NR73 - to File or Not File

Why to NOT Submit an NR73.

The reasons given by some advisors for not submitting an NR73 to CRA are

  • The NR73 is voluntary, so why give CRA information unless you are forced to do so.
  • There is a risk of having CRA deem you to still be a Canadian resident because of the information you provide on the NR73, and of course you don’t want that to happen.
  • Some people also feel that if CRA decides you are still a Canadian resident, then it is difficult to have them change their mind.

That thinking is out of date, especially in view of increasing scrutiny of Canadians at the border crossings, and of non-residents in general by CRA.

When to NOT Submit an NR73

  1. Do not submit without advice
  2. Do not submit if you are moving to countries that do not required residents to file income taxes, such as you might encounter in the Middle East, Bermuda and some others. Mexico does have income taxes for residents, even though they don't enforce them. So filing an NR73 for Mexico residency is OK as long as you get advice to ensure the form is done correctly.

Why you Should Submit an NR73

This certainly applies if you are moving to Mexico or other countries that have income tax on residents. CRA can request that you submit an NR73 at any time, even years after departure from Canada. It’s better to find out now, not years later. Otherwise you may be in for a big tax shock. Read on.

Imagine leave Canada without filing an NR73 and believe you are a non-resident. You stop filing Canadian tax returns. Then 5 years later, you get a letter from CRA requiring the NR73 be filed and that you prove your non-residency. Yes, they can do that. So you fill out and submit the NR73…. and are deemed to be a resident of Canada!!

Better yet, you DO file a tax return every year even as a non-resident because your Canadian taxable income is low and you are eligible for a refund on the withholding taxes. Many non-residents do it. And to complicate the matter, because you are a non-resident you were no longer paying taxes on capital gains or on income that you earned in other countries. Then, years later you file the NR73 as requested and CRA demands you pay back-taxes (and penalties) on the capital gains and other earnings… because they deem you to be a taxable Canadian resident.

So by not submitting the NR73, you now have a major tax problem with Canada. We have seen that happen many times, so it is a real risk.

Compare that to preparing an NR73, and having it reviewed by an advisor experienced in non-residency before you submit it.

Filling Out an NR73

The key to becoming a non-resident is do it right...and do it right the first time. There are some things that can be left in Canada, and other things that are not acceptable. See our page on Canadian Non-Residency to see Things to Do When Leaving Canada.

When completing the NR73, if you provide the wrong answers resulting in you being deemed a resident of Canada, either you misinterpreted the question or you really didn't do everything you are required to do in order to be classed as non-resident. We recommend you have a financial advisor review the NR73 before you submit it to ensure you answered correctly, and to identify any issues that could result in you being deemed to still be a Canadian resident for tax purposes.

Properly done, the NR73 helps ensure that you don’t get a tax surprise years after leaving Canada.

Originally written:  September 7, 1999

Revised: December 27, 2017

Return to Canadian Non-Residency

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