John Brown was born and raised in Germany. He worked as an engineer with 

The Siemen's Company in Germany.

In September 2005, John and his wife Marissa moved to Canada with their two children.

On arrival in Canada, John immediately started working for the Enbridge Corporation, a gas and oil

Company . The job required him to work in several cities in Canada for lengthy periods of time. John

and his family moved together to whatever city he was posted to.

In 2010, John accepted a two- year contract position in Montreal, Quebec, with the

Bombardier Corporation, in the aircraft industry.

At the end of the contract in 2012, John accepted an offer of a position with the Hyundai Corporation in

the U.S.A.

To facilitate his move to the U.S.A., John and his Company took the following steps:-

• The employer obtained a work permit for John to work in the U.S.A
• The employer obtained private health insurance for John .
• Closed all his bank accounts in Canada except the one he had at the Bank of Montreal which had a branch in the United States in which his salary was to be deposited.
• He cancelled all his Canadian credit cards and gasoline credit cards
• He did not renew his membership in the Montreal Golf and Country Club.

Before leaving for the U.S.A., John made the following arrangements with the Bank of Montreal:-

• A monthly amount of his deposits with the Bank of Montreal in the USA was to be

transferred to his Canadian account

• The account was a joint account and the spouse can withdraw from the account

for the children and her maintenance in Canada

• The Bank to transfer a sum of $5.000 in the year to his RRSP which he held at the Bank
• The Bank to make a transfer of $11,000 to the RESPs of his children.

In October 2012, John moved alone to the United States. He stayed in a hotel until he could find permanent accommodation for himself and family. His wife remained in Canada until July 2013 to stay with the children in order for them to complete their school year.

When he left Canada, John took the following items with him:-

-all of his clothes and personal belongings

-laptop and cell phone

-golfing equipment

-some paintings

In February 2013, he bought a home in California and settled there. To this end , he:-

-Purchased a car

-Obtained a California driver's licence

-Opened 2 bank accounts and obtained Visa and Master cards as well as a debit card

-Joined social and dining clubs as well as a surfing club

During the period October 2012 and July 2013, John returned to Canada on three occasion to stay with him family. He was in Canada for Xmas and spent 7 days. In March he came for another 7 days to stay with the family for Easter and then in June he spent 7 days with the family for the summer. During his stay in Canada, he stayed at the family home in Montreal and in June he rented a cottage in Toronto for 7 days to enable the family to engage in some outdoor activities.

In 2021 John retired from the position and returned to Canada with his family.

Required: 

Prepare a memo for the tax person in your firm who will advise John on the income tax consequences of these facts. Evaluate in detail the alternatives in the residency issue as they relate to this fact situation for the period October 2012 to 2021. Discuss each degree of residence and their tax consequences. State your conclusion.

 

Answer rating: 100% (QA)

Memo To Tax Advisor Subject Tax Consequences for John Brown Residency Issue October 2012 to 2021 Summary of Facts John Brown a Germanborn individual w... View the full answer