Michael DOLLARS AND SENSE HOW MANY days do you spend in the U.S. each year, ‘whether on major holidays or cross-border jaunts? If you are a regular visitor, make sure you don’t run afoul of the U.S. tax laws. “We have heard many rumors of tax problems people are having who spend substantial time in the U.S.” writes reader K.U. “We. work in Canada but holiday in the U.S. and plan to spend more time there, especially in winter. Can you please clarify the rules?” Commented Virginia Perry, a senior manager in KPMG Peat Marwick Thorne’s U.S. tax group: “The U.S. taxes its citizens and residents on their worldwide income. So a Canadian citizen who lives in Canada but spends substantial time in the U.S. may also sometimes unknowingly be considered a U.S. resident for tax purposes. You could end up having to file tax returns in both countries on your worldwide income, although you can usu- ally avoid double taxa- tion. “The key is to care- fully record the num- ber of days you spend in the U.S. Anda quick trip across the border for gas or other shopping counts as one day.” Perry provided the following guidelines but warned you must iook at all the facts of your situa- tion to decide which approach is best, and possibly get professional advice. @ First take the “substantial pres- ence” test. Count the number of days you spent in the U.S. in 1994; then add one-third of the total for 1993 and one-sixth of the 1992 figure. Wednesday, July 6, 1994 - North Shore News - 41 Canadians can benefit from visits to the U.S. “You meet the substantial pres- ence test if you spent at least (a) 183 days in the U.S. this year, or (b) 31 days this year and 183 days in total (under the three-year for- mula) for 1992, 1993 and 1994," Perry said. Don't count days under the fol- lowing conditions: if you regularly commute to work in the U.S. from a home in Canada (if you meet the 66 If you are a resident of both Canada and the U.S., you can apply to be considered only a Canadian resident for tax purposes. 99 regular cornmuter rules under U.S. laws); if you spend less than 24 hours in the U.S. in transit between two places outside the U.S.; if you develop a medical in the U.S. which forces you to stay there; or if you are an exempt indi- vidual like a teacher, student or professional athlete competing in a charitable sports event. Second, check the “closer con- nection exception.” Said Perry: “Even if you meet the substantial National home sales continue to keep rental vacancies high PERSISTENTLY HIGH vacancy rates will linger in many metropolitan areas throughout 1994, according to a recent forecast from Canada Mortgage and Housing Corporation (CMHC). Based on an analysis of April vacancy results, 20 of 26 centres are forecast to have a vacancy rate of 3% or more this October. This will be up from 18 centres in October 1993. As a generai rule, a vacancy rate reaching 3% provides renters with a reasonable choice. When tates exceed 5% for a prolonged period, choice improves, but new rental construction is discouraged. These values usual depend on local market conditions. “The forecast of continuing high vacancy rates is mainly due to the large number of renters who bought homes in the first four months of 1994,” said Greg Goy, CMHC’s Manager of Locai Market Analysis. “To many of these buyers, the increasing mort- gage rates of March and April sig- naled an end to the record low rates of the last year.” As a result, many people who had been waiting for rates to bot- tom out decided to buy before mortgage costs increased further. With moving dates from these sales in the spring and early sum- mer, renter mobility will be high. “High vacancies are forecast to linger in 1994 as more renters have bought new homes.” Mr. Goy added. “As closing dates for new homes are about four to eight months after the sale and start of construction, the freeing up of rental units will continue for some time.” Other factors creating higher vacancies in some markets are slow economic growth and high unemployment. The April survey results show that St. John’s (10.6%), Edmonton (9.19) and Saint John (8.7%) had the highest vacancy rates in Canada. Edmonton experienced the biggest increase in the vacancy rate compared to a year ago. The rate has gone from 5.5% April 1993 to 9.1% this April. CMHC’s semi-annual survey is conducted in April and October to provide vacancy information on privately initiated apartment struc- tures of three units or more in 26 metropolitan areas. Capilano College teams up with business to create first-class lab CAPILANO COLLEGE is claiming one of the leading business computing programs in Canada, as a result of three. national accreditations it recently received and a new client-server computer labo- ratory. “The economy has changed, the place of work has changed and the nature of work has changed,” said college president Douglas Jardine. Cap College is changing with them. The accreditations were award- ed as a result of a project that redesigned the program's curricu- lum. One came from the Canadian Information Processing Society (CIPS), which made Cap College the tenth college in Canada to receive its blessing. Graduates of the program will now be able to receive the Information Systems Professional designation in half the normal time — four years, rather than eight. The college is also the second institution in Canada to receive the designation of Novell Education Academic Partner by Novell Corporation. “People with Novell experience are in huge demand right now and we offer training in that area,” said Maureen Morris of the col- lege’s PR department. The third certification comes for the Business Computing Co-op Program from the Canadian Association for Cooperative Education (CAFCE), which sets standards for co-op education job placements. The two-year program, which accepts 32 students per year, cur- rently explores trends in micro- computers, business systems and programming languages. The CAFCE endorsement means that graduates of the pro- gram are equipped not just with strong theoretical knowledge but also with current business experi- ence. The client-server laboratory is a state-of-the-art facility which by September will be equipped with 30 Novel] networked workstations with removable hard drives. Chevron Canada donated $50,000 toward the lab. presence test, you won't be con- sidered a U.S. resident for U.S. tax purposes if you also qualify for the closer connection exception.” Basically, you have to show you (a) have a Canadian place of business, employment, post of duty or normal residence if you don't have a job, (b) spent fewer than [83 days in the U.S. during the current year, (c) have a closer connection to Canada (see next paragraph), and (d) took no steps to emigrate to the U.S. To establish your closer connection exception for {994, file Form 8840 by next June 15. You must do this for every year in which you meet the substantial presence test. The internal Revenue Services estimates it takes about two hours to complete and file this form, with its three dozen ques- tions. If you are a resident of both the U.S. and Canada, you can apply to be considered only a Canadian res- ident for tax purposes under the Canada-U.S. Tax Convention, known as “the Treaty.” This means taking an estimated six hours to complete and file Form 8833 — again, on an annual basis as long as you are considered to be a resident of both countries. (You can get these forms and any necessary U.S. tax returns — you must file a Form 1040NR return if you are submitting a Form 8833, or if you have U.S. income and are filing a Form 8840 — from the IRS, 60 Queens, Ottawa KIP 5Y7, phone (613) 563-1834.) For more information, ask your local tax office for the 26-page booklet Canadian Residents Going Down South, produced by Revenue Canada with input from the IRS. Here’s one example of how the tules work. Darcie lives and works in Canada but takes a seven-month leave of absence to tour the U.S. this year. She’ Il be in the U.S. for at least 183 days in 1994 so won't meet the closer connection excep- tion. But under the Treaty her per- manent home in Canada should establish her as a Canadian resi- dent for tax purposes. She should file Forms 8833 and 1040 NR by June 15, 1995. Michael Grenby is a North Shore-based columnist and inde- pendent financial adviser who works with individuals, he will answer your questions in this col- umn as space allows —~ write to him clo 2444 Haywood Ave., West Vancouver, B.C, V7V IYI. Avoid being ripped-off THE BETTER Business Bureau offers the following tips for avoid- ing rip-off artists. Watch for: * High-pressure sales tactics, and a stubborn reluctance to accept “‘no.” ¢ A request for your credit card or bank account number for any pur- pose other than to make a purchase, such as for “verification” or “iden- tification”; * A statement that a prize is “free” followed by a requirement that you SEAV.CE iTO. 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