This is the 6th of seven posts analyzing the “dual citizen exemption” to the S. 877A Exit Tax which is found in S. 877A(g)(1)(B) of the Internal Revenue Code. Please remember that the “dual citizen exemption” is available ONLY to those who meet the “five year tax compliance test”.
1. What is the S. 877A(g)(1)(B) “dual citizen exemption” and why does it encourage those “born dual citizens” to not renounce U.S. citizenship?
2. The history of Canada’s citizenship laws: Did the 1947 Canada Citizenship Act affirm citizenship or “strip” citizenship and create @LostCanadians?
3. The S. 877A “dual citizen” exemption – I was born before the first ever Canada Citizenship Act? Could I have been “born a Canadian citizen”?
4. The S. 877A “Dual Citizen” exemption: The 1947 Canada Citizenship Act – Am I still a Canadian or did I lose Canadian citizenship? (The “Sins Of The Father”)
5. The S. 877A “Dual Citizen” exemption: The 1947 Canada Citizenship Act and the requirements to be “born Canadian”
6. “The S. 877A “Dual Citizen” exemption: I was born a dual citizen! Am I still “taxed as a resident” of Canada?”
7. The S. 877A “Dual Citizen” exemption: “MUST certify tax compliance for the five years prior to relinquishment”
Covered Expatriate? S. 877A "Dual Citizen Exemption" – What does it mean to be "taxed as a RESIDENT of" Canada? https://t.co/l8VuB53zIH
— Citizenship Lawyer (@ExpatriationLaw) February 19, 2016
In order to use your “dual citizen from birth” as a defense to being a “covered expatriate” and therefore subject to the S. 877A “Exit Tax”, you must (as both a Canadian and U.S. citizen from birth”) be subject to taxation as a Canadian resident. What does this mean? Are you actually required to live in Canada?
What are the rules for determining whether one is “taxed as a resident of Canada”?
This could be considered from each of a “U.S.” and a “Canadian” perspective.
“Resident in Canada” for tax purposes – from a Canadian Perspective
Calgary couple gets $18K bill after CRA questions residency for tax purposes https://t.co/WKOaW5DRyP – Resident or non-resident of Canada?
— Citizenship Lawyer (@ExpatriationLaw) February 20, 2016
Living in Canada would be a “sufficient condition” for being subject to taxation as a Canadian resident (all Canadian residents pay tax).
Living in Canada may not be a “necessary condition” for being subject to taxation as a Canadian resident.
In other words, one could be treated as a “tax resident of Canada” without actually living in Canada. It seems clear that this is an issue that is decided on a “case by case” basis. That said, incredibly:
There are situations where one would want to be subject to taxation as a Canadian resident.
Here is information from the Canadian Revenue Agency (current as of the date of this post WHICH IS SUBJECT TO CHANGE).