Ms. Van der Vamp was born in Vancouver in 1973, was educated in St. Catharines, and has

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Question:

Ms. Van der Vamp was born in Vancouver in 1973, was educated in St. Catharines, and has lived and worked in Canada all of her life. Until mid-July 2020, she had been senior vice-president of Dalhousie Debits Manufacturing Limited (“Dal Debits”).

Effective July 15, 2020, Ms. vamp was promoted to president of the corporation’s wholly owned subsidiary in Costa Rica, CR Credits Mfg. Ltd., and was paid by that corporation from that date. No definite term was placed on her contract with the Costa Rican subsidiary. Ms. Camp is generally regarded as the leading candidate for the office of president of Dal Debits when the incumbent retires within the next several years.

Ms. Camp left Canada on July 15, 2020 to take up her new position in Costa Rica. One of her two minor children stayed in Canada to complete his final year of high school, which was beginning in the fall of 2020. He stayed with one of the Van der Vamps’ two married children who remained in Canada. The other unmarried child left with her mother for Costa Rica. Mr. Camp stayed in Canada until August 31, 2020, when the sale of the St. Catharines house closed, and while he arranged to conduct his international consulting practice from the Costa Rican home.

The Van der Vamps did not sell their cottage on Georgian Bay, but they did enter into a long-term agreement with a realtor to have the cottage rented during the winter ski season and the summer vacation period, except for the first two weeks in August 2021 and thereafter when they intended to vacation there with their family.

In Costa Rica, Ms. Camp rented an unfurnished house which was smaller, than their St. Catharines house. She rented some basic furniture for the short period to September 2020 when most of her furniture from St. Catharines was moved. The Camps left some of the furnishings from their St. Catharines home with their married children for their use. Title to this property was not formally changed, but the Camps had listed this property in their wills as being transferable to these children on death. These children both had guest rooms in their homes which the Camps and their unmarried children could use whenever they chose to.

The Camps maintained their portfolio of investments in Canada with the Canadian broker that they had always used. They did this because of their lack of confidence in other financial markets. Ms. Camp also decided to maintain her accumulated pension credits with Dal Debits, rather than transfer them to the Costa Rican corporation’s pension plan. However, she did join the Costa Rican company’s plan for services after July 15, 2020. The Camps closed all of their bank accounts, except for one necessary for the running of the St.Catharines household until August 31, 2020, at which time this account was also closed. They had funds transferred to a new account for the maintenance of the remaining unmarried child while he was in school. Ms. Camp terminated her Canadian health and car insurance and her business and social club memberships, except for one business club, which she retained on a non-resident basis, effective July 15, 2020. They sold one car on July 15, 2020, and the other one on August 25, 2020, but Ms. Camp kept her Canadian driver’s licence in force.

The Camps and the unmarried child who moved with them spent about two weeks in Canada during the December holiday period visiting with the other children and skiing. In addition, they planned a two-week vacation in August in 2021 and thereafter.

Required:

The Camps are concerned about how to file their tax returns for 2020. Prepare an analysis for the tax person in your firm who will advise them on the income tax consequences of these facts. You can use the chart below as a template for your analysis. Evaluate in detail the alternatives in the residence issue as they relate to this fact situation for the year 2020. Discuss each possible degree of residence and its general tax consequences. Be sure to state your conclusion on this case after weighing the relevance of the facts considered.