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Tax Implications for Temporary Residents X

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What happens to my CPP contributions if I become a non-resident?

If you become a non-resident, your Canada Pension Plan (CPP) contributions remain intact, and you can still qualify for CPP benefits upon retirement, regardless of your residency status. You generally cannot continue contributing to CPP unless working for a Canadian company abroad. When claiming benefits, you will need to apply and provide documentation, and be aware of potential tax implications in your new country of residence.

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Can I maintain my Canadian bank accounts while living abroad long-term?

Canadians living abroad long-term can generally maintain their bank accounts by keeping them active, informing their bank, and managing tax obligations. Practical tips include setting up online banking and monitoring inactivity fees. However, closing accounts may be advisable if permanently emigrating or if maintaining them becomes too complicated. Ultimately, the decision should consider individual circumstances and future plans.

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What is the 183-day rule?

The 183-day rule in Canadian tax law determines if an individual is a "deemed resident" for tax purposes. Staying in Canada for 183 days or more without significant residential ties results in deemed residency, requiring the filing of a Canadian income tax return on worldwide income. Exceptions exist for those with residential ties in countries with tax treaties, and non-residents are taxed only on Canadian-source income.

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Can I claim medical expenses incurred abroad on my Canadian tax return?

Canadian taxpayers can generally claim medical expenses incurred abroad on their tax returns, including a variety of healthcare costs and travel expenses related to medical treatment, provided certain conditions are met. Claims can be made for any 12-month period ending in the tax year filed, and documentation should be kept for verification. Only unreimbursed expenses can be claimed, and residency status may affect tax obligations.

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How do I properly exit the Canadian tax system?

To exit the Canadian tax system, notify the Canada Revenue Agency (CRA) of your departure, file a final tax return covering your residency period, and be aware of the departure tax on certain assets. After leaving, report only Canadian-source income. Consider tax treaties, moving expenses, and consult a tax professional for guidance.

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What tax deductions am I eligible for as a Canadian digital nomad?

To claim employment expenses for a home office as a digital nomad: • Your employer must provide a T2200 form, confirming that working from home is required. • The home office must meet CRA conditions for exclusivity and use. • You must maintain Canadian tax residency to claim the expenses.

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Are moving expenses tax-deductible if I relocated for work?

In Canada, moving expenses may be tax-deductible if you relocated for work, provided you meet certain criteria, such as moving to a location at least 40 kilometers closer to your new workplace. Eligible expenses include transportation, travel, temporary living costs, and expenses related to selling and purchasing homes. To claim, complete Form T1-M and report the deduction on your tax return. Keep receipts, and note that if your expenses exceed your income, you can carry forward the unused portion to future years.

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What is a capital gain?

Capital gains occur when an asset is sold for more than its adjusted cost base (ACB) plus selling expenses. In Canada, only 50% of capital gains are taxable, and they must be reported on Schedule 3 of the income tax return. Understanding capital gains is crucial for compliance with tax regulations and can help minimize tax burdens, especially with special considerations for donations and exemptions for principal residences.

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