Canadian Non-Residency Pros & Cons 

Understanding Canadian Non-Residency 

In 2021, Canada had 924,850 non-permanent residents, including international students, temporary foreign workers, and asylum seekers. Becoming a non-resident involves evaluating your physical presence in Canada, ties to the country, and your intentions regarding residency. 

Key Statistics 

• In 2021, around 171,445 individuals became Canadian non-residents. 
• The majority were temporary foreign workers (55.8%), followed by international students (22.3%) and asylum claimants (11.9%). 
• Popular destinations for these non-residents included India, China, and the United States. 

Form NR73 and Residency Determination 

Form NR73 from the Canada Revenue Agency (CRA) helps determine your tax residency status. It requires details about your connections to Canada, including family, residence, and employment. 

Primary and Secondary Ties 

To become a non-resident, you must sever primary ties (like a residence, spouse, or dependents in Canada) and reduce secondary ties (such as driver’s license, health card, bank accounts, etc.). 

Pros and Cons of Non-Residency 

Pros: 

• Clarity in tax status. 
• Potential for reduced taxation in Canada. 
• Simplified tax affairs, as non-residents don’t receive GST/HST credits. 
• Ability to maintain a Tax-Free Savings Account (TFSA) with some limitations. 

Cons: 

• Loss of Canada Child Benefit and GST/HST credits. 
• Departure tax on certain assets. 
• Restrictions on RRSP and TFSA contributions. 
• Disclosure requirements for Canadian properties worth $25,000 or more. 

Tax Obligations and Filing Requirements 

• Non-residents pay taxes only on Canadian-source income. 
• Filing a tax return may be necessary if you have Canadian-source income. 
• Canadian tax on US income is generally not applicable for non-residents. 

Conclusion 

Becoming a non-resident of Canada requires careful consideration of your ties to the country and understanding the tax implications. It’s a significant decision that impacts your financial and tax responsibilities.