Canadian Tax Basics for Nomads

Residency vs. non-residency — the basic distinction

Canada taxes people based on their residency status for tax purposes, not citizenship. Your status determines what income Canada can tax:

• Resident (factual or deemed) — taxed on worldwide income for the period you are a resident.
• Non-resident — taxed only on Canadian-source income (with some special rules and withholding obligations).

Residency is a question of facts — the Canada Revenue Agency (CRA) looks at your ties to Canada, how long you are here, and whether a tax treaty applies.

Factual resident

You are a factual resident if you maintain significant residential ties to Canada, even if you live abroad for long periods. Factual residency usually results from strong personal connections to Canada.

Deemed resident

You may be a deemed resident if you spend 183 days or more in Canada in a calendar year (see the 183-day rule below). Deemed residency can mean you are treated as a resident for tax purposes for that year, even if you do not have strong residential ties.

Non-resident

You are a non-resident if you have severed your residential ties and are living outside Canada. Non-residents generally pay Canadian tax only on income that has a Canadian source.

Primary and secondary ties — what CRA looks for

The CRA assesses both primary and secondary ties to decide factual residency.

Primary ties (most important)

• A home in Canada (owned or long-term rented)
• A spouse or common-law partner in Canada
• Dependants in Canada