Business between Canada and Australia continues to increase and, along with this, comes an increase of employee movement between the two countries. Furthermore, many individuals are taking it upon themselves to move from one country to another, be it a temporary or permanent move. This is not surprising given that both Australian and Canadian cities continue to rank the highest amongst the world’s most livable cities given their high quality of life, educational standards and healthcare, with low crime rates and stable infrastructure developments. When considering a move most companies and individuals focus on the logistics of moving, immigration, and housing and often forget about the tax implications. Too often they are surprised by the tax consequences until it is too late.

     When moving from Canada to Australia there are some unique tax implications that have both negative and positive tax outcomes. When looking at the tax implications individuals must first determine their residency status in both countries and this may involve using the tax treaty signed by both countries. The treaty contains 'tie-breaker' rules which seek to overcome situations where an individual is treated as resident of both Canada and Australia. The determination of resident status under these tie-breaker rules overrides the operation of the domestic resident status tests.

     In Canada, your Canadian residency for tax purposes is determined based on an individual’s residential, economic and social ties to Canada. As such, the factors involved in residency determination includes where your family is located and where you have a home available for your use (primary ties) and where you work, have bank accounts, social memberships, drivers license, etc. (secondary ties).

     If one ceases to be a resident of Canada there are many issues to consider. One of the most common is the departure tax. In general, if you cease to be a resident of Canada, you’ll be deemed to have disposed of and reacquired your capital property at its FMV on that date. You’ll be subject to tax on any taxable capital gain resulting from this deemed disposition. Other issues to consider are the tax implications of your RRSP’s, company and public pensions, TSFA’s, RESP’s etc. You may also consider the tax implications of selling a Canadian home while a non-resident of Canada or renting it while in Australia. Many Canadians are surprised to learn about some of the administrative burdens and negative tax consequences associated with the above scenarios. The implications do not only revolve around Canadian taxes. Australian taxes must also be considered.

     Many Canadians are surprised to learn about some of the administrative burdens and negative tax consequences associated with the above scenarios. The implications do not only revolve around Canadian taxes. Australian taxes must also be considered. In Australia residency works in a similar way with some exceptions. 

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