There are a considerable number of Americans who have lived in Canada as Permanent Residents for prolonged periods of time, including decades but have never applied for Canadian citizenship. Certain individuals do not apply for Canadian citizenship out of a fear of loss of US citizenship and others do not apply because they do not feel the need to do so. There a number of reasons for Americans living in Canada to apply for Canadian citizenship. This blog post identifies some of the rights and benefits of Canadian citizenship and also debunks the myth that obtaining Canadian citizenship will result in the loss of US citizenship.
Rights and Benefits of Canadian Citizenship
There are numerous rights and benefits that come with obtaining Canadian citizenship. For an American living in Canada who adopts a cross border lifestyle, we identify several of the most salient rights and benefits, namely:
- the constitutional right to enter, remain in, and leave Canada;
- the right to vote in Canadian elections;
- the ability to spend as many or as few days in Canada as he or she wishes;
- the ability to always become eligible for a provincial public healthcare insurance plan; and
- the ability to depart Canada without the loss of Canadian citizenship.
1. Right to Enter, Remain In, and Leave Canada
As a Canadian citizen, section 6(1) of the Canadian Charter of Rights and Freedoms grants you the constitutional right to enter, remain in and leave Canada. Under the US Constitution, US citizens enjoy the same right to enter and remain in the United States. This means that the citizen of each country cannot be denied entry into the country or forcibly exiled from their country.
In contrast, a Canadian permanent resident is not afforded the same protection. Instead, section 6(2) of the Canadian Charter of Rights and Freedoms provides that a Canadian permanent resident has the right to move between providers and pursue the gaining of a livelihood in any province. This right does not encompass a constitutional right to enter, remain in, and leave Canada. This effectively means that a Canadian permanent resident may potentially be denied entry into Canada.
Bottom Line: Once a US citizen who is a Canadian permanent resident becomes a Canadian citizen, he or she has full mobility between the United States and Canada. He or she can freely enter either country and remain in either country or split time between both countries as he or she wishes.
2. Right to Vote in Canadian Elections
Like in the United States, the right to vote in Canadian federal, provincial, and municipal elections is limited to citizens. If you are an active participant in public life and are not a Canadian citizen, you cannot vote in Canadian elections.
Bottom Line: Once a US citizen who is a Canadian permanent resident becomes a Canadian citizen, he or she can freely vote in Canadian elections.
3. Freedom to Determine Duration of Stay in Canada Without Loss of Citizenship
Under the current Immigration and Refugee Protection Act, a Canadian permanent resident is required to be physically present in Canada for at least 730 days each five (5) year period. Otherwise, he or she may lose status as a Canadian permanent resident. In contrast, a Canadian citizen can spend as many or as few days a year in Canada as he or she wishes, including zero-days, without losing Canadian citizenship. The same rule applies for US citizens: they can spend as many or as few days as they wish in the United States and will remain US citizens.
Bottom Line: A dual Canadian and US citizen can freely determine the number of days he or she will spend in Canada, the United States, or elsewhere without losing his or her Canadian or US citizenship.
4. Access to Canadian Public Healthcare Insurance Plans
Each Canadian province has adopted its own public healthcare insurance plan. These plans are available to Canadian citizens, Canadian permanent residents, and other persons legally entitled to work in Canada, subject to certain requirements. One of these requirements is a physical presence requirement: an individual must reside in the province for a specific number of days per year in order to be eligible for a province’s healthcare insurance plan and to maintain eligibility for this plan.
If a Canadian permanent resident abandons his or her status, he or she will no longer be able to spend the minimum required number of days to remain eligible for a given provincial healthcare insurance plan. In contrast, if a Canadian citizen spends the majority of his or her time outside of Canada, he or she can freely return to Canada, spend the requisite number of days to become eligible (or eligible again) for a given provincial healthcare insurance plan, and then apply for registration in the plan.
Bottom Line: A dual Canadian and US citizen can always stay the required number of days in Canada to meet the physical residency requirement to become and/or remain eligible for a provincial public healthcare insurance plan.
5. Departure from Canada Does Not Result in the Loss of Canadian Citizenship
US citizens are US tax residents regardless of whether they live in or outside of the United States. This means that they are subject to US taxation on their worldwide income and to US tax reporting obligations on their worldwide assets. These obligations are extensive and the US government has concluded numerous agreements to ensure their enforcement vis-à-vis US citizens who live abroad, including Americans living in Canada. In respect to US taxation, the Canada-US Tax Treaty offers Americans living in Canada, among other categories of individuals, a variety of means to avoid double taxation, but double taxation nevertheless arises in many instances.
The US tax filing obligations include the obligation to report foreign bank accounts (FBAR filings) and foreign financial assets under the Foreign Account Tax Compliance Act (“FATCA”) and other laws. Foreign tax authorities such as the Canada Revenue Agency (“CRA”) have even concluded agreements with the US Internal Revenue Service (“IRS”) whereby they undertake to provide the IRS with information on US citizens who hold bank accounts in their countries.
An American can only cease to be a US tax resident through full expatriation. This process has two (2) components: (i) the renunciation or the deemed relinquishment of US citizenship and (ii) informing the IRS of the loss of US citizenship and the intention to terminate US tax residency. In certain instances, an expatriating US citizen may be subject to a mark-to-market exit tax on his or her worldwide assets and to a number of post-expatriation US taxes. Moreover, an American who expatriates for the sole purpose of ceasing to be a US tax resident may potentially be denied future entry into the United States.
If you are an American living in Canada, we highly recommend that you consult one of our cross border tax professionals to determine if you are exposed to double taxation and if you are fully compliant with your US tax filing obligations. We also advise Americans living in Canada on the process for expatriation from the United States.
Unlike the United States, Canada does not tax on the basis of an individual’s citizenship, but rather on the basis of an individual’s residency. An individual who is predominately present in Canada will be a Canadian tax resident whereas an individual who primarily resides outside of Canada can terminate Canadian tax residency without being required to renounce Canadian citizenship. The termination of Canadian tax residency is referred to as “departure”. When departing, a departure tax is owed on all worldwide assets, with certain exceptions. In certain instances, it is possible to post a bond to defer this departure tax. Moreover, a Canadian citizen who has departed Canada can always return and “unwind” his or her departure.
Bottom Line: A dual Canadian and US citizen can always depart Canada and cease to be a Canadian tax resident without being required to renounce Canadian citizenship. Following departure, he or she can also resume Canadian residency. A US citizen cannot expatriate and cease to be a US tax resident without first renouncing or relinquishing US citizenship.
Obtaining Canadian Citizenship Does Not Result in the Loss of US Citizenship
For a considerable portion of the 20th century, US immigration laws enumerated a wide range of actions by US citizens which resulted in the loss of their US citizenship. For Americans living in Canada, these included swearing allegiance to the Queen as part of becoming a Canadian citizen, voting in Canadian elections, and serving in the Canadian armed forces. This is no longer the case.
A number of US Supreme Court judgments and an overhaul of the US Immigration and Nationality Act (“INA”) have considerably restricted the acts which result in the loss of US citizenship. For an American living in Canada who becomes a Canadian citizen, he or she will only lose US citizenship if he obtained Canadian citizenship with the intention of relinquishing US citizenship. This intention must be actively demonstrated by the US citizen; it is not presumed. The most evident way for an American living in Canada or elsewhere in the world to demonstrate this intention is to sign an oath of renunciation in front of a US consular officer abroad at a US embassy or consulate.
If you are an American living in Canada and have not acquired Canadian citizenship after living in Canada for a prolonged period of time, there may be a number of reasons for you to apply for Canadian citizenship. We can advise you on the process for doing so. If, however, you decide that you wish to return to the United States on a permanent basis, we can also advise you on the Canadian immigration and tax implications of this departure.
The comments offered in this article are meant to be general in nature and are not intended to provide legal advice regarding any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate for your circumstances.
About the author
Shlomi Steve Levy is a Partner of Levy Salis LLP and is a member of the Quebec Bar, the Law Society of Ontario (L3), the Society of Trust and Estate Practitioners, and the Canadian Bar Association.
Sergei Titorenko is an Associate at Levy Salis LLP and a member of the Quebec Bar. He devotes his practice to US and Canadian tax and estate planning, Canadians doing business in the United States, Americans living in Canada, US real estate transactions for Canadians, and cryptocurrency transactions.