Tax residency in Canada

During a tax year, an individual is subject to Canadian income tax as:

resident: taxed on worldwide income from all sources, or
non-resident: taxed on Canadian-sourced income only

A resident of Canada can be further classified as either:

deemed resident, or
factual resident

Confusingly, the term "resident" is not defined in the Income Tax Act, so its interpretation has been left to the courts through case law.

Residency is determined case-by-case using all relevant facts and circumstances, including:

length of your stay in Canada and abroad
your ties with Canada and other countries
applicable double tax treaties, if any

Deemed Resident

The Income Tax Act, subsection 250(1)(a) also known as the 183-day rule, deems a person resident for the entire tax year if they

sojourned in Canada in the year for a period of, or periods the total of which is, 183 days or more

To sojourn means to stay temporarily. This applies to visitors who spend time but don't have significant residential ties in Canada. For example, if you live in Canada permanently, you are not a sojourner, thus the rules for deemed residents do not apply to you.

However, under 250(5), if you are a deemed resident of Canada, but you establish ties with a country that has a tax treaty with Canada, then you become a deemed non-resident of Canada. Note that your tax liability to Canada ends on the date that you qualify under said tax treaty, meaning you can be a part-year resident of Canada. You must have a home, center of life, or habitual abode (see more) in that other country.

Note that 250(1) also applies to members of the Canadian Forces (b), ambassadors, servants (c), and some others.

See Deemed residents of Canada by the CRA.

Factual Resident

In Thomson v. Minister of National Revenue (1946), although the plaintiff spent less than 183 days in Canada, the Supreme Court held that under 250(3) he was considered "ordinarily resident" in Canada.

According to the CRA, you are ordinarily resident, also known as a factual resident (because facts must be examined), if you maintain or establish one or more significant residential ties in Canada:

dwelling place(s),
spouse or common-law partner, and/or
dependants

Note that the significant ties carry less weight if you are a foreigner in Canada, as opposed to a Canadian-born person (read more).

Your secondary residential ties are less important on their own, but may still be considered collectively. These are:

property (vehicles, furniture, clothing, etc.)
social ties (memberships in organizations or clubs)
economic ties (employment, business, bank accounts, brokerage accounts, etc.)
immigration status (work permit, etc.)
health insurance with a province or territory
driver's licence
Canadian passport

Other residential ties are the least significant and may include:

mailing address
PO box
safety deposit box
telephone listings
newspaper and magazine subscriptions

If you keep one or more significant ties, you are a factual resident. If you don't have any significant ties but keep some minor secondary ties, you are likely a non-resident. If you make a clean break severing all ties with Canada, you are a non-resident of Canada.

If not all residential ties have been severed, the CRA may also consider:

evidence of intention to sever ties (or otherwise return to Canada)
steps taken to comply with the Income Tax Act
- ex: paying exit tax, instructing Canadian agents to withhold non-resident tax
regularity and length of visits to Canada
re-establishment of ties in another country (or lack thereof)
- note: you could still be a tax resident of both countries

A factual resident is subject to worldwide tax during the part of the year in which they were a resident of Canada, and after their departure date they are taxed as a non-resident (ex: 25% witholding tax) on their Canadian income, if any.

Note that since Canadian law follows the English common law, you may also encounter the term common-law resident.

See Determining your residency status and Factual residents – Temporarily outside of Canada.

Non-Resident

If you are not a deemed resident nor a factual resident, then you are a non-resident of Canada. The date you become a non-resident, reported as departure date on your tax return, can only be determined after reviewing all relevants facts and circumstances. Generally, it's the latest of:

the date you leave,
the date your spouse or common-law partner and dependants leave, or
the date you become a resident in another country

One exception is if you were a resident of another country prior to entering Canada, and you are returning to re-establish your residency there. In that case, you become a non-resident on the date you leave Canada.

See Non-residents of Canada and Leaving Canada (emigrants)

Resident of Nowhere

In Thomson v. MNR, the Supreme Court established that:

For the purposes of income tax legislation, it must be assumed that every person has at all times a residence.

In practice, this means that to exit Canadian tax residency, you must become a tax resident in another country. For example, if you leave Canada to become a digital nomad and fail to establish residency elsewhere, your residency is likely to fall back to Canada.

Provincial Residence

In simple terms, an employee is taxed in the province where they are resident on December 31. A business owner is taxed in the provinces where their income is sourced. Quebec's Taxation Act has its own rules regarding tax residence in Quebec.

Semantics

The term you will most often see in CRA publications is "resident". It is implied as "resident for tax purposes" or simply "tax resident". This is not to be confused with "legal resident", which is a person who has a legal status in the country, such as a visa, a permit, or a passport. Notably, you can be a tax resident but not a legal resident and vice versa. Similarly, being a tax resident is different from being a resident of a city, or a resident of a home on a lease or title.