Hi colleagues,
I have encountered a situation where a client emigrated middle of a year.
The person has a rental property and therefore needs to file returns reporting rental income under Section 216 after becoming a non-resident for tax purposes. I know how theoretically it works but have never done it.
For the past year in which the residency status changed, do I file a t1 return covering the period during which the person is a tax resident and file a T1159 covering the remaining months? or do I file one T1 reporting full year rental income and prorate deductions etc.?
Thank you for your time!
First place I would start is to obtain a copy of the persons tax filing and the tax assessment of the tax return as Tax-resident in their new country to verify exact date of change of tax-residency filing.
Second thing I would do is to verify that the data so proven is in accordance with the ITA and the Treaty.
Reason: you don’t want to waste energy solving a problem which may not be there. Just because they may or may not have traveled in the “middle of the year” sometime is not necessarily determinant of Tax Residency status pursuant to the ITA and Treaty, hence, that is where I would start.
It could be quite significant, since other schedules (eg T1161 etc), and Capital Disposition issues, could increase the size of what needs to be reported quite a lot.
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Thank you, everyone, for your input!