Factual Residency in Canada: The Residential Ties Test
The significant and secondary ties, why there's no day count, and the treaty tie-breaker
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
Factual residency is the CRA's main test of Canadian tax residence. It weighs residential ties: a home, a spouse or partner, and dependants are significant; personal property, bank accounts, a driver's licence, provincial health coverage, and memberships are secondary. There's no day-count rule — someone who keeps significant ties usually remains a resident.
On this page
The ties
| Significant ties | Secondary ties (examples) |
|---|---|
| A home in Canada (owned or leased, available for use) | Personal property (car, furniture) in Canada |
| A spouse or common-law partner in Canada | Canadian bank accounts and credit cards |
| Dependants in Canada | Provincial driver's licence, provincial health insurance, a Canadian passport |
| Social, union, and professional memberships; a Canadian mailing address (limited weight on its own) |
Why it matters
A factual resident is taxed on worldwide income. A person leaving Canada while keeping a home available or a spouse in Canada may remain a factual resident — and owe Canadian tax on U.S. income — even after moving to Florida. Form NR73 asks the CRA for an opinion (the NR73 guide).
Dual residents
If someone is a resident of both countries under domestic law (factually resident in Canada and a U.S. resident under the substantial presence test or a green card), the treaty's tie-breaker decides — permanent home, center of vital interests, habitual abode, citizenship, then mutual agreement between the two tax authorities. A person who is resident in the United States under the tie-breaker is deemed a non-resident of Canada for all purposes of the Income Tax Act under section 250(5) — the emigration rules, including the deemed disposition, apply from that date.
Frequently asked questions
How many days can I spend outside Canada and stay a resident?
There's no day rule — factual residency depends on residential ties, not days.
Can I keep my Canadian home after moving to the U.S.?
Keeping a home available for your use is a significant tie and can keep you a resident. If you lease it to a third party on arm's-length terms, the CRA weighs all the circumstances and may treat it as only a secondary tie (Income Tax Folio S5-F1-C1, ¶1.12).
What is a deemed resident?
Someone who isn't a factual resident but sojourns in Canada 183 days or more in a year, among other categories (the deemed residency guide).
What if both countries consider me a resident?
The treaty's tie-breaker decides, and a person resident in the U.S. under it is deemed a non-resident of Canada.
Official sources
The Canada Revenue Agency explains: “The most important thing to consider when determining your residency status in Canada for income tax purposes is whether or not you maintain or establish significant residential ties with Canada.” — Canada Revenue Agency, Determining your residency status, https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/determining-your-residency-status.html
The Canada Revenue Agency explains: “Complete this form if you have left or are planning to leave Canada temporarily or permanently and need help determining your residency status for income tax purposes.” — Canada Revenue Agency, NR73 Determination of Residency Status (leaving Canada), https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/nr73.html
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our Canadian Tax Desk handles residency determinations, NR73 requests, and treaty tie-breaker analysis for people moving between Canada and the U.S.. See pricing or book a call.
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