda are not particularly advanced. Which may cause problems while renting a car in other countries. Finally there's the RRSP issue, I suppose I could avoid them. But given the tax advantages they give while here will it be that big an issue when I leave? There will be no capital gains issue in either country so that's not a problem.

-- Fri Sep 25, 2009 5:09 pm --

Another quick question. Do avoid keeping my Canadian driver's license is there any form of international one I can get?

[agnelson]

No. All so-called "intl" driver's licenses are predicated on holding a valid one in your place of residence.

Just get one where you are moving.

These small ties will kill you. Forget the membership. Evenm an insurance polict is a tie.

If you don't have an RRSP now, don't bother starting one: you are leaving.

[Steven]

RRSPs are not usually a big deal if the place you're going to has no capital gains tax. I don't think Bermuda has income tax on things like that either so it doesn't really matter.

If there's no tax treaty then you really need to ditch everything except your passport and bank accounts (provided you've declared to the bank you're non-resident), I remember caselaw where someone who had an unexpired DL and furniture in storage was deemed resident in Canada.

Get a Bermuda or HK DL and forget about anything else. If you're worried about renting a car somewhere else, get an international DL then.

If the test in Bermuda is like the one in BVI I definitely wouldn't get worried about it. Basically you get in a car, drive a few blocks, turn around, come back.

[robdclarke]

I'm living in Guatemala right now and facing the same situation. (no tax treaty)

I own no property, would gladly ditch my Canadian bank, but want to keep my passport, my membership to a professional organization, and my drivers license would be awefully handy (but from the sounds of it that's a big NO-NO).

My big worry is that i'll ditch all the wonderful things residents get, apply for non-residency status, and be denied! wouldn't that just be awesome.

Also, what's the story on getting credit cards in the US when you have no credit history there? Those darn things sure are useful for online shopping, booking flights.... and just about everything else!

I pressume one must tick the box that says you're planning on not returning to canada? (but you could at any time if you wished?)


I know theres a lot of questions here, and they're all over the place, so THANKS A TONNE for your help guys & gals.

[agnelson]

By saying "tick the box" I assume you mean the NR73 form from CRA? Don't file this form! Look it over, ditch all of the ties you feel comfortable with (your DL is no good to you, lose it, so is ohip), and file as a departing resident, departure date when you leave (see Emigrants guide), file thereturn next spring. With no property and no dependents in canada, if you keep only a bank account and a memebership, you are probably

Only file NR73 if asked by CRA, some time next year.