From time to time I get questions from visitors to Canadian Tax Resource that are interesting and valid questions. I respond directly to all e-mails and although I don’t give advice, I can clarify and interpret the income tax act for you.
The Question
If I am a Canadian, living and working overseas for 3-4 years, am I tax exempt on the first $100,000 and then pay tax on anything beyond that amount?
Response
First, there is no $100,000 exemption for Canadian residents leaving Canada nor are there any exemptions for non-residents.
A person is liable to pay Canadian income tax based on their residency and merely leaving the country for a period of time does not necessarily mean you do not have to pay Canadian income tax on your worldwide income. The CRA considers a number of factors including whether you have family in Canada, bank accounts in Canada, and a residence in Canada as well other factors. They are looking for ties to Canada that suggest you have left permanently.
If you want to clarify your tax situation, you should contact the CRA prior to your departure.
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Hi,
I am a Canadian citizen. I left Canada to teach in Taiwan in 2004 and I never did any non resident claims. I wrote down the income I made in Taiwan on my Canadian tax returns (yes, I paid both countries taxes), then I went back to Canada to work for a year and then now I’m here in Taiwan married and with a child.
I have property (with my siblings), bank accounts, stock investments under my name in Canada. My husband is not a Candian citizen or nor does he live there or is a Canadian resident. I am a housewife where my husband is the soul provider. How do I file my taxes under this situation? While in Taiwan I still filed my taxes, and in the past I was still getting Government cheques but now the accountant I’m working with says the Government is cracking down. Am I doing something wrong?
Ichiro
Yes. You appear to be resident in both countries and could benefit from treaty relief of double taxation. You should hire an accounting firm with internatioanl experience to help you.
Thanks so much. But does the Canadian government take claim on my husband’s income too when I file mine? Are we considered one unit now? That’s what someone told me. We’re considered one unit so the government can get taxes from what my husband. I will ask someone if I can. You are very helpful.
Generally, if you have a home, spouse, or dependent children in Canada, you are a resident and must pay tax on worldwide income.
Canada does not allow joint filing.
To get a rulimg on your statuses, use CRA form NR73.
Should I tell CRA to stop sending the CCTB in my account? Even if I file our income tax next year and every year Im out of the country? and even if my children live with me in China?
It just seems like a gray line to me… Please make me understand, If we are outside Canada – we are expected to pay taxes under world income (which we are happy to oblige)- but we cannot receive benefits from CRA? Am I right? But what of those who live in Canada who doesn’t pay taxes because of “0? income but still receives benefits?
Please enlighten me.
Thank you for helping folks like us with so many questions.
Hello Stardust,
If you are not a resident of Canada for tax purposes you do not pay tax in Canada. In addition, you would not be entitled to CCTB. If you are a resident for tax purposes you are not entitled to CCTB.
Thank you so much for the quick response.
Why was I told that even if we are outside Canada as long as we are permanent residents, we should pay taxes? They call it ‘world income’ —
So even if we have a bank account in Canada, but since we work in China – we should not file income tax in April 2011? Because we categorized as non resident?
Because if this is the case that we don’t need to file tax in Canada next year, then there really is no grounds for me to accept or file CCTB for the kids.
Thank you, your insights are very helpful.
Hi there,
You need to find out if you are in fact a resident of Canada. See http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html
And
http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/README.html
And then file form NR74 to obtain a ruling.
If you are not a resident, you may have to pay an exit tax.
I would suggest you hire an accountant to help you.
Hi,
It’s me again. You’ve been so helpful. I just wanted to ask quickly if my child who is with me in Taiwan able to receive money from the child tax benefits?
Take a read through the following link to see if you still qualify.
There’s no link.
Hello Tax Guy,
I came across your site and found them to be very informative and I was wondering if you could clarify something for me.
I am Taiwanese and got my acceptance to move to Canada. I have a rental property in Taiwan and reported it in my Taiwan income tax form. I hope to be a Canadian citizen in 5 years.
Do I need to report that income in Canada’s income tax form? I don’t thing so as I will be “double taxed”?
Am I correct?
Thank you.
Christopher
As a resident of Canada you must pay tax on worldwide income.
Canada provides a foreign tax credit to help offset foreign taxes paid.
Can a Canadian corporation employ (personally) a Swedish citizen who works and resides in Sweden and visits us twice yearly for a month at a time to keep up to date on projects. We have employed this person through his consulting company but it would be apparently advantageous for him to pay whatever withholding taxes etc. that we would have to charge him rather than receive the gross amount over there? Thank you.
You can add him to payroll and deduct only non-resident withholding tax.
There is no issue as long as you remit the NR Tax to the CRA. See
Thanks so much. So this would include while he is living and working for us in Sweden and when he comes here? (i.e. both ?)
Ralph,
As long as he is not in Canada 183 days in any given calendar year there would be no issues from an income tax perspective. Immigration may have some concerns and he may need a visa or work permit, but that is a immigration and legal issue.
Hi I have a question about Canadian residency.
I am a Canadian citizen who lost my residency because I was living abroad for four years. Now I have returned to Canada to live permanently. Do I automatically regain my residency status upon return or do I need to reapply?
Thank you
Colin
Hi Colin,
Residency for tax purposes isn’t lost. You have to take steps to give up and sever tax residency with Canada and there is then a specific departure date and a taxable deemed disposition occurs.
Whether you are a resident of Canada, in a given tax year is a question of fact and simply leaving Canada for four years does not mean you are no longer a resident of Canada for tax purposes.
If you had in fact, not been a resident for tax purposes, then you will be a deemed resident of Canada once you are in Canada for 183 days.
Take a read through this document from the CRA.
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