Taxation Summary
Fall 2000 Prof. Allard
Income
if a receipt is in the nature of income, it will be taxed.
A receipt is in the nature of income, if you have earned it.
Hence, a windfall like gift, lottery winning, inheritance is not an income.
Residence
s. 2: Income should be paid on income by every Resident in Canada.
Common Law Residence
The person meets the c/law residence test when the cumulative effect of multiple factors demonstrates that his customary mode of life is centralized in Canada, that he has a sufficient nexus or link to Canada: Thomson, Lee
i. Being a question of fact and degree, the link or nexus can be determined by various factors: Lee
· ownership of property or dwelling in Canada
· location of family home
· residence of spouse, children
· regularity and length of physical presence; and its purpose
· mode of life, past and present habits of life
· presence of business interest
· presence of social interest
· ties to jurisdiction: memberships, registration of vehicles, credit cards, mailing address, telephone listing, bank account, subscriptions
· ties elsewhere
ii. general propositions:
· no single factor is determinative: Lee
· citizenship is not a factor: Thomson
· a taxpayer must reside somewhere: Thomson, Lee
· intention and free choice of domicile are not necessary to establish residence: Lee
· taxpayer may have more than one residence and pay taxes in two countries: Thomson
Part-time Residence s. 114
Special rules for calculating (y) apply to individuals who are resident in Canada for only part of a taxation year (they have either “commenced” to reside or “ceased” to reside in Canada).
Test: have you ceased to have ties with Canada? Factors:
· permanence an purpose of stay abroad
· residential ties in Canada
· residential ties elsewhere
· regularity and length of visits to Canada.
· However, if some of ties remain, the individual must prove that the reason for keeping these ties is not underlined by the intention of residing in Canada. E.g. in
a for the whole year, you may be a Canadian rez in that year. The court will consider the taxpayer’s activities over a period of years and whether you have intention and likelihood of coming back to Canada. E.g. in Reeder, the taxpayer was likely to return to Canada, because his work in France, though was indeterminate in length, was temporary. Thus, residence is more than physical presence.
Residence of Corporations
s. 250(4):
1st: Corporation is a Canadian resident if it was incorporated in Canada after 26.04.65:
De Beers:
2nd: if not incorporated in Canada, it is still a Canadian resident if the corporation’s “central management and control” abide in Canada. Factors:
· location of meetings of directors
· with today’s powerful communication, might rather consider the residence of directors
· residence of shareholders is irrelevant.
