This is an inquiry I just recieved from Joanne - a Candian member - asking about giving up Canadian residency and gaining Panamanian resident status.
I am really enjoying your articles and website. As a fellow Canadian, I am interested in your perspective on becoming a non-resident of Canada/resident of Panama. Have you gone this route given the tax advantages since from your articles you mention that you spend less than 6 months a year in Ontario? If so, do you have advice on the residency process? Thanks for the information. Joanne
Thank you so much for your kind words. I enjoy writing and positive feedback just fuels the fire.
Essentially you are correct, however determining whether or not someone is a resident of Canada is a question of fact which is determined by jurisprudence and not defined by statute. It is based on the situation and there is no one thing that determines it. You are correct in that if you keep residential ties to Canada you may be considered a Canadian resident for tax purposes, but for example if all you had was an RRSP, then you could definitely be considered a non-resident for tax purposes. Your advice to talk to an accountant is right on the money because everyone’s situation is different and there is no “cookie-cutter” answer.
You are also correct that on becoming a non-resident of Canada you would need to file a final tax return up to the date of departure. At this time you are deemed to dispose of your assets at Fair market value, with a few exceptions. Again, this is a complicated area and I would counsel anyone looking at this to seek professional advice to make sure they are handling it properly. The last thing anyone want is for CRA to hound them and to have to pay any unexpected, and in certain cases, unnecessary taxes. We have a team of tax professionals here who are quite versed in international tax and I can certainly tell you it is one of the more complicated areas we practice.
I trust this will help you and your readers and I am always happy to help you.
Jordan Caplan C.A.
Partner, Assurance & Advisory
Soberman LLP, Chartered Accountants
2 St Clair Avenue East, Suite 1100
Toronto, Ontario M4T 2T5