Factual Residents – Temporarily Outside Canada — Montreal CPA Firm Near You: Tax Residency, Obligations, Benefits, Credits, and Foreign Tax Relief

Many Canadians work, study, travel, or spend extended periods outside Canada while still maintaining strong residential ties. In these cases, you may be considered a factual resident of Canada for tax purposes, even if you physically live abroad for part or most of the year. This distinction is critical: factual residents must continue to report worldwide income, file Canadian tax returns, and may continue receiving benefits and credits.

This guide explains what it means to be a factual resident, when the status applies, which tax package to use, filing deadlines, how your status can change, and how benefits, CCB, and foreign tax credits work. It is essential reading for Canadians working abroad, digital nomads, snowbirds, students overseas, daily/weekly U.S. commuters, missionary workers, and anyone maintaining ties to Canada.

What Is a Factual Resident?

You are a factual resident of Canada for income tax purposes if you keep significant residential ties in Canada while living or travelling outside the country.

This means that even though you are temporarily outside Canada, you are still considered a resident for income tax purposes. This status applies when you maintain key ties such as:

• A home in Canada

• A spouse or common-law partner in Canada

• Dependants in Canada

• Canadian driver’s licence, health coverage, bank accounts, credit cards, personal property

• Canadian memberships, community ties, or social connections

If you leave Canada but keep these ties, you generally remain a factual resident.

Factual Resident vs. Deemed Non-Resident

If you establish residential ties in a country with which Canada has a tax treaty, and under that treaty you are considered a resident of the other country, you may become a deemed non-resident.

A deemed non-resident:

• Is taxed the same way as a non-resident of Canada

• Is not treated as a Canadian resident even if they still have ties in Canada

• Must file non-resident returns instead of factual resident returns

This often happens when someone accepts a position abroad, becomes tax-resident in the other country under the treaty, and is assigned treaty residency to avoid double taxation.

Situations Where You Could Be Considered a Factual Resident

You may be considered a factual resident of Canada if you are temporarily outside Canada:

• Working abroad for a limited time

• Teaching or studying in another country

• Commuting to the U.S. for work daily or weekly

• Vacationing or travelling for extended periods

• Spending part of each year outside Canada (snowbirds)

Missionaries Abroad

Missionaries may choose to be factual residents even if they do not keep residential ties in Canada, but only if all of the following are met:

• You are a Canadian citizen or permanent resident

• You serve a religious organization whose national office is in Canada

• You are sent abroad for five years or less

• You file annual returns reporting income from all sources

This election preserves Canadian resident status for tax and benefits purposes.

Your Tax Obligations as a Factual Resident

As a factual resident, your tax situation remains essentially the same as if you had never left Canada.

You must:

• Report worldwide income on your Canadian return

• Claim all applicable federal and provincial credits

• Pay federal and provincial/territorial tax for the province where you maintain ties

• File a return every year

• Claim all eligible refundable credits

• Continue participating in CPP/QPP and EI if applicable

• Continue qualifying for the GST/HST credit and the Canada child benefit (CCB)

Example

If you live in Quebec but spend winters in Florida, you remain a factual resident of Quebec unless you sever your ties.

Which Tax Package Should You Use?

Use the Income Tax Package for the province or territory where you keep your residential ties.

For example:

• If you lived in Ontario before relocating temporarily to the UK for work → use the Ontario package

• If you lived in Quebec before teaching abroad → file both federal and Quebec returns

Do not use the non-resident tax package unless you become an emigrant or deemed non-resident.

Filing Deadlines

As a factual resident, your filing deadlines are the same as Canadians living in Canada:

• April 30 – Filing deadline for most individuals

• June 15 – Filing deadline if you or your spouse/common-law partner carried on a business in Canada

However:

• ALL tax owing must be paid by April 30, regardless of filing deadline.

Factual residents are not granted the later filing deadline for non-residents.

What Happens if Your Residency Status Changes?

Your residency may change if:

• You decide to stay abroad permanently

• You sell your Canadian home

• You move your spouse and dependants abroad

• You give up health coverage, memberships, bank accounts, and other significant ties

• You become treaty-resident in another country

When you sever your residential ties, you become an emigrant for tax purposes. The year you leave becomes your departure year, requiring special reporting:

• Reporting of worldwide income up to departure date

• Deemed disposition rules may apply (exit tax)

• Filing as a non-resident in future years

If you suspect your residency status changed, consult CRA’s “Determining your residency status” or seek professional advice immediately.

Benefits and Credits for Factual Residents

Canada Child Benefit (CCB)

If you are eligible for the CCB:

• You continue to receive it while temporarily outside Canada

• You must file a return each year

• Your spouse or common-law partner must also file annually

• If your spouse/partner is a non-resident, they must file Form CTB9 – Income of Non-Resident Spouse or Common-Law Partner

If you have a child while outside Canada, you can apply for CCB using Form RC66.

GST/HST Credit and Provincial Credits

As a factual resident, you remain eligible for the GST/HST credit and related provincial benefits.

Canada Carbon Rebate (CCR)

Eligibility depends on your province of residence, but factual residents generally continue to qualify.

Foreign Tax Credit (FTC)

If you pay tax to a foreign country on income that is also taxable in Canada:

• You can claim a foreign tax credit (FTC)

• The FTC reduces your Canadian tax on that same income

• This prevents double taxation

FTC = the lower of:

1. Foreign tax paid

2. Canadian tax otherwise payable on that foreign income

To claim the credit, file:

• Form T2209 – Federal Foreign Tax Credits

• Provincial/territorial foreign tax credit forms if applicable

You cannot claim an FTC for foreign tax paid on income earned in Canada.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps Canadians temporarily abroad understand and comply with their residency obligations. We assist with:

• Determining whether you are factual resident, deemed non-resident, or emigrant

• Filing returns for Canadian residents abroad

• Claiming foreign tax credits correctly

• Coordinating with foreign tax systems to avoid double taxation

• Maintaining benefits like CCB, GST/HST credit, and CCR

• Handling cross-border income, property sales, and treaty residency issues

• Planning your departure or return to Canada

• Filing for children, spouses, and non-resident partners

If you are living outside Canada temporarily and unsure how to file your taxes, Mackisen can guide you step-by-step to keep you compliant, minimize your tax burden, and protect your benefits.