Thank you for the detailed information and examples. It sure seems a murky matter to me. We are not trying to dodge having to pay our dues, but we sure would not like to mangled by having to pay 25% over our capital gain (which are our live savings) and standing a fair chance that the purchaser lawyer will withhold 50% of the purchase price to forward to the CRA(as they seem to be allowed to do this). Our situation is as follows:
We have Canadian citizenship and received NZ PR in june 2010. Yes, the intent to leave Canada and to reside in NZ is there of course. But this intent is open ended as we keep the option open to returning at some point. We have a short term rental agreement here till november 2011.
Spouse got a job offer from NZ in March 2011 with a start date of june (her Canadian job technically ended 3rd of june). Principal property went on the market shortly after. Shipper collected our household goods 11th of may and we left for NZ the day after. At this time our property was still for sale. Although we had hoped to sell it before leaving for NZ, this did not happen and so the problem emerged that we had the intent of selling our property while in Canada but now had to deal with the sale of our property at an unknown point in time. I guess we could have prevented this situation by declining my spouse's job offer, but that didn't seem to be a good plan. Neither the option for me to stay behind in an empty house till it would sell at an unknown point in time.
We have an offer in now with a closing date of the end of august. It is conditional though and could technically fall trough. It just seems all a bit weird. We tried to dispose of our property before leaving, and if we would have been successful this would have been free of tax. Since we were unsuccessful before leaving for NZ, now we would have to pay 25% capital gain.
We still have ties with Canada:
- more friends there;
- bank account;
- credit cards;
- principal property;
- property insurance (insurer not willing to renew after certificate runs out in november because vacant);
- pension plans
- driver's licences;
- provincial health cards;
- citizenship.
It is not about us making a decision to sell our principal property after leaving the country to take up residence in NZ. Our intent was to dispose of our Canadian property before leaving. The time of sale of a property is arguably not in our hands. We are waiting for our lawyer to advise us on this, but we cannot believe we would be deemed non-residents for tax purposes by the CRA. Certainly the short time frame of a couple of months this all took place should not warrant such a situation in our opinion. But it sure increased our stress levels and I will go back to Canada for the closing of the sale if that is what I have to do to avoid a financial blow like that. Even though this, of course, means substantial extra cost.
Thanks to all who responded and we will post back how this ends.