Harper’s move to Calgary will cut tax duty
Prime Minister Stephen Harper is moving back to Calgary. While this may seem like a logical decision, given he must vacate the official PM residence of 24 Sussex Dr., his choice to leave Ontario for Alberta before year-end is a tax-savvy move that could save him thousands in 2015.
Where you pay provincial tax is based on where you live on the last day of the year, regardless of where you lived during the year. Of course it’s not as simple as checking into an Alberta hotel before midnight Dec. 31. The determination of provincial residency looks to the province where you have the “most significant residential ties.”
Significant residential ties include the location of your home, your spouse or partner and family. Mr. Harper should have no problem satisfying this test as his wife and daughter, who is already enrolled in a Calgary school, will also be living in Calgary. His son will continue studying at Queen’s University in Ontario.
Sometimes it’s not practical for a family to move midway through the school year, in which case the determination of provincial residency also looks at secondary ties, which can include: maintaining a recreational membership in the province, using that province’s hospital or medical insurance coverage, continuing to drive a vehicle registered in the province and holding a driver’s licence from that province.
The Canada Revenue Agency says it’s possible to be a resident in more than one province. The CRA will determine in which province you have the most significant residential ties. If that can’t be determined, then your province of residence is where you have the most secondary residential ties.
So how much tax could Mr. Harper save in 2015?
Given the PM’s salary of $335,000, adjusted slightly downward to $307,000 for 2015 since he will only receive an MP’s salary for the last two months of the year, and assuming no other income or tax credits, his combined federal/Ontario tax bill would have been $125,000.
By moving to Alberta before the end of the year, Mr. Harper’s federal/Alberta combined tax bill on his Parliamentary income drops by about $18,000 to $107,000.
So, if you’re a high-income Canadian contemplating a move to Alberta, you may want to follow in Mr. Harper’s footsteps and accelerate that move before Dec. 31.