Non resident?

Have a client that went to her winter home in Nicaragua last January. They closed the airport and she wasn’t able to get home and is still there. Does her 2020 tax return get filed as a “non-resident”? Do her non-refundable tax credits have to be pro-rated?
She only has one source of income, her company pension. She turned 65 a couple weeks ago and has not collected her CPP or OAS yet.

I believe she is not NR, as she did not severed his primary residential ties with Canada.


Akhlaq Khokhar, CPA, CGA

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Depending on the circumstances you might be able to report her as non-resident. I am not certain you would want to however as I don’t see a tax treaty with Nicaragua which would mean her pension income would get taxed at a flat 30% as a non-resident of Canada which could possibly be reduced slightly on a S217 return depending on income levels. More than likely you’d have a hard sell trying to convince the CRA she is a non-resident however as she did not intend to stay down there and wouldn’t have take the appropriate steps before leaving to show her intent to go non-resident.

“They closed the airport and she wasn’t able to get home and is still there.”

I wouldn’t be in a hurry to believe everything clients say.
September 21, 2020
Colombian airline Avianca resumed “regular commercial operations in Nicaragua” on Saturday with a welcome ceremony at the air terminal, pro-government media said.
Although Nicaragua did not officially close its only international airport, airlines had suspended their operations to the country since April as a security measure due to the coronavirus.*”

From a tax point of view, the status of the airport at various times is only ONE of extremely many other tax factors to be investigated on this file before you can come close to even remotely hazarding a guess as to what this client’s tax position is…

One of the primary factors in the determination of residency is “intention”. On its own, getting stuck due to the inability to fly out of Nicaragua shouldn’t be enough to sever your client’s Canadian residency (whether she wants to or not). However, as Joe points out, there are many factors that could come into play.

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