TN1 and Cross-border taxation

[ramarsh]

Hi,

I have been on a TN1 for almost 3 years, and I fear I may have been going about the taxation all wrong. I have filed normal US tax returns with a world income form included since Ive been here as no accountants I called had any idea how to do cross border taxation. I have no income in canada except some small dividends and stock transactions. I read another post on here that suggested I file in Canada not the US, so I am wondering if I should change my approach, or what the dangers are of proceeding as I have been the past two years? (Bush has kindly offered the economic stimulation check this year, and I would hate to refuse him his charity!)

Help anyone!

Thanks

Rob

[Steven]

It depends on what your situation is, if you have residential ties in Canada or not and if you don't, how you went about severing the ties. There is an exit tax from Canada, although this isn't a big deal if you had no significant assets that you disposed of in Canada when you left. (such as a house). You can be assessed penalties if you just up and left without notifying the CRA because they may consider you to be resident in the year that you left if you were in Canada for more than 90 days - that makes you resident even if you severed your ties so you should have filed a T1 for that year. In addition, you need to have declared to the bank in Canada that you are non-resident so they can withhold Part XIII tax. If you didn't and you were issued a T5 in any of the years you have not been in Canada, you should have filed a T1 for those years.

Have a look through this: http://www.cra-arc.gc.ca/E/pub/tg/p151/README.html

And also check the CRA non-residents website.

[ramarsh]

Thanks Steve.
In answer - I didnt dispose of any significant assets, no. I have a lot of investments there and RSP savings, which still reside with a Cdn firm. I use the same bank in the US that I do in Canada - RBC (RBC Centura in the US) so I would assume they must know I no longer live in Canada.

My thinking was what difference could it make whether I file now or catch up later if/when I move back to Canada, since I have no income there anyway.

Rob

[Steven]

If you never declared to the CRA that you have left the country on your T1, then they will still think you are resident and be wondering why you haven't filed a T1 since. So yes, it could make a big difference.

Also the bank won't ncessarily assume that you are non-resident, you have to tell them. If you receive an NR4 every year instead of a T5 then they have put you down as non-resident (assuming you have a Canadian dollar account). Those T5s go to the CRA, so they will be expecting to see a T1 filed under your SIN to cover them.

You will be assessed a late filing fee for every year you failed to file, if nothing else.