Assignment task:
Maurice Glena, your client, was born and raised in Canada. He began working as a consultant after obtaining his Master of Financial Accountability in 2010. In July 2019, Maurice-Gelina Limited (MGL), of which he was a major shareholder, entered into a contract with a multinational Canadian Corporation having business in Asia to provide consulting advice in Japan. The contract stated that the services were to commence August 15, 2019, and end February 13, 2020. Maurice received a fee according to the number of days the services was provided and the fees were determined by the client. In order to avoid over-budget in this consulting contract; the client set a maximum number of days to be charged by MGL. Maurice was confident that he could finish all the work within the limit. In order to make the contract more appealing to Maurice; the corporation offered moving, travel, and living expenses for Maurice and his dependents up to a specified amount. The client paid all fees and expenses to MGL headquartered in Toronto. Maurice continued to be a shareholder, director, and officer of the corporation, and he remained very active in the daily operation of the business. Maurice received these payments in Maurice's Canadian bank account, which he continued to maintain for this purpose and for the operation of the rental property that he owned. He maintained the Canadian bank account because of foreign exchange difficulties that he might otherwise encounter. He planned to establish his international consulting business in Asia upon completion of the contract in Japan. As such, he instructed his accountant at MGL not to withhold any income taxes from his salary and remuneration received. As Maruice received the confirmation of the contract in Jun 2019 and he had only little time to prepare before leaving for Japan. He then asked his friend, John, who is a real estate agent, to rent out his condominium apartment that he owned. Maurice would like to sell the property when he could earn reasonable profit; so he is willing to accept a lower rent but it has to be renewed month by month. He instructed MGL to manage the renting of this property in return for fixed monthly management fees. Maurice shipped his smaller household and personal effects to Japan but he stored his major furnishings and winter clothing at his parent's house in Canada. He sold his car, cancelled his auto insurance and a credit card, and obtained an international driver's licence. He retained credit cards such as American Express, Visa, and MasterCard, as well as his RRSP and TFSA accounts. He was also required to maintain his health insurance coverage as the consulting contract does not provide him with any health insurance coverage in Japan. When Maurice left Canada for Japan, he was accompanied by his friend, Marina, who had been a part of his life for over a year before their departure. She was pursuing her PhD at York University and she had obtained leave from her program of studies for the fall 2019 term. As the housing market was soaring in 2019; there was no long-term lease available for them. Thus, Maurice and Marina took up residence in a service apartment in Tokyo, Japan in which they have to renew their lease every two weeks. During his stay in Japan, Maurice obtained a Japanese driver's licence and maintained two bank accounts and two cars. CSAC 3561: Taxation Principles in Canada Week 1 Open (Individual) Discussion Case Study As Maurice would like to establish his consulting in Asia; he joined the alumni of his alta mata clubs in Tokyo in order to build his connection. He was provided with an office by the client and he carried business cards which identified him as a consultant with that client. He actively promoted the consulting business of MGL in Japan in the hope of establishing the business abroad, but he did not generate sufficient business to stay in Japan beyond the period of the existing contract. He did not seek to extend his visa or pay any form of tax on his income in Japan. Marina returned to Canada for the Winter 2020 term and returned to Japan in summer of 2020, but returned to Canada in September 2020 to continue her program. By December 2020, Maurice had billed the limit under the contract. He vacated his apartment, sold his cars, packed up his possessions (including some artwork, textiles, and other souvenirs that he had acquired), and returned to Canada. Required: (a) Evaluate thoroughly and in detail the facts to determine if Maurice maintained Canadian resident status throughout the period in question, or (b) ceased to be a resident of Canada in July 2019, thereby establishing part-year resident status in that year and non-resident status immediately thereafter until December 2018. (c) Advise Maurice on how to file his 2019 tax return. Present your answer by discussing briefly the tax consequences of the options outlined above as they apply to this fact situation. Provide your advice, in conclusion, after weighing the relevance of the facts you have considered.