2017-0736681M4 Mariners income

Principal Issues: Why a mariner who routinely leaves Canadian waters is required to pay income tax in Canada?

Position: Factual residents must report worldwide income for the entire year. General comments provided.

Author: Wirag, Eric
Section: -

February 7, 2018

XXXXXXXXXX

Dear XXXXXXXXXX:

Thank you for your correspondence asking why a mariner who routinely leaves Canadian waters is required to pay income tax in Canada. Thank you also for your understanding regarding the delay of this response.

Under Canada’s tax system, income tax obligations to Canada are based on residency status. From the limited information you have provided, it appears that you are considered a factual resident of Canada for income tax purposes. The term factual resident means that, although you left Canada for a period of time, you are still considered to be a resident of Canada for income tax purposes. This could include when you work temporarily outside of Canada.

If you are a factual resident, you must report your worldwide income, that is to say, your income from all sources both inside and outside Canada, for the entire tax year. Your income is taxed as if you never left Canada. You can also claim all deductions and federal, provincial, or territorial non-refundable and refundable tax credits that apply to you. You may also be able to claim a foreign tax credit for income taxes that you paid to a foreign government.

For more information about residency status, go to canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/determining-your-residency-status or refer to Income Tax Folio S5-F1-C1, Determining an Individual’s Residence Status, at canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-5-international-residency/folio-1-residency/income-tax-folio-s5-f1-c1-determining-individual-s-residence-status.

I appreciate the opportunity to respond to your concerns and trust the information I have provided is helpful.

Sincerely,

The Honourable Diane Lebouthillier
Minister of National Revenue

Eric Wirag
2017-073668

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