Non Residents
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• 1 - Immigration lawyer David Aujla- immigration and real estate related issues. |
| • 2- British Columbia Real Estate Association - Buying and Selling Canadian property: an overview for non-residents |
| • 3- Immigration and citizenship web site of the Canadian Government. |
| • 4- Arthur Azana of D+H Group LLP Chartered Accountants: non residents and real estate in Canada |
| • 5 - Additional cross border accountants |
| • 6 - Accountant Gabrielle Loren- rules that apply to non residents who rent out their Vancouver property. |
| The correctness of the information provided is the responsibility of the authors. |
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1. FIVE IMPORTANT QUESTIONS by DAVID AUJLA
1. Will buying a house or a business help my immigration to Canada? Buying a house does not increase chances of entry, but nor does it hurt. The purchase of a home certainly shows a connection to Canada and the home is ultimately treated as a part of the overall net worth of the individual, but simply owning a house and living here as a visitor will not affect the selection process. If a second home is purchased, one can bring in a reasonable amount of furniture as a "seasonal resident" without paying any duty. Buying a business, however, could result in a faster entry into Canada based on a temporary work permit. CAUTION! Buying a business must be part of a comprehensive immigration strategy. The purchase must be strategized with other qualifying factors, such as overall asset base, the projected performance of the business and previous business experience. These important aspects are examined and must be approved by the provincial government and/or the federal immigration department before any business is purchased. It is best to seek professional taxation and legal advice prior to purchasing a home or business. 2. As a foreigner can I get a mortgage? The answer is yes. The requirements for obtaining a mortgage to finance a purchase, whether a home or a business will depend on the institution with which the foreign national will do business. Generally speaking, there is usually not a problem in securing mortgages with more-established financial institutions. These institutions will usually require a letter of introduction from the previous banking facility with which the foreigner has done business in his or her own home country. Previous income in the home country will also be verified. Also, institutions may require a greater percentage of the purchase price as a down payment. 3. How long can I stay in Canada? (Can't I just go out for a day and come back?) As a visitor, a person is generally allowed to remain in Canada up to 182 days (or six months). The immigration officer can make a decision to restrict the visitor to a shorter time, but if no comment is made by the officer, the visitor can assume six months. The six month period in NOT per calendar year, but this time period is granted on each occasion that the person comes into Canada. There is no corresponding regulation in the Immigration Act (IRPA) that states the person has to remain out of Canada for six months before returning, so multiple entries can be allowed. CAUTION! You cannot, however, "flagpole" continuously. Flagpoling means leaving Canada for a few days and then returning to Canada. Although such re-entry may be allowed on one or two occasions, the person does run a risk of being refused entry into Canada because he or she is living in Canada as a resident under the guise of being a visitor. The foreign national must maintain substantial roots with his or her home country including owning or leasing a home (which home should be worth more than the second home in Canada), having utility bills, credit card statements, driver’s licence, a health coverage card, bank statements and tax returns all showing permanence in the home country. Another consequence of staying in Canada for more than 182 days of the year can be Canada Revenue Agency declaring the visitor to be a Canadian taxpayer. If that becomes the case, then the visitor will be required to pay tax in Canada on ALL world-wide income including the income earned in the home country. Canada does have tax treaties with many countries, such as the USA, to avoid double taxation, but it is imperative that if a foreign national is planning on spending more than 182 days in Canada, then immediate taxation advice should be sought. Occasionally, foreign nationals will purchase a home, reside in it for a few months of the year and rent it out for the balance. NOTE: Special tax rules do apply to such situations and Canadian tax returns must be filed by the foreigner. In fact, if the taxation payments are not set up properly, the foreign landlord will be required to pay 25% of the gross rental income per month to the tax department as a holdback until the tax returns are filed. However, such a drastic reduction of rent can be avoided if a Canadian resident is appointed on behalf of the foreign national to make the filings at the end of the year. CAUTION! When selling a residence, a foreign national must file a clearance certificate well in advance of the sale or there can be up to a twenty five percent holdback of the full selling price until the clearance certificate is obtained from the tax department. Often retirees who have chosen to investigate their immigration options of living in Canada are shocked when they are advised that they do not qualify. Even though they have substantial assets, independent medical coverage and sufficient income, they will not qualify for permanent residency since Canada Immigration decided to eliminate the retirement category in the late 1980’s. Even though they may be retired, the individual still must attempt to qualify as a result of past experience as a skilled professional or a business applicant. Although they may not have the desire to work or start a business, the issue is one of qualifying for entry into Canada despite their future desires for retirement here. Thus, timing of the application is absolutely crucial given their date of retirement. To qualify individuals for permanent residency, Canada Immigration looks back ten years prior to the date of the application for skilled workers to assess relevant work experience and five years prior to the application for those applying under the business class. Thus, if a person has been retired longer than those time periods, then no points can be awarded to work or business experience. Anyone applying as a skilled worker must have at least four years of relevant work experience during the last ten prior to the application and business individuals must have at least two years in the last five prior to the application to prove their business experience.
If, if a person has been retired, for say seven years, he or she may not obtain full points for work experience (being only three years of work). Similarly, in business applications, if the person has been retired for five years, he or she will not obtain any points for business experience even though he or she may have been active in many businesses before that time period. Thus in advising clients, one must ensure that they have at least some work experience during the ten year period or five year period as outlined above. Therefore, the best time to apply for status, for potential immigration applicants who wish to retire here in Canada, is during their last year of work or business activity. This would then ensure them that they can then maximize their points for successful immigration to Canada.
DAVID AUJLACanadian Immigration Lawyer Victoria Office: Vancouver Office:
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2. Click on the link below to view the article of the GOV.BC.CA |
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3. Canadian Government site. The time required to obtain each type of visa depends on an applicant's personal circumstances. To obtain a time estimate contact an immigration lawyer like the writer of the article above, David Aujla. |
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4. Arthur Azana of D+H Group LLP Chartered Accountants - 604 731 5881, [email protected]:
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5. Additional cross border accountant |
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RULES for Non Resident Property Owners
NR6 If you purchase property that you rent out, you have to file an NR6 form before the first month's rent is received. This form allows you or your agent to remit taxes on your net estimated rental income vs. remitting 25% of your gross rental income. The NR6 form is a joint election between yourself as the owner and your agent stating that you will file a Section 216 Canadian tax return by June 30th of the following year and pay any taxes due by April 30th of the same year. The following demonstrates this further: No NR6 Election With an NR6 Election Gross rental income $12,000 $12,000 Monthly expenses $15,000 $15,000 Monthly tax payment due $ 250 $nil Tax refund due $ 3,000 $nil As you can see, this is a cash flow issue more than anything so it is very important to file this form. You will need details of your anticipated expenses in order to complete it - see detailed list below - plus the name, address and phone number of your Canadian agent. If you have no agent, you must remit 25% of your rental income to the government by the 15th of the month following the month in which the rent was received. In other words, January you collect $1000 in rent, then by February 15, you have to pay $250 to CRA. Section 216 Return This is a special rental income return that is due to be filed by June 30th of the following year. I.e. your 2008 return is due June 30, 2009. If taxes are payable, they are due April 30th and interest accumulates on the amount due after this date. The return calculates taxes due on your rental profit. Allowable expenses include:
Gabrielle Loren, CGA |
