I have residential ties to both Canada and another country — which country taxes me?

When you are a tax resident of two countries simultaneously — because you have strong ties to both — the applicable tax treaty (if one exists between Canada and the other country) contains a tie-breaker article that determines which country has primary taxing rights. This is a federal matter under the Income Tax Act and applies regardless of which Canadian province you live in.

Most treaties follow the OECD model. The tie-breaker looks first at where you have a permanent home available to you. If homes exist in both, it looks at where your centre of vital interests is (economic and personal ties). If that is also inconclusive, habitual abode (where you spend more time) and then nationality are used in sequence.

The country that "wins" the tie-breaker taxes your worldwide income; the other country's rights are generally limited to source income (income earned there). You still file returns in both countries in many cases, and claim a foreign tax credit in one to avoid double taxation on the same income.

If no treaty exists between Canada and the other country, both countries may tax your worldwide income and your only relief is Canada's unilateral foreign tax credit rules.