The client was born and raised in Canada. After obtaining his MBA in 2006, he began working as a consultant. In July 2019, the corporation of which he was a major shareholder entered into a contract with a Canadian Crown corporation to furnish consulting advice in Nigeria. Services were to commence July 15, 2020 and end January 14, 2022. A daily rate of fees was set, but total billings were not to exceed a specified maximum. The contract also provided for moving, travel and living expenses for the client and his dependants up to a specified maximum.

All fees and expenses were paid to the clients corporation in Toronto. He continued to be a shareholder, director and officer of the corporation and he remained very interested in its activities. The corporation paid the client and was instructed to deposit these payments in the clients Canadian bank account which he continued to maintain for this purpose and for the operation of the rental property that he owned. He felt that the Canadian bank account was necessary because of foreign exchange difficulties that he might otherwise encounter. He instructed the corporation not to withhold any income taxes on these payments because he intended to give up his Canadian residence status to establish an international consulting business abroad upon termination of the Nigerian contract.

Since the client had little time before leaving for Nigeria, he quickly rented the unit that he had been occupying in a duplex that he owned, on a month-to-month basis. He intended to sell the property when the market would provide him with a reasonable profit. He arranged to have his corporation manage the renting of this property for a fee which he paid to the corporation.

He stored his major furnishings and winter clothing in Canada. His smaller household and personal effects were shipped to Nigeria. He sold his car, cancelled his auto insurance and a gasoline company credit card and obtained an international drivers licence. He retained credit cards such as American Express, Visa and MasterCard, as well as his RRSP accounts. Under the contract, he was also required to maintain his provincial health insurance coverage.

When he left Canada for Nigeria, he was accompanied by his girlfriend, Martha, who had been a part of his life for over a year before their departure. She had obtained leave from her university program of studies for the fall 2020 term. The couple took up residence in a hotel suite that was converted into an apartment at the Holiday Inn in Lagos, Nigeria. No conventional living

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quarters were available, because of the housing market. During his stay in Nigeria, the client obtained a Nigerian drivers licence and maintained two bank accounts and two cars. He joined sports, dining and social clubs in Lagos. He was provided with an office by the Nigerian government and he carried business cards which identified him as a consultant with that government. He promoted the consulting business of his Toronto corporation actively in Nigeria in the hope of establishing the business abroad, but he did not generate sufficient business to stay in Nigeria 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 Nigeria.

Martha returned to Canada for the winter 2021 term, and then returned to Nigeria for the summer of 2021, but returned again to Canada in September 2021 to begin a new program.

By December 2021 the client 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:

The client is concerned about what should be his residence to file tax returns for 2021. Prepare an analysis to advise the taxpayer on the his degree of residence. You can use the chart below as a template for your analysis.

Discuss each possible degree of residence (e.g., full-time resident of Canada, part-time resident of Canada) and the general tax consequences of each degree of residence (e.g., taxed on worldwide income or not). You need to list all the case evidence that can be used to support each possible degree of residence.

In the end, remember to state your conclusion on which degree of residence the taxpayer belongs to after weighing the case evidence supporting each degree of residence.

Degree of Residence:	Briefly describe tax implications and criterion to be met for the degree of residence:	Case Evidence supporting criterion

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