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Working outside of Canada and Taxation Implications

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Working outside of Canada and Taxation Implications

Old 6th Apr 2015, 01:48
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Working outside of Canada and Taxation Implications

I was wondering if anyone would mind sharing some details about the subject? I realize that taxation is a personal thing so if you'd rather PM vice share on the forum that's understood.

I've spoken to the International Taxation Office and gotten their take on things regarding their 'non-binding' Determination of Residency status form and "approval" to claim as a 'deemed' or 'non-resident' on your Canadian income . . . For example - Canadian pension.

I'm more curious about how CCRA taxes pilots who work in say the US, China or the Middle-East? What about those "tax-free" incomes paid by some carriers outside of Canada? What piece of that world income does CCRA want?

Anything at all you're willing to share or any advice is appreciated! Thanks in advance
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Old 6th Apr 2015, 10:38
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If you are deemed a non-resident of Canada, you pay no taxes in Canada.
First line of the Canadian Tax Code: All Residents of Canada will pay taxes.
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Old 6th Apr 2015, 13:16
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Chris..

Check I sent you a note to your PM
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Old 6th Apr 2015, 22:24
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Thanks 777AV8R . . . PM responded to!
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Old 6th Apr 2015, 22:35
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Red Hot Poker, the issue as I understand it is becoming a 'deemed non-resident' in the first place.

CRA asks you to complete an NR71 form essentially showing that you've severed ties with Canada. But what if you still own that retirement property or are drawing a pension or are renting your home whilst employed outside of the country or have your furniture and effects in long-term storage?

Here's where things become problematic . . . Even if CRA overlooks all of this and says "in our opinion" because you're working outside of Canada you are a "non-resident" that opinion is 'non-binding'. Meaning essentially they could reverse their opinion and now you owe taxes on previous tax years while you were employed overseas.

I'm just wondering what others in this situation are doing and who they've turned to for advice?
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Old 7th Apr 2015, 13:30
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When I left I never filled in the NR71 form because of the concerns you raised. We sold our house, furniture and cars. Cancelled our provincial health cards and most importantly my wife and kids moved overseas with me. I kept my bank account, passport and drivers license. My first tax return out of the country I ticked the non resident box and paid Canadian tax up until the date we departed. Upon returning to Canada after a few years away I filed a tax return as normal. I have never had any issues.

Things that will run you into trouble are kids still in Canada, if you own property you need to make sure it is rented out at arms length(not to a family member) and limit those secondary considerations, that CRA mention on the website, which could be used to determine residency. Unfortunately, even if you did everything by the book you are still at the whim of a CRA employee.
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Old 7th Apr 2015, 18:41
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Offshore

My wife and I are now living and working overseas. This is our second stint outside of Canada and we have had no issues other than errors in record keeping on THEIR part that has taken us over two years to correct (actually still ongoing).

We maintain rental properties in Canada, bank accounts, credit cards, and vehicles. The only income generated in Canada is from a pension, rental income, investments, and interest.

We have a permanent address, bank accounts, driving license, credit cards, and resident permit OUTSIDE of Canada. This is also where we derive our primary income from a company based OUTSIDE of Canada.

You can see the trend here. We filled out the form with Customs and Revenue and they have declared us offshore residents. IF they subsequently find you have not told the truth on their form, THEN they may reconsider but if you are legitimately working and living outside Canada and your spouse/partner is with you, then no problem. Children remaining in Canada may also be an issue if they are not boarding.

We keep all income derived overseas while our Canadian income is subject to a 25% withholding tax. Still a bargain and we are enjoying our time in the Middle East despite what you might read on this forum.
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Old 8th Apr 2015, 02:34
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Severed Ties

We too have been offshore for quite a number of years. I wanted to do this right so employed a Canadian expat tax expert to do the work for us.

We were advised NOT to fill in the CRA NR71 form by him but then the tough work came. We had to sever everything (except property). We have no credit cards, driving licenses, healthcare or anything that deems us to be coming back to Canada. Our property is held by a management company and is rented. Our children are not allowed to use the property.

We have had piece of mind and all we pay is the tax derived from the rental property.

An example of things going wrong...a colleague of mine was just presented a bill for $64,000.00. Why? They didn't sever their ties completely. They too had filled out the NR71 but were reassessed. They held credit cards, property, drivers licenses and healthcare and their children lived in the property.
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Old 8th Apr 2015, 02:44
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ChrisGK, have you tried here: The Expatriate Group » Canadian Residency & Non-Residency Advice and Referrals They were highly recommended to me when I was looking into becoming a non-resident.
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Old 8th Apr 2015, 04:18
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Let's move the question forward a bit....

Once you have accumulated your offshore wealth and you decide to return to Canada what do you do with it?

I have not found an offshore broker who can deal with a resident Canadian so by law you will be required to close that account before going home. Where does the money go?

Everyone I have spoken to says they have had no trouble repatriating their money but.....

Anyone have any experience? It seems to be of little benefit to leave it offshore as the costs will mount and by law you must report your offshore holdings every year once you are resident. Trying to dodge that bullet could cost you dearly.
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Old 8th Apr 2015, 15:40
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I'm not sure I understand the question. You can keep your money anywhere in the world, you just need to report any income (including capital gains). You also need to report any foreign properly or assets now -- no big deal, just fill in that section of your tax return.

CRA is just worried about people earning income while resident in Canada and then stashing it overseas without paying tax (or earning income in overseas investments and not paying tax on it while resident in Canada).
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Old 8th Apr 2015, 15:46
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Could you name an offshore broker who can operate a securities account for a resident Canadian? The one I am with is in Luxembourg and will require me to close out the account once I become resident in Canada. I have not found a replacement who can deal with me, thus for the moment I plan to repatriate the funds.
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Old 10th Apr 2015, 16:05
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Does a foreign bank debit card work for purchases in Canada?
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Old 10th Apr 2015, 16:21
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Yes chuck it works been using it a lot last two years no problem,
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Old 14th Apr 2015, 00:28
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All,

Thanks for all the advice . . . It's particularly reassuring to know that there are some of you out there that are drawing a Canadian pension or have a rental property here "at home" and that CRA is more or less staying out of the picture tax wise.

I guess the big take away for me is to consult with a expat taxation specialist in advance of any big move.

For those of you living away how are you liking it and why?

We just moved back after spending the last four years in Germany whilst I was flying the NATO AWACs (B707) . . . Miss it soooo much! The kids attended a great international school and all of us enjoyed the adventure and travel. I'm thinking we're meant to be "expats" but we still love this great land of ours!
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