A November 28, 2018 Court of Quebec case (Fono vs. Quebec Revenue Agency, 2018 QCCQ 10534, 550-80-004253-163) evaluated whether an individual was a resident of Quebec (as assessed by Revenu Québec) or Ontario (as asserted by the taxpayer) for the 2009 and 2010 years.

whether residential ties have been established at the new location

Taxpayer loses
While the taxpayer originally left Quebec in 2007 for Ontario to improve his English, the Court found that several factors confirmed that he did not sever his ties and continued his residence in Quebec for the 2009 and 2010 years. In particular, the Court observed that, where an individual leaves Quebec with the intention of becoming a non-resident of Quebec, but does not establish important residential ties elsewhere, the remaining ties with Quebec may be of even more importance. Also, the fact that a taxpayer may establish residential ties outside of Quebec does not mean that they no longer reside in Quebec.

In finding the taxpayer did not sever his ties to Quebec in 2009 or 2010, and therefore remained a resident of Quebec for those years, the Court noted that:

did the family move with the taxpayer?

• the taxpayer’s wife remained in Quebec when the taxpayer left for Ontario. The Court did not accept that the relationship was stormy and punctuated with breaks, noting that the couple had a child in each of 2010 and 2015 and bought a condo together in 2010;
• the taxpayer was the principal shareholder and president of a company which was formed, registered and had an address in Quebec for the period in question;
• the taxpayer kept his two apartment buildings located in Quebec (one acquired in the year of his departure in 2007) after moving to Ontario;
• the taxpayer maintained several bank accounts in Quebec after departing to Ontario;
• several tax forms and documents indicated the taxpayer’s address was in Quebec for the 2009 and 2010 years; and
• during Revenu Québec’s review of this matter in 2015, the taxpayer filed his 2008 Canadian tax return as an Ontario resident. He filed his 2009 and 2010 Canadian tax returns, also reflecting Ontario residency, shortly after the review was completed. This indicated to the Court that, while the taxpayer sought to avoid Quebec residency, he also did not appear to assume the obligations that go with residency in another province.

Based on the evidence provided, the Court concluded that the taxpayer had not demonstrated a change of residence from Quebec to Ontario on a balance of probabilities. He was, therefore, held to be a resident of Quebec in 2009 and 2010, the years under appeal.

the risk of double taxation in a provincial residency dispute

Risk of double taxation
Also, an October 17, 2018 Court of Quebec case (Rousseau vs. Quebec Revenue Agency, 2018 QCCQ 7340, 400-80-001972-169) similarly held that the taxpayer was a resident of Quebec based on his residential ties. In this case, the taxpayer had filed as an Alberta resident for several prior years. The Court suggested that, in the interest of fairness, the Minister should take steps under the agreements between the federal government and the other provinces, including Alberta, to avoid the double taxation to which the taxpayer would otherwise be subject. The Court noted that it could not order that such steps be taken.