To address the question of whether you can maintain Canadian personal tax residency while changing your business tax residency, it's essential to understand how residency is determined under Canadian tax law.
Understanding Personal vs. Business Tax Residency
In Canada, personal tax residency is based on an individual's residential ties to the country. These ties include having a home, a spouse or common-law partner, dependents, and other significant connections such as bank accounts and social memberships. If you are deemed a resident, you are subject to Canadian income tax on your worldwide income24.
On the other hand, business tax residency is determined by where a business is managed and controlled. A corporation is generally considered a resident of Canada if it is incorporated in Canada or if its central management and control are exercised in Canada. For individuals, the concept of business residency can be more complex, especially for those operating businesses abroad while still being Canadian residents.
Maintaining Personal Tax Residency
You can maintain your personal tax residency in Canada while changing your business tax residency, provided you continue to have significant residential ties to Canada. For instance, if you move your business operations to another country but keep your home and family in Canada, you may still be considered a resident for personal tax purposes. This means you would still report your worldwide income to the Canada Revenue Agency (CRA) and pay taxes accordingly24.
However, if you sever your residential ties with Canada, such as selling your home or moving your family abroad, you may lose your personal tax residency status. The CRA looks at the totality of your circumstances, including the length of your stay outside Canada and your intent to return4.
Changing Business Tax Residency
If you decide to change your business tax residency to another country, you will need to consider the tax implications in both Canada and the new country. Depending on the tax treaties in place, you may be able to avoid double taxation. It's crucial to consult with a tax professional to navigate these complexities and ensure compliance with both Canadian tax laws and those of the new country.
Conclusion
In summary, it is possible to keep your Canadian personal tax residency while changing your business tax residency, as long as you maintain significant residential ties to Canada. If you're considering such a move, it's advisable to consult the CRA's guidelines on residency and possibly seek professional tax advice to ensure you understand the implications fully24.
Citations
- https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4027/doing-business-canada-gst-hst-information-non-residents.html
- https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-5-international-residency/folio-1-residency/income-tax-folio-s5-f1-c1-determining-individual-s-residence-status.html
- https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/certificate-residency.html
- https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/determining-your-residency-status.html
- https://www.canadavisa.com/canada-immigration-discussion-board/threads/to-not-become-a-non-resident-for-tax-purposes-quesetion.789923/