Which country taxes me if both say I am resident?
Neither country's view yields to the other on its own. Where both sets of domestic rules make you resident, the treaty's ordered tests decide which of them treats you as resident for treaty purposes, and they are applied in sequence until one of them resolves the case. It is not a choice and it is not a negotiation. Two things have to be checked before you rely on it: that a treaty applies to you at all, and that the version in force — as modified by the multilateral instrument where relevant — still contains the test you intend to use. The position then has to be claimed and evidenced on the return.
Do the tie-breaker tests have to be applied in order?
Yes, and the ordering is the whole design. You work down the tests and stop at the first one that resolves the case; the later tests are then irrelevant. That is not a formality, because it decides where the effort goes. If the first test settles the matter, evidence about later ones adds nothing to the file and can muddy it by inviting an argument that was never reached. The practical consequence is that evidence should be concentrated at the test that decides your case, gathered to the standard that test requires, rather than spread thinly across all of them.
What counts as a permanent home under a tax treaty?
Availability, not ownership. A home you own but have let on a term lease is generally not available to you; a place you rent but keep at your disposal continuously can be. The word doing the work is permanence: somewhere arranged for your continuous use rather than for a stay of short duration or a particular purpose. In practice it is evidenced with documents rather than description — lease terms and dates, utility accounts in use, insurance, where your possessions actually are, whether anyone else had the right to occupy. Where such a home exists in only one country, the question usually ends there.
Does the tie-breaker decide my residence for all purposes?
No. It resolves residence for the purposes of the treaty, which is narrower than it sounds. Your status under each country's domestic law is unchanged by it, so a filing obligation, an information return or a reporting duty that follows from domestic residence can survive a tie-break you won. People are frequently surprised by this: the allocation of taxing rights moved and the paperwork did not. Work out the domestic consequences separately, and expect to file in both places — once on the treaty basis, and once because domestic law still asks you to.
What happens if none of the tie-breaker tests decide it?
The tests are a ladder and the ladder has a last rung: where they do not resolve the case, it goes to the two countries' competent authorities to settle by agreement. That is slow, and meanwhile returns fall due, so a position has to be taken and disclosed in the interim. The file should be built with that possibility in mind from the start, because a submission to the authorities is only as good as the contemporaneous evidence behind it. Cases that reach this rung usually have symmetric facts on both sides, which is exactly why they need documenting early rather than reconstructing later.
Is the treaty text I am reading the version in force?
Not necessarily. The multilateral instrument changed many treaties at once, so the text published as your treaty may not be the text that governs your year: it has to be read together with the modifying instrument and with whatever each country reserved or notified. Newer wording also brings eligibility and purpose conditions that a treaty benefit can turn on, quite apart from the tie-breaker itself. Establish which text is in force for the year in question before building the position, not afterwards. It is a short check at the start of a file and an expensive discovery in the middle of one.
Can I move my 401(k) or IRA into an RRSP?
In limited circumstances, and rarely without cost. Canada allows a transfer of certain US plan proceeds into an RRSP with additional room for that purpose, but the withdrawal is a taxable distribution on the US side first, with withholding and potentially an additional charge for taking it early. Whether the Canadian credit fully absorbs that US tax is the calculation that decides it. Often leaving the plan where it is and drawing later is the better answer. See RRSP against 401(k) and IRA.
What is double taxation?
Double taxation means the same income being taxed by two authorities. It comes in two forms: juridical, where two countries each tax one person on one amount, and economic, where two different people are taxed on the same underlying profit — a company on its earnings and a shareholder on the dividend paid out of them. Relief comes from a treaty, a foreign tax credit, or an exemption, and which one applies depends on the income type. How to avoid double taxation sets out the routes.
