George and Gina Anderson, (Canadian citizens), moved to Europe on August 15^th, 2020 to open and incorporate a café in a small Italian village.Prior to moving, George earned $65,000 in 2020 as a computer programmer and Gina earned $67,000 in 2020 as a registered nurse.(The couple did not have any other income besides their salaries prior to moving.)
They are both in their 60s and plan to retire in Italy, which is Gina's birthplace.They sold their home prior to moving to Europe.As the couple only expects to return to Canada every second year, they cancelled their bank accounts and driving licenses.Their café was successful in 2020 and earned a pre-tax profit of $25,000 by year's end.
Required:
Determine the residency status of George and Gina and their café for Canadian tax purposes in 2020 and discuss the Canadian tax treatment, if any, of their personal and business income.(Assume there were no assets with realizable gains upon their move.)

Question

Quizplus · Accepted Answer

The Answer is George and Gina would be considered 'part-year' residents (or 'residents until August 15th'), since they severed their ties with Canada prior to moving.When filing their Canadian tax returns, they would only be liable for tax in 2020 on their earnings prior to leaving Canada.
The café is not a Canadian resident.It was not incorporated in Canada, and its central management and control is not exercised from within Canada.Therefore, the café is not required to file a Canadian tax return.The income would be subject to Italian tax laws.

George and Gina Anderson, (Canadian Citizens), Moved to Europe on August