UAE tax ??? for Canadians
 

Can somebody please explain to me whether you are required to continue to pay taxes in Canada while working in the UAE as a pilot?
My searches on PPRune have, so far, revealed nothing.

UAE Tax??? for Canadians
 

Two ways of legally not paying Canadian tax:

1. If you are established with CCRA as a non-resident for the purposes of taxation (talk to a tax lawyer. Some details are available on the CCRA website) or,

2. If you are paying tax in the jurisdiction you are working in, AND that country has a tax treaty with Canada.

1. It seems to be quite difficult to claim non-resident status from Canada. You virtually can have no ties whatsoever. Would that assumption be correct?

2. I believe that the UAE has a tax treaty with Canada but was also led to believe that income earned there was tax free.

I am also a British citizen. Any loop holes on that account? Perhaps an offshore account?

Can somebody please explain.

I went through this a few years back.

It all depends on your situation, but basically here is what I got.

If you have any interests in Canada, ie house/car etc then you will not be considered a NON-Resident and will have to pay tax.

If you leave your wife there and the property is on her name, you will pay tax. Only way out of this is get divorced, but then that creates more problems that it will solve.

If you keep a rental propery, you pay tax.

I had to dispose of everything, basically you can keep bank accounts, mutual funds, credit cards , pensions etc. otherwise if you get audited, you will most likely get nailed with a huge tax bill.

You can spend hours reading on the CCRA web,or just call and pay an accountant for info, I would also suggest you get a professional to do your last tax filing in Canada, and have him make the CCRA application for NoN Resident, it seems to go a lot smoother that way.

Oh and you can call CCRA from here "Collect" they will accept the charges, ive done it a few times, and ask them directly if you are now considered a NON RESIDENT, it will show in there data bases.

Good luck,

If you are considered a non-resident, you are not required to pay tax. If there are too many 'ties' back to Canada, you can be considered a 'factual resident' and be required to pay tax. However, I can also state that you ARE able to own a home, as long as it is rented at arm's length--to a non-family member through a third party ie property manager. You need to have your accountant file a tax return for you in regards to the rental income, but for the most part once the property taxes, the property manager, the accountant and all other expenses are claimed, you will break even and not be required to pay any income tax.

Thanks for the replies.
It seems I should start by seeing an accountant who would be familiar with all of the ins and outs. I don't currently own a home, but do have several RRSPs and a pension I need to be concerned about.
No wife in the legal sense to worry about, just an ex who has given me a reason to want to leave Canada.

The CCRA has a few publications about this, but in the end they look at the whole picture. Some people get spooked into thinking that residency and citizenship are the same thing-- they are not. Becoming a non-resident of Canada is not synonymous with a renounciation of Canadian citizenship.

One issue that is a strong tie of Canadian residency is if you are still on your Provincial Medical Plan-- lets face it, it's an expensive social project in Canada and you are expected to pay. Just turn it in, it isn't worth the money anyhow, and if some day you decide to go back to Canada you can get it again with a 3-month waiting period. Canadian drivers licences are another strong indication of residency, since, (duh), residency in Canada is a condition of their issuance and they are a proof of residency.

I recommend consulting with an attorney who specializes in Tax Law. A few years ago I hired one, his fee was about $1500 for the consultation. He assessed my entire situation, and made helpful recommendations. In the end, it was a large fee, but worthwhile and a drop in the bucket compared to what I would be paying with an unpleasant surprise down the road.

CCRA also has a form where you fill out your particulars. You send it in, they assess it, and right away they tell you if you are considered a resident or not for taxation purposes. I recommend doing this even if you go through a lawyer, since then you have a backup record.

I do believe Canadian tax laws are quite beneficial in some ways but very ambiguous which could cause problems down the road. If you have no financial ties whatsoever then it seems you are laughing. This includes no bank accounts unless for valid reasons such as for a rental property investment. No health insurance which is understandable, a drivers licence is listed as one item that is questionable as well. Your RRSP's are no problem whatsoever I'm told, but other investments could be a problem. The beauty of the system is that if you are able and willing to severe all financial ties, then no taxes are required. I know of a few Canucks who have gone thru the process of obtaining a letter from the canadian tax people stating 'non-residency' with respect to tax purposes, but they are in the minority.
I get the general feeling that the government is not to be trusted if things are somewhat fuzzy in your personal case. It seems to me that the rulings will be based on individual cases and as such, the wording and requirements are somewhat vague. Kind of reminds me of the FTL's here at EK, haha. At least you won't have to pay taxes based on a salary above a certain level like some of our colleagues (eg Americans I believe) if you obtain non-residency status for tax purposes.

With over 150 canadian pilots at EK alone, it would not surprise me if the government took a real close look at them once they start trickling back to Canada in the future. This is where the ambiguity could bite you unless you basically severe financial ties for the required time frame (at least 2 years and up until your return)

Getting good advise from a tax accountant is prudent. Not renewing accounts or liciences would be obvious, but after doing now a couple times I've never had any problems. Just ticked the non-residence box and date of departure on filing of taxes. The less paperwork the better. From memory, if your gone at least three years then it should be no questions asked. Medical card cancelation would be a good idea as well, and shows legitimate non-residence and proof of intent. Sounds like you shouldn't anything to be concerned about.....except the ex :ouch:

Be careful about the not renewing the DL bit.

You will need it to rent a car outside of the ME. And when going back, you will need to do all the testing to get a new one.

Wow,

I know that car rental rates were high, but that is ridiculous.

Don't worry about the car rental thing. For a few kapufniks, you can get an International Driving Permit, validating your UAE licence for almost all countries of the world (including Canada) for one year. That is if it is even required (I am not sure), since I have successfully rented and driven cars on foreign driver's licences in Canada numerous times (being a visitor to Canada) without holding an IDP. In fact, I enjoyed it when I was once pulled over by the RCMP and saw the puzzled look on his face as he read my Licence which was only in Spanish. He let me off with an oral warning of "In Canada we . . . "

As far as having to take the test over-- you can reclaim it if you return before the date it would have expired when you turned it in. If not, so what?!?!? Take the test (and think of all the money you've saved in taxes). After driving for years in the UAE you will have probably picked up some bad habits that could do for some remedial training. ;)

Since when has a UAE license been issued in Spanish?

Yes, yes DesertM2005. Very good. Here is your lolly-pop. You obviously quite switched-on to notice that Spanish is not spoken nor written in the UAE. :rolleyes:

I guess I should explain to you that I have had various foreign driver's licences (from various countries, not including Canada) during my lifetime. Not all countries issue drivers licences in English (or French). I have never had a DL from the UAE (never having lived in the UAE), however, I have lived in Spanish-speaking countries (I thought I would clarify that-- hopefully it removes all doubt at this point).

Disregard all I say DesertM2005, the message about driving licences and taxation was not directed at you in any case. ;)

Nevertheless, you consider yourself an authority on using a UAE DL to rent a car in Canada. You are truly an amazing person.:rolleyes:

Thanks buddy, you too! :ok:

Desert M2005,
Panama Jack was trying to be helpful and please do understand what he is saying about the residence ties. It is a small price to pay if you need to do yourl DL again after your return.
Have Fun!
PS. My DL is also in Spanish only!

Back to the whole tax issue, I applied online to the CCRA, and filled out a form stating what I had left in Canada, and they made the decision that I'm not a resident anymore, and sent me a letter to confirm it. The process was fairly straightforward and took maybe a month-ish max? No more Canadian tax for me! Good luck!

I posted this message in response to a similar CX query a few weeks ago....
First and foremost, I would strongly recommend seeking the assistance of an international tax professional. Simply filling out a few forms or doing what your neighbor's-fathers-uncle did 10 years ago may cost you dearly when you and your family decide to repatriate yourself if you have not gone through the proper channels. I have been going through the expatriation process myself and would be happy to steer you towards the right people. I decided to let professionals "tax professionals" do all the paperwork and advise me accordingly. These services are not quite as expensive as you may think but remember that all the while that you are living as an expat overseas, tax rules are in an ever changing state back home in the great white north and your trusty tax consultant will advise you at such times. Some forms change, some are added, some become obsolete and keeping up with all of this, not to mention the interpretation of tax laws can be more than a handfull for most of us. With the right consultant and the ease of communication and couriers services these days it can be a very simple and streamlined process!
And yes, you may keep your existing property(s) here in Canada as well as bank accounts etc so long as you've done everything within the confines of the law. You will however have to sever some of your financial ties. ie: car(s), boats, toys, licenses, memberships and other fringe benefits. If you haven't tied up all of the loose ends properly you will be in for an unpleasant surprise when you decide to return to Canada.
I'm not sure where you are living howerver I have located a very trusting and straight shooting consultant who has been expatriating and repatriating gentlemen like yourself for 25+ years. Feel free to PM me if you'd like some more information.
Hope this helps. Cheers!