Left Canada and became separated in the same year

Question

Left Canada and became separated in the same year

My client became a non-resident in August 2018 and became separated in October 2018, and now I'm preparing the departure tax return for 2018. Should I record the marital status as married or separated?

Also do I need to record world income for the non-resident period (Augusut-December 2018) to prorate the basic credit? I always get confused..

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Thanks mike. If my client is claiming a full basic amount (5292 & 5293 both zero) in the year of departure, do I need to mail a note to CRA to let them know there was no income outside Canada, just like immigrant tax return?

Burnabyman

Yes just like an immigration return, but I normally include more than just a note. CRA has rejected a couple of the ones I submitted over the years and I've had to fight to get them adjusted.

I normally include a cover letter and write something like: “As per the income tax act, if the Canadian “source” Income you report for the part of the year you were NOT a resident of Canada is at least 90% of your net worldwide income for that period of the year (or if you had no income from sources inside and outside Canada for that part of the year), you are eligible to claim the full value of deductions and credits for the year. Otherwise your deductions and credits must be prorated based on the time you resided in Canada. ITA ss. 118.91 and 118.94.”

You must also attach a separate summary stating your net world income (in Canadian dollars) for the part of the year that you were not a resident of Canada (which would be zero). Show separately the net income you received from sources inside and outside Canada for that part of the year (which should also be zero).

mike

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Answer 1

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It's marital status at the time of departure, so married. Besides, you need to be separated for 90 days or CRA still considers you married.

Yes, Canadian sourced and foreign sourced income for the period of non-residency needs to be reported for the period AFTER departure.

As soon as you put in the departure date, field 5292 and 5293 will open to input this income.

Think about this as if you were completing a separate non-resident return for just the period AFTER departure and completing a Schedule A like you normally would.

It's the income you put in this section that will determine of the basic exemption will need to be prorated. If they have foreign income from the period after departure it most likely will need to be prorated.

Hope this helps.

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mike

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Left Canada and became separated in the same year

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