Which country taxes me if both say I am resident?
The treaty decides, and it does so in a fixed order rather than by weighing everything at once. The tests run from the permanent home available to you, to the centre of your vital interests, to your habitual abode, to nationality, with agreement between the two authorities as the final step. You stop at the first test that resolves the matter. That order is the whole point. If a permanent home in one country only settles it, nothing further needs to be argued, and dragging in the rest of your life weakens the position rather than strengthening it. The country that gives way does not necessarily lose the right to tax income arising in it.
What is a permanent home for the treaty tie-breaker?
It is about a dwelling being continuously available to you, rather than about ownership. A house you own but have genuinely let out on a long lease may not be available to you; a flat you rent, or a room kept for you in a family property, may well be. Hotel stays arranged trip by trip are a different matter again. Because this is the first test, the evidence for it is worth gathering carefully: leases, utility accounts in use, insurance, and what the property was actually used for during the year. Many dual residence questions never need to go past this point once those documents are in order.
What does centre of vital interests actually mean?
It is reached only when the permanent home test does not settle things, usually because a home was available in both countries. It looks at your personal and economic relations as a whole: where your family lives, where your social and civic life is, where your occupation is carried on, where property is managed and where your affairs are administered. It is not a scorecard, and it is not decided by whichever country holds the larger asset. What it asks is where the centre of the life sits, taken together, and the answer has to be explicable to both authorities in the same terms.
Do I still file in the country that loses the tie-break?
Usually yes, and this is worth saying plainly, because people expect the tie-break to switch one country off. Losing residence under the treaty does not remove that country's right to tax income arising within it, so a return on a non-resident basis is often still required there, for employment carried on in the country, rent from property in it, or a gain on assets situated in it. What changes is the scope: the country that yields is no longer taxing your worldwide income. Plan for two returns of different kinds, rather than one.
How do I prove where my centre of vital interests is?
With documents rather than assertions, and preferably ones created for another purpose. School enrolments, a spouse's employment, a family doctor, club and religious memberships, where vehicles are registered and insured, which country's bank handles the household spending, where a business is actually run from, and where advisers and property managers are instructed. Set them out for the year in question, not as a general picture of your life. A file that a reader can follow month by month, and reach the same conclusion from without being told it, carries more weight than any assertion about intention.
What if none of the tie-breaker tests settle it?
The order ends with nationality, and where that does not resolve matters either, because you hold both nationalities or neither, the treaty leaves it to be settled by agreement between the two tax authorities. That is a process rather than a form, and it takes time, so it is the last resort rather than an ordinary route. Preparing for it looks much like preparing the earlier tests: one set of facts, documented, and a position stated identically to both countries. Files that arrive there with two inconsistent stories already filed are considerably harder to resolve.
Is foreign pension income taxable in Canada?
Yes. A Canadian resident reports foreign pension income in Canadian dollars like any other income, and foreign tax withheld on it becomes a credit rather than a reduction of the amount reported. Where a treaty exempts part or all of it — some social security pensions are treated this way — the relief is claimed as a deduction on the return, not by leaving the pension off. Omitting it and claiming it was exempt are two very different filing positions. See the pensions and annuities article.
Do I pay tax when I inherit property abroad?
The inheritance itself is often not income to you, but three other things can create tax: the estate may owe tax where the deceased or the property was situated, some countries tax the recipient directly, and the gain from the date you inherit to the date you sell is yours. Reporting obligations can also attach to holding the asset. See inheriting property abroad.
