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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i hope you can help me out with my question.
I was a Canadian Immigrant & did my landing in 2001. In 2003 or 2004 i got my Permanent Resident Card. I was filing for my taxes all these years.
In 2005 i got my Canadian Citizenship & had the opportunity to move abroad almost immidiately after. i had no assets & properties in Canada, then & even today.
I was verbally told by my accountant that if I closed my bank account & cancelled my OHIB card (which i did), then as a non-resident Canadian living abroad with no property or asset in Canada, I would not be liable to any taxes & also dont need to file.
Have i been given the correct information or do i need to pay taxes on my worldwide income or am i required to file / need to file with zero taxes?
Please advise.
Thanking you.
@ Z:
It sounds right given these facts.
thanks for your prompt response, but even if i am not liable to taxes, must i file for taxes (even if zero)?
@ Z:
You have to file a Canadian tax return if you have sold capital property such as investments or real estate. Otherwise, propobably not.
Tax Guy
We live in Canada, born & raised. We have our own business and plan to keep it. We have an oppurtunity to buy a piece of equipment with personal money in the U.S. and send it overseas where an international company will rent it. If the money is earned abroad, and stays in a bank account in say Spain, what taxes am i responsible for in Canada. As well, if we do transfer money into Canada is there any tax relief as the money was earned abroad. Basically asking the question; Can a guy get a break from personal/corporate income tax by getting into business overseas.
Thanks
@ Jason:
A resident of Canada, you are taxed on your worldwide income. A corporation is generally resident in the country where the core management of the company resides. As a result, the physical location of your assets is not important because the income generated is taxed in Canada. If the equipment is rented or leased out, you will be able to claim the Capital Cost Allowance against your rental income.
The revenue you receive outside of Canada may be subject to foreign withholding or other foreign income taxes. Generally speaking these taxes may be claimed as a credit in Canada to offset the foreign tax already paid.
I am a Canadian who has been working abroad for about three years. I live in Taiwan, a country that does not hold a tax treaty with Canada. I was wondering if the non-resident status still holds true with countries that do not have a tax treaty with Canada?
Also, I have not paid taxes while living abroad. When I re-enter Canada, will I be subject to paying back taxes? As well, as I have no significant ties to Canada, will this be equated in automatically, or must I motion for this on my own accord?
Thanks for any help you can provide
@ Susan
Good questions!
If you are not a resident of Canada, you do not have to pay Canadian income tax. However, any Canadian source income (dividends from Canadian companies or interest earned on balances in regular bank accounts) are subject to non-resident withholding tax. You do not file a Canadian tax return if you are subject to non-resident withholding taxes on Canadian source income.
When you return and become a resident again, you will only be required to pay Canadian income tax on income earned from your date of Canadian residency forward. There would not be any back tax since you were not a resident.
I am a Canadian who has been living and working in the US for several years under TN and H1 visas but I have never completed the non-resident status form. I’ve been paying US taxes but not Canadian, do I owe Canadian taxes?
@ Chris – Your status in the U.S. does not have an impact on whether you are a resident of Canada. Whether you are a resident of Canada depends on the facts in your given set of circumstances.
You should have a read through the following CRA Interpretation Bulletin (particularly paragraphs 4 through 15): http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/it221r3-consolid-e.html
I am a canadian citizen and i currently got a swedish temporily student working visa. When i work here i understand i will have to pay the swedish tax on my pay cheques. I was wondering when i move back to Canada after my visa is up, will i receive all my money back from the swedish government that i payed in taxes? If so how do i go about doing this?
@Scott:
You wouldn’t get a credit for tax paid in the past. When you leave Canada and stop being a resident you stop paying tax in Canada and start paying tax in Sweden. When you come back you begin paying tax in Canada and stop in Sweden.
If you happen to be a resident of both countries and have to pay tax in both countries on worldwide income, then the treaty between the two countries will apply and you will get credit on one or the others tax.
Hi
I immigrated in Quebec in January 2009 with my son under 18. My husband moved to canada in Feb 2010. I only have bank interest around 80 dollars, no work, and I don’t plan to claim any GST refund or child benefit. or any other plans. In that case, do I or my husband need to file a return for 2009? Does he need to pay tax for 2009 (outside Canada income 40000 dollars) when he hasn’t resided in Canada yet? Married couples file returns seperately in Canada, if he does not file a return, but I do with stating spouse income 4000 in 2009, will I be penalted? Can we file a return till next year?
Thank you.
@Faye: Yes. Under the residency rules for income tax, if you had a spouse or dependant child residing in Canada, then you must file a Canadian income tax return. Therefore, both you and your husband must file an income tax returns and each report your worldwide incomes for 2009.
Your husband may be able to claim treaty relief (if there is treaty between the two countries) for double tax or may be able to claim foreign tax credits or deductions to offset foreign taxes paid.
Dear Sir/Madam,
My husband was here in canada like 3-4 years back but he had to go back to his country after i had to sponsor him outside canada he had a job and was working and were paying taxes each year. He was absent from canada in year 2009 and i had to support my self for the whole financial year, my questions is can i claim for my husband income taxs and how do i go about doing that and what documents do i require to claim for my husband and myself income tax. Please response soon, thanks.
If you had income, you are taxed on that income in Canada. Your husband is probably still a resident of Canada for tax purposes and must file a Canadian tax return despite the fact he was not in Canada.
If you supported your spouse and his income was less than $10,320, you may be entitled to the Spousal tax credit.
Hi . My husband and I are just going through the process of moving to Canada-BC. My husband works offshore for around 6 months of the year. As a resident of Canada do we still get taxed on the money he earns offshore or can he just pay it in the country hes working in?
Thanks
@Shel: All residents of Canada are taxed on their worldwide income. You pay provincial taxes based on the province you were resident in.
Hi,
Currently I am living in Taiwan for few years already. However, I sitll have an account in Canada which generate some interests each year. Other than this account, I don’t have any properties in Canada now. Am I fitted the condition of non-resident of Canada? For the interested earned, should I file the tax return to CRA? In your site, you mentioned about the “non-resident withholding taxes”. what does this mean? How do I do that? Should I tell my bank? Thank you for answering my questions.
@Kevin: You are probably not a resident for tax purposes. Since you are not a resident, you should change your address, but it is the bank that holds back and remits the non-resident tax. You need not file a return in Canada.
Hi,
I am a canadian citizen who was living overseas since 3.5 years. I am married and have 2 children. My wife and two children are not citizens nor residents of canada (i.e. not yet sponsored). If I file my taxes for the last three years can I claim Child tax benefit so that I can reduce the tax paid. My current income is 60000 CAD. Thank you
If you are not a preminent resident or factual resident of Canada, then you cannot claim or receive the CCTB.
You need to determine if you are a resident of Canada for tax purposes. If not, would the additional CCTB offset the tax you would pay in Canada?
Hi,
I believe I am a resident of since I have an address + Bank account in Canada. So, after filing my taxes declaring my foreign earned income, can I claim CTB for my kids who do not have status in canada (i.e. neither citizens nor immigrants). Thank you
@Abdo Dia:
It is difficult for me to say whether you would qualify. There are four requirements that must be met:
1. You must live with the child (the child must be under age18),
2. You must be a resident of Canada,
3. You must be a citizen of Canada, and
4. You must be primarily responsible for the upbringing of the child. The CRA normally considers the female parent to fill this role if they live with the child. I’m not sure if you would qualify under this particular condition.
The application and process information can be seen at this link – http://www.cra-arc.gc.ca/bnfts/cctb/fq_qlfyng-eng.html
Sorry, I forgot to answer your question,
It would not offset the tax but given that I am planning to sponsor my family to canada soon, statying resident will help in doing that. Any idea on how much I will be paying tax in those circumstances (60000 CAD Fincome-CTB)? Thank you
I am a australian citizen living in Canada with my Canadian wife. We moved here from Australia in March 2009 . I have been working here and currently in the process of applying for permanent residence. Can i claim moving expenses from australia to Canada as it was for a job ? what can i claim ?
@Phillip: At the time of the move, you would have had to have been a deemed or factual resident of Canada. See http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/219/q/q1-eng.html
Hi – I’ve been living abroad for the past 5 years.. I have residency status in Uruguay — and was actually deemed a non – resident in Canada (had to pay back some GST credits a few years back) I’m not really sure how they decided that I wasn’t a resident but anyway I’m not.
I work for a Canadian company as a freelancer — but pay my taxes etc down here.. (actually I am expempt from taxes and just pay into the retirement and health fund)
I am planning on sponsoring my husband and am planning on moving back to canada in May 2011 (with our 2 kids).
My question is will I have to pay taxes on the money that I’ve earned abroad? — If i don’t what proof do i have to show theM?
The money is currently in a Canadian bank account (my mom’s) as I am paid online (paypal). My mom pays the interest tax on the money in the account (since it is under her name) I just want to make sure that I am not doing anything illegal.. Tax is really confusing..
Let me know – thanks Tax Guy
Hi Misterborwnpants:
You mention that you are not a resident. If this is the case, then you will only have to pay Canadian income tax on your worldwide income at that point you become a resident of Canada again. The income tax would be on a go forward basis. If you have investments in Canada (Canadian stocks or bank accounts), the investment income would be subject to non-resident withholding tax of 25%.
Technically, the bank account in Canada should be in your name and then non-resident withholding tax applied (which is probably a little better than your mother paying tax on your investment income). The withholding rate on interest is the top rate of 25%. If your mother’s tax rate is higher than 25%, then you are overpaying anyway and I don’t feel the CRA will have an issue with that.
Overall, I would not worry too much, although I would suggest you hire a Canadian accounting firm to help you transition back to Canada.
Hi TaxMan,
So I will have to pay 25% on my income? I am already paying tax down here… that doesn’t make sense..
Dear Tax Guy,
I am a Canadian citizen but for the past 4 years have lived outside of Canada. In 2009 I got married to my husband in Japan who is not a Canadian citizen.
I filed income taxes for the past 4 years I’ve been away, but this year I can no longer check the ‘single’ box under marital status as I am now married. However my husband does not have a SIN number or any other information I can supply on the tax form.
I do not see myself returning to Canada any time soon, that being said, what do you think my options are in terms of filing this years tax return, and also, I guess I should apply for non-residency?
I appreciate your time, thank you.
Hi Vicky:
You should figure out if you are even a resident of Canada for tax purposes. Canada does not tax citizens, only residents. If you are no longer a resident, you need not file. It’s not a matter of applying for non-residency, since you either are a resident or are not. The CRA will only determine if you meet the requirements.
If you are a resident, you indicate your husband’s total income on the front of your tax return. Leave the SIN blank.
I moved out of Canada 3 years ago, but have investments, bank acct and Visa card in Canada. I also earn income in Canada. I gave my investments my new address Jan 09, and received an NR4. Am I now a non-resident? Does this affect my common-law who receives CPP?
The NR4 only indicates you are not physically resident in Canada (your address is not in Canada). Whether you are a resident for tax purposes is a question of fact. It is difficult for me to say whether you are a resident fort tax purposes, but I would suggest that if you have sizable investment assets with accrued gains you should seek help from an accounting firm (PwC, Deliotte, or BDO Dunwoody).
If not, then you file a document with the CRA to get a determination yourself although this is not required.
Whether you are a resident or not does not affect CPP!
In October, 2009, I married a woman in China, who is currently living in China. I plan to try and bring her to Canada as soon as we both have our documents in order to submit to Canada Immigration. In the mean time I have supported her since November 2008. I have sent her money each month to survive on and am still doing so. She has been enrolled in a full time English class learning how to speak and write English since November 2008.
My question is– can I claim her on my income tax return as a spouse, since I am supporting her full time?
Mike,
You cannot claim the amounts paid to your spouse as a deduction nor any costs associated with her being overseas. However, you can claim the spousal tax credit.
Hi, i would like to clarify residency and tax implication. For 2008 tax year i was in canada and my husband recently married did his landing stayed for a month and left canada, For the year 2008 we have declared my income tax and him as having no income during the time he was in canada.
for the tax year 2009, i am working as a freelancer in canada going back and forth to visit my husband out of town, my husband resides out of canada. would he need to file taxes as a resident or would he be considered non resident for 2009?
Also he will be coming back to canada by the end of the year. In that case will he need to declare his world income for future and will he be taxed on any money that he is bringing with him into canada when landing that was not declared in his list in his first landing?
Hi KN2001:
You husband became a resident of Canada for tax purposes when he married you. He needs to file for 2008 and 2009.
Hi Taxguy, Thanks for answering my question. Based on your answer i would like to clarify the second part of my question which was being that you stated that my husband would be considered a resident of canada for tax purposes would he be then taxed on any money he is bringing with him into canada when he comes back to canada finally? and what do we declare on his 2009 returns since he has no income in canada?
Thanks for your help
Hello KN2001:
Canada taxes residents and deemed residents on their worldwide “income.” Therefore, the physical location of the assets is not relevant: Only that the “income earned” from those assets is taxed as income from the point they became a resident forward.
Bringing money to Canada is not an issue.
I am Canadian living in Eastern Europe. I work for the same Canadian software company that I have worked at these last 5 years. However, I live in Europe, visiting clients, representing my company and I continue to do software work online for them – working from home. I am paid in Canada into my Canadian bank account. My employer has no field offices, only the Canadian office. I am on contract, technically self employed, but have no other employer. Last year I was away for 3 months, but this year I have been away all year except the 2 months I spent visiting home in Canada and trips back to the head office. My family is with me in Europe, although they are all also Canadian. My wife is a dual citizen which allows me the residence permit here. So the net net is that I spend more than 6 months a year outside of Canada, I work outside of Canada online and in different countries, but all my income is with one Canadian employer paid into a Canadian bank account. I also maintain my Canadian health insurance, and intend to return to Canada in a couple of years. Currently I own no property, but rent here in Europe, rent a storage unit and maintain a mailing address in Canada. Should I continue file Canadian taxes as a deemed resident? I would prefer to just to avoid the hassle of figuring out how to pay taxes here in Europe, and avoid getting into trouble in Canada later.
Hello Dean:
I can’t say if you are a resident, but if you don’t maintain a residence here, you may not be a resident and are not liable for tax in Canada.
I am helping a woman who is a live in caregiver in Canada prepare her tax return. She is a citizen of an African country and was resident in Canada for 2009 working under a temporary permit of the type issued to live in caregivers. Her husband has never been to Canada and continues to live and work in Tanzania and is not planning to immigrate here. He has no Canadian sourced income. They are separated by circumstance and not as a result of a dispute. I presume that she should not claim the spousal amount. Is this correct?
There is no requirement he be a resident. Only that she is supporting him.
She has to report his total income on her return. If it exceeds $10,320 CDN, then she cannot claim the credit.
See http://www.cra-arc.gc.ca/E/pub/tp/it513r/it513r-e.html#P178_25861
Hi Tax Guy,
I have been going my taxes and have a few questions.
I have been working in Korea now for about 2 and a half years. I have no primary ties to Canada, but a few secondary ties which i need since my Visa in Korea depends on me having a job here. I plan to go back to Canada eventually but for now i am deemed a non-resident for tax purposes.
The only problem i am having is that i have a considerable about of interest from savings bonds/GIC’s/etc., and i need to know if i file a return for them, even as a non-resident.
The returns are all co-signed with my parents but they usually gave the forms for taxes in the previous years. Now that i am a non-resident im not sure how i will fill them out in the tax return, or do i even fill one at all? Also do i have to report my “World income” if i fill in a tax form even if i am a non-resident?
Also i have one last question about the address. For the mailing address do i put my Korean address or my Canadian one if i am retuning home in time to be able to send in my taxes?
Hello Ken,
None of the investments you have listed would require you to file a tax return in Canada.
If you are not a resident, and meet the requirements, you do not file a tax return.
Hi Tax Guy,
I’ve moved out of Canada for more than 5 years. I don’t have any primary ties to Canada now. However, I do have an account which is GIC and it will generate some amount of interest each year in Canada. My question is, do I need to file a tax return to report these interest even I am a non-resident now?
I have another question regarding to the tax return. Later this year, I will be an expat to Canada for one year assignment. I will still get salary in my home country while I am in Canada and I will receive some allowances to meet the living standard in Canada. My second question is: Do I need to file a return next year for these allowance? Do I also include the salary paid in my country for the “world income” purpose?
Thank you for answering my questions.
Hello Kevin,
If, as you say, you are not a resident of Canada, you do not have to file a Canadian tax return, unless you dispose of taxable Canadian property. The GIC is not taxable Canadian property and you do not have to file a Canadian tax return.
With respect to your second question, If you are in Canada for 183 days, you are a resident of Canada am must pay tax on your worldwide income. After 1 year, you will need to file a return and declare worldwide income.
Hi Tax Guy,
Thank you for your quick response. I appriciated it.
For the second question I asked previously, so if I stay for more than 183 days, then I will have to file the world income. Does that include the allowance? (The allowance is wired to my account directly from my company)
One more question, after next year (2011), say if I didn’t stay for more than 183 days in 2011, how do I tell CCRA that I am a non-resident again in 2011 when I do the tax in 2012? Do I still need to do tax return for year 2011? Or I can just ignore it and do nothing?
Thanks.
Hello Kevin,
An allowance is taxable in Canada. Also, note that its not 183 “consecutive” days.
After your year is up, you will have a deemes disposition and will need to file a final return for partial year. Its a matter of filing.
Hi!
I am a Canadian citizen who has been living in the Caribbean for almost 5 years. I have a bank account back in Canada and a mailing address (my Mom’s address). I also have a couple Canadian credit cards that I use on occasion and pay online through my Canadian bank. I do NOT work, and haven’t since I left Canada – therefore, no income.
Prior to moving in October 2005, I did work (in Canada) until August. I filed taxes for that year – but have not filed anything since. I’m just wondering if someday I’ll get a nasty letter from Revenue Canada for not filing even though I don’t have anything to report!?
Hello Suzy Q:
By the sounds of it, you are probably not a resident of Canada and would not have to file a Canadian tax return. If you are still a resident for whatever reason, you only have to file if you have a tax balance to pay, have disposed of capital property (i.e. investments), or if the CRA asks.
Thanks for the quick reply!
I’m guessing also that I am no longer considered a resident of Canada. I never did file any kind of “I’m leaving” tax return – mostly because I really didn’t plan on being gone for more than 6 months. Turns out I enjoy not “doing winter” anymore and only return (in the summer) to visit family and friends for about a month every year. I do not have any property – other than a few personal property items stored at my Mom’s place.
Thanks for the reassurance! It’s good to know that I’m not breaking any kind of laws!!
Just curious on one thing though……if I was to ever return to Canada to live again, and got a job – would I just start filing taxes again when the time comes? Or is there something that I would have to do upon my return to say “I’m baaack”??
You can just begin filing when you return. If you need some certainty, you should request the CRA evaluate your residency status, but unless there is something glaringly missing, I don’t see any issues.
I am teaching for my second year in the UAE from Canada and was on a leave of absence so have paid taxes. I will be resigned from my job in Canada end of July and want to become a non resident as am planning to live and continue working in UAE. I have residenct atatus here. I want to cut all ties except keep a non residenct bank acct and visa card till paid off. AM I better off to close all and get a loan in UAE to do this and get UAE visa card? WIll I have to pay taxes fro Jan.- end of July as had a job waiting there for me till then?
Janet:
The existence of a Visa card and bank account in and of themselves does not make you a resident. There are many factors that must be considered to determine residency.
Keep in mind that ceasing to be a resident can have tax consequences, particularly if you own investment property.
Thanks for the reply. My resignation for my job in Canada becomes effective end of July 2010 and the only thing I will have in Canada when I go back to my job in UAE is my bank acct and visa and line of credit with money owing. I own no property. Am I correct in assuming that I pay taxes from Jan.2010 while in Uae till end of July 2010 or till the date I leave in \Aug. to return. Once I have no job waiting for me I believe I can be deemed a non resident? After that would I just not file a return the next year as a non resident? I plan to be here for 4-5 more years.
Hello Janet:
You will definitely be liable for Canadian income tax up to the point you leave. After you leave is a question of fact and the CRA will assess whether you are a resident or not based your situation.
I would suggest you contact the CRA to more help or hire an accountant to help. If you want an opinion about your residency status, complete and submit Form NR73, Determination of Residency Status (Leaving Canada).
Also, take a look at the CRA page on this topic.
Dear Tax Guy,
I am a Permanent Resident in Canada holding a PR card and own a condo as well. I have a couple a question for you.
Q. In July, I am leaving Canada to pursue a job in Bahrain in the Middle East and was wondering if I have to pay any tax on the income that I earn whilst I live there ?
I will not be maintaining an address in Canada whilst I’m in the Middle East as I would be renting out my condo. I do understand that I have to pay income tax on the income earned through renting out my condo which is fine as that is the law.
Please advise,
Thanks
Bevan
Hello Bevan:
If you maintain the residence in Canada and it i ready for you to occupy, then yes, you are a resident of Canada for tax purposes and pay tax on worldwide income. If you sell the property and cease to be a resident, then you will have to pay the departure tax or put up collateral, if you intend to return.
You really need to hire a cross border specialist to make this happen with the least amount of pain.
I am getting constantly harassed from Revenue Canada it’s getting to the point where the staff at my MP office are agreeing this is becoming a witch hunt. I left Canada to live in the UK in 2005 came back in 2009, I have recently contacted to confirm to the International Tax Office that I was a non resident. I had no financial ties to Canada, property etc but even though it was stated that I was a non resident they are insisting that I file a return for those years I was away. It is getting silly now and I getting tired of it, this is our pathetic tax office going after the little guy. How do I get this people off my back !!
Brian,
Although I do not know all of the specifics, I do have some thoughts you might want to consider:
After you left Canada, did you file your 2005 T1 income tax return and disclose that you were no longer a resident of Canada? In the year of departure, you are required to file an income tax return.
Also, if you had reportable property (i.e. real estate or certain other types of property) you were required to file form T1161.
If you didn’t do this, you may be in a bit of a pickle. The CRA has the right to demand that you file a tax return and failure to comply can result in fines of between $1,000 and $25,000 or both the fine and imprisonment of up to 12 months.
My suggestion is that if they are asking, you should probably comply.
With respect to residency, the CRA may not be convinced you were non-resident. Simply leaving the country does not necessarily mean a person is no longer a tax resident.
Finally, with respect to the filing itself. You are looking at 3 years of returns. If your situation is simple, preparing the returns should also be pretty simple. I understand it is a bit of a pain, but you may as well comply.
If you feel you have a case and do not feel you need to comply, you certainly can hire a lawyer and take the CRA to court.
I left in late June 2005 so reading the tax return it states 183 days that would deem you a non- resident.
To the CRA are just a bunch of bullies I can do all the returns it is a pain in the ass, but can you do nothing. The CRA is not something you can really fight against.
I have written a letter to the International Tax stating that I was a non-resident from June 2005 to April 2009 and they have placed this on my records.
I have printed all the forms and maybe just do it , but again they are bullies esp when your the little guy.
Brian,
It sounds like you may have misinterpreted what the tax rules means with respect to residency.
The 183 day rule applies to those who have entered Canada: If you are “in” Canada for 183 days, then you are a resident of Canada for tax. The 183 day rule has nothing to do with becoming a non-resident.
The fact that you left in June 2005 and were away for several years does not mean you were not a resident for tax purposes. You may have very well have been a factual resident. You should read carefully the following link: http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/it221r3-consolid-e.html
They make confusing to trip people up but on the form tax form it states
Check only one box that best describes your residency status as of December 31, 2005 well my residence was the United Kingdom.
Now up to December 2008 my residence was the United Kingdom.
I mean your right just do the tax forms place I was deemed a non-residence and just input zeros.
“The Courts have held that an individual is “ordinarily resident” in Canada for tax purposes if Canada is the place where the individual, in the settled routine of his or her life, regularly, normally or customarily lives. In making a determination of residence status, all of the relevant facts in each case must be considered, including residential ties with Canada and length of time, object, intention and continuity with respect to stays in Canada and abroad.”
It is a very perplexing tax law, I know a few people in Canada that do live overseas and never made a tax return.
But I will call CRA and just say fine I do all these silly tax forms.
Hello there,
I am a resident of Taiwan and will be moving to Vancouver, BC, Canad in May 2011. Hopefully I will be a Canadian citizen in few years.
Because Canada and Taiwan does not have a tax treaty, am I going to be taxed twice and how is that calculated? For example, if my income is taxed $100 in Taiwan and for the same income amount, I am taxed $275 in Canada, does that mean I have to either:
1. pay the difference of $175 to Canada? or
2. combine both for a total of $375 to Canada?
I heard about foreign credits to avoid reporting my Taiwan income. How does this work?
Please help.
Thank you
Hello Chris,
In Canada, you will be able to claim a foreign tax credit for income paid to a foreign government. Although complex, the basic idea is that you essentially get credit paid for the tax paid in the foreign country and end up paying tax in the higher -tax jurisdiction.
In your example, you would end up paying the difference to Canada (note that Canada will apply a tax of $275 and give you credit for the $100 – again “generally” the actual calculations and claims are really complex).
Good luck!
Hello:)
I’ve been out of Canada for 6 years now. I plan on returning to live in a month and a half! When I left, I sent in a form Declaration of Residency and was declared a non-resident. I haven’t filed taxes since I left (I was told as a non-resident, I didn’t have to)…I guess what I am wondering is, is there anything I should do upon my return? Is there any paperwork I need to fill out to resume my residency? Will my SIN still work or will it be considered dormant?
Thanks,
Erin
Hello Erin,
When you return, you are deemed to have acquired your assets at their fair market value and will being to file and pay tax for the part -year. That is you only file for the point you enter Canada forward.
If you had a taxable disposition when you left, this can be undone and you should consider hiring an accountant when you return to assist you.
Beyond that there is nothing additional you should file.
Daughter (Canadian) and husband (English) have been non-residents of Canada for 10 years. They want to buy a cottage in Canada.
What are the implications for residency .. and what if they sell that property while still non-residents?
A couple of issues arise. First and foremost, if they are in Canada for 183 days or more in any calendar year, they are deemed to be a factual resident of Canada and then become taxable in Canada on their worldwide income, just like any other resident. They may be able to claim the tax paid in Canada as a credit in the UK or vice-versa but they will still have to file and pay in Canada.
The establishment or acquisition of a cottage in Canada is considered a significant residential tie and in and of itself may deem them to be residents of Canada if the property is vacant available for their use. If the property is rented or leased for periods when not used, then this may mitigate the residency.
It is always advisable to obtain a ruling from the Canada Revenue Agency on a proposed transaction such as this. I suggest contacting the CRA directly and requesting a ruling, but it may make more sense to have an international accounting firm, or an accounting firm here in Canada provide you with an opinion. You may want to contact BDO Dunwoody here in Canada (wwwbdo.ca).
Hello,
If i am running an e-commerce site registered in Canada, yet selling products for abroad countries that are tax-free countries such as the MiddleEast. Am I still obliged to pay income taxes on those sales?
Hi Sara,
If you are a resident of Canada and you pay incometax on your worldwide income!
Hi Tax Guy,
I am a Canadian resident finishing University (in Canada) this summer and moving to the UK upon graduation (should be a ‘clean break’). However, I have built up tuition tax credits and a sizeable student loan (OSAP). I’m not sure if/when I’ll be returning to Canada, and am wondering if the tuition credits will be lost? Also, will there be any way for me to claim tax deductions on my student loan payments?
Thanks,
Shayne
As long as you are a resident of Canada, you should be able to use any carry forward credits and deductions incurred previously as a resident.
Thanks for the quick response! It makes sense that I can do this for my 2010 tax return, but what about after that when I am no longer a Canadian resident? Presumably I won’t be filing any Canadian tax returns from 2011 onwards, so would I lose my tuition credits and tax deductibility of my student loan payments? Is it possible that I could claim them through the UK system? Thanks!
Hi Shayne,
The credits can be carried forward indefinitely. You can’t use them if you are not a resident. there is noting in the Act that says you loose them when you cease residency. When you re-establish residency, and file again, you carry on where you left off.
This is simplistic and I strongly urge to you to speak to a professional accountant before you leave as there may be problems when you get to your new country.
Hello Tax Guy,
I am a Canadian citizen planning to marry an american guy working in the Middle East. We are planning to live in the ME after the wedding. I intend to keep my apartment here in Canada and at the same time I have mortgage, and just rent it out.
If I would just be a plain wife in the ME, should I still need to do a tax a return and should I include his income? How does including his income affect my taxes?
Thanks in advance for your answer.
Hi there,
Your rent charges would be subject to non-resident withholding tax. You’d need to remit that.
Hi,
Iam Indian citizen,landed in canada as a resident(PR) on 3rd March 2007 and left the country on 11th March 2007 as my wife was pregnent, and was working in india till september 2009.
In October 2009, I came back to canada and working in an IT firm and sponsored wife and kid and they both landed on April 19th 2010
On March 20th,2010 I filled my income tax for the year 2007-2008 as ’0′ ,2008-09 as ’0′ and 2009-2010 as 20,100 cad
I have earned gross 1300000rs(30000 cad) each year and paid taxes in India, do i need to pay the taxes for this income in canada even though i was outside canada.
If i have to pay the tax for the above amount should i get foreign tax refund/credit for the above amount?
can you please confirm atthe earliest.
thanks in advance.
-Sunkara
Ideally you only pay tax for the 8 days in 2007 and after October 2009.
Hi Taxman,
I am a canadian citizen and I’ve been living in Taiwan for 2 years. I filed for non residency with CRA as soon as I left Canada in 2008. I had no primary ties with Canada
- no property
- single, no children
- have not-so-active banking account
- however (I forgot to terminate my bc driver’s license)
I was told that if I don’t have those ties, I would not be liable to pay taxes. However, in June I receive a letter from CRA saying that I am still liable to pay taxes. So my question is, is it because I still have my bc driver license that’s why I am still liable to pay taxes?
Do I need to find an accountant to help me to clarify my non residency status with CRA,so that I don’t pay taxes to both countries?
What do I do with the CRA letter I receive? Is there a way that I can get them to review my residency status
Thanks a lot ~really appreciate it
Jen
Hi Jen,
You may not have filed a final return and thye may feel you still are resident. File form NR73 and you may need to amend your 2008 return.
Let me know if you need additional help.
Hi Taxman
Thanks for your response~
Yes, I do need some adivces from you…. please help me~
Actually I did file NR7 form and they sent me back the form a couple times and ask me to fill missing data on the form. I sent them back the file and then the last letter I got from them is 300 bill…
What do you mean by amend 2008 return? Do you mean I need to file 2008 income tax return? (I was still a student in 2008 so I had no income)
Do I need to get an accountant to refile my case to CRA?
Hi Jen,
You need to file a tax return for the year you left Canada and on the forms you tell them the date you left. This is your final return.
For tax purposes, you will be deemed to have sold your assets and may have a tax bill on the deemed sale. Also, if you had investments, there may be taxes due.
Hi,
I left Canada to work overseas in January 2009 . I have no ties in Canada except for a GIC account with little interst. I did not file T1 this year. What do I have to do? do I have to fill in the NR73 form to inform CRA that I am not a resident anymore or do I send a letter or What? Please advise.
thanks
Aline,
The form is used to get a reidency ruling and is not a declaration. The ruling will tell you if you are a resident. If not, you’ll need to file a final return for Jan 2009.
Thanks for your reply. So I did not understand how can I inform CRA that I am not a resident anymore and will not file tax. Do I send them a letter or what? or just not file and leave it.
thanks
Hi Aline,
You’ll need to file a return for you last year as a resident and tell them the date you left (there is a space on the form). You will then need file a NR73 to get a final assessment of your residency.
See: http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/lvng-eng.html
Be aware that you may have a tax bill as of your departure date as the CRA deems you to have sold all of your assets on the date of departure.
Hi Taxman,
Iam Indian citizen,landed in canada as a resident(PR) on 3rd March 2007 and left the country on 11th March 2007 as my wife was pregnent, and was working in india till september 2009.
In October 2009, I came back to canada and working in an IT firm and sponsored wife and kid and they both landed on April 19th 2010
On March 20th,2010 I filled my income tax for the year 2007-2008 as ‘0? ,2008-09 as ‘0? and 2009-2010 as 20,100 cad
I have earned gross 1300000rs(30000 cad) each year and paid taxes in India, do i need to pay the taxes for this income in canada even though i was outside canada.
If i have to pay the tax for the above amount should i get foreign tax refund/credit for the above amount?
can you please confirm atthe earliest.
thanks in advance.
-Sunkara
Hello Tax Guy,
I am currently a PR in Canada. Expecting Canadian citizenship early next year. I live with my wife and kids here since 5 yrs and have been paying all taxes etc regularly and properly.
i have submitted a sponsorship application for my parents long back and expect the approval in a month or two. after which the application would be sent to embassy for PR visa. this last step will itself take more than 3 yrs.
I am thinking to go overseas after my Canadian passport mid next year and work for some years. however, to avoid paying hefty taxes on my worldwide income i am looking if i could apply for non-resident status.
Do you think I can try for a non-resident status ? If yes, then would my non-resident status affect my parents PR application, even though the sponsorship would have been approved by CIC ?
If non-residency not an option in my case, then is there any other legal way via which i could still work oversears without paying hefty taxes and do not affect my parents sponsorship application.
Thanks in advance.
Enquirer,
Tax residency and immigration are different. If you leave and sever tax residency, you will have a tax bill or will need to post security. The tax bill can be unwound when you return.
Thanks Tax Guy for your input. Would you be able to point me to a resource(web, cic, etc…..) with more info on tax bill and post security. I would like to read more about it and understand it better and its not really clear to me how this works
thanks,
Enquirer,
Here is the CRA link http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/lvng-eng.html
You need to file a final return and then complete a NR73.
If you need help, let me know what province you last lived and I’ll refer you to an accountant who can help.
I am a Canadian who has lived overseas for more than a decade. I have had no ties to Canada during this time. That being said, I am planning on buying a home in Calgary this summer, but continue to live abroad. Will I have to pay income tax after the fact? I am not planning to rent it out, so I will not be taking an income from the house if that makes a difference
David,
You should contact the CRA and request a ruling on your plan.
If the home is available for occupation, this is considered a significant tie and you may be a deemed resident.
Our family became permanent residents early this year Jan 2010, we filed for our kids CCTB and started to receive benefits Mar 2010. My question is – mid this year we needed to travel outside Canada and live in China for my husband’s business May 2010. We maintained our Bank Account where CCTB is being paid, we don’t touch the amount since the CCTB started its payout. My husband plans to return in Canada next year 2011, and we plan to follow on 2012. Should we do anything about the CCTB or do we let our investments grow for the kids future study in College?
The following is from the CRA …
To be eligible for the CCTB, you have to live with the child and be a resident of Canada for income tax purposes. In addition, you or your spouse or common-law partner has to be one of the following:
* a Canadian citizen;
* a permanent resident (as defined in the Immigration and Refugee Protection Act);
* a protected person (as defined in the Immigration and Refugee Protection Act); or
* a temporary resident (as defined in the Immigration and Refugee Protection Act) who has lived in Canada throughout the previous 18 months.
You also have to be the person who is primarily responsible for the care and upbringing of the child. If the mother lives with the child, we usually consider her to be this person. However, it can be the father, a grandparent, or a guardian.
If the only tie to Canada is your bank account, you are probably no longer residents. I suggest filing form NR73 to determine your residency status.
Hello Taxman,
Iam Indian citizen,landed in canada as a resident(PR) on 3rd March 2007 and left the country on 11th March 2007 as my wife was pregnent, and was working in india till september 2009.
In October 2009, I came back to canada and working in an IT firm and sponsored wife and kid and they both landed on April 19th 2010
On March 20th,2010 I filled my income tax for the year 2007-2008 as ‘0? ,2008-09 as ‘0? and 2009-2010 as 20,100 cad
I have earned gross 1300000rs(30000 cad) each year and paid taxes in India, do i need to pay the taxes for this income in canada even though i was outside canada.
If i have to pay the tax for the above amount should i get foreign tax refund/credit for the above amount?
can you please confirm atthe earliest.
thanks in advance.
Sunkra,
Whether you were a resident after March 11, 2007 is a question of fact. If you landed, rented a house and left and had no real ties here, it is doubtful you were a resident…even if you were as of March 3, 2007, it may have only been for 8 days.
You should complete for NR73 for the period to March 11, 2007. If you were not a resident aft that point, you would only needed to have filed a 2009 return.
Thanks Tax Guy, I landed on March 3rd 2007 and stayed with my cousins house till March 11th 2007 and left the country and came back on sept 30th 2010.
anyway i filled ruturns for 2007,2008 as ’0′ and 2009 as 20,000 cad as i was working in canada.
Thanks