Overseas taxes

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Youngback
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Overseas taxes

Post by Youngback »

Ok, I've checked on Revenue Canada, I'm in touch with a tax company that specializes in overseas taxes but I have yet to go through all the paperwork. Is there anyone who can explain overseas taxes? I am leaving for Africa in just over a week and I'm not planning on being back in Canada for quite awhile although circumstances may require me to be back in March. I was under the impression that you did not pay income tax if you were a non-resident. I was also told about a year ago that if you pay tax in the country you are working in, that you don't have to pay tax on that same income back in Canada. That was a year ago though and in a fairly casual conversation so I'm not putting too much weight on that. For anyone who's done this before, the shortest, easiest explanation would be very much appreciated as well as any tips or advice.

Thanks in advance
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BibleMonkey
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Re: Overseas taxes

Post by BibleMonkey »

Sell your house, or lease it out through a third party management company on a long term lease only, sell your car, close all your bank accounts, cancel your provincial health insurance, take your wife and kids with you, and act like you're not coming back. Stay away for 25 months ; after that you can return for 182 days a year and continue to evade Canadian taxes .

Hard to do for most people,-sounds like it won't work in your case- but do-able. You could slip up/get sloppy on a few of those and still evade Canadian taxes, since there's no legal definition of "resident' in the Income Tax act, but if you make it easy for a bureaucrat to say that you have "remaining residential ties", they will.

http://www.cra-arc.gc.ca/E/pub/tp/it221 ... olid-e.pdf
http://www.canuckabroad.com/tax/expatriate-tax.php
Things may have changed/been changing ; there was some bitching about rich Canucks evading taxes on beaches for two years, then returning every year for 181 days-re-activating their health care after 90 days....e.g:
above second link wrote:As a non-resident, you can receive capital gains from most investments tax-fee as long as they are based in Canada.
If you're an American-can't do it at all ( I'm a dual U.S American/Canadian citizen )-hafta pay Uncle Sam no matter where you are. Can cross the border on whatever random gravel road I like without talking to the monkey-suits though-lol.

Or, get elected Prime Minister and register everything in the Carribean :D

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Last edited by BibleMonkey on Fri Dec 19, 2008 3:13 am, edited 1 time in total.
5400AirportRdSouth
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Re: Overseas taxes

Post by 5400AirportRdSouth »

I did a lot of digging, and found CRA to be very cagey about the whole issue, not really spelling it out very clearly.

They do have a form you can file on leaving the country ( NR73 )

http://www.cra-arc.gc.ca/E/pbg/tf/nr73/nr73-07e.pdf

This can only help establish your intent to be non-resident for tax purposes.

The biggest thing is to ensure you do not have any " primary " ties to Canada and as few secondary ties as possible. I used to have a list of the primary and secondary ties they used when determining residency, but cannot find it. ( I found it online somewhere...not CRA.. )

Primary ties included ( going off memory here ) ; Property, Spouses or dependant children, Business activity, employment activity, health care

Secondary ties were things like bank accounts, credit cards, mailing addresses, vehicles, personal effects, etc.

When we returned to the country and began working in Canada again we simply filed our taxes, with a gap of a few years, and there was a request from CRA for the missing years eventually. We submitted a letter stating we were out of the country, why and for how long, and that was the end of it.

A couple things I was warned about at the time - periods of non-residency of less than 2 years were not well received by CRA and any primary ties at all were bad news. You could have a few secondaries, but they used it like a scorecard and the more you had, the more chance they deem you resident for tax purposes. And don't come back and get caught up on your doctors visits while visiting the folks over Christmas....using the health care system ( even paying into it ) is a primary tie I'm pretty certain.

If the country you are working in has a tax treaty with Canada, then any taxes withheld or paid in the foreign country would be deducted from your tax liability in Canada. But make no mistake, if you are not claiming non-resident status, they want every nickel of income tax on every nickel you make overseas. If you're working in a country with a civilized income tax rate, the difference is still substantial and this can be a nasty bite on return.

I spent a long time worrying a lot about this and it turned into a non-issue... a phone call to CRA might even help...their website doenst do much...
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PITA
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Re: Overseas taxes

Post by PITA »

5400 has it pretty well on the mark

The way I interpet it is that Revenue Canada takes the position that if your not a resident of Canada any more, what Coutnry are you a resident of? If you can't come up with a viable explaination they will gladly contunue to receive the money.

I worked overseas for much of my adult life and when I see some of these guys that skipped the country, bounce around from job to job don't pay any taxes to anyone, dont pay for the wife and kids left to fend for themselvs back home, bitch about Canadadian taxes, bitch about the lack of infrastructure in the third world country they are not paying any taxes to

My advice to them - Dont Get Sick

I won't mention school fees
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ScudRunner
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Re: Overseas taxes

Post by ScudRunner »

I told you not to listen to Scuds Tax Evasion Services.
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Youngback
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Re: Overseas taxes

Post by Youngback »

Ok thanks for the help so far. As far as ties go, I do not have any dependents. I have no house. I have a truck that will not be keeping. I sold all my furniture. I have a 2 bank accounts, both with RRSP's attached to them. I have provincial health care although I am looking at private insurance. I have a provincial drivers license and social insurance number obviously but that's it for my ties to Canada. I'm hoping to make this relatively painfree although I'm well aware that it is the CRA I'm dealing with. Thanks again guys
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rd1331
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Re: Overseas taxes

Post by rd1331 »

Talk to CRA,

But you should be fine. You can have bank accounts and you can have investments in canada, so those RSPs will be fine. You can also have business ties, such as if you had a house and made it into a rental. But there are limitations, talk to CRA and they will give ya the goods.

When i left my mom, who works for CRA, got it all sorted out. If I remember right i filled that form out, transfered my car to my parents, and away i went. But you cannot use the health care system, as soon as you leave you will have to get your own if you want it.

CRA can help you.
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Bushed
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Re: Overseas taxes

Post by Bushed »

Keep the money you make in an overseas accnt in a safe banking country use debit card to with draw cash as you need it.
Revenue Canada needs not know anything you do not want to tell them.
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middle marker
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Re: Overseas taxes

Post by middle marker »

From my point of view all above imputs are good advise...
However, you can own a home.. You need to show long term lease to another party.
You can own a car.. You need to show long term storgage with storage insurance or long term rental of said vehicle.
You can have Canadian visa cards if it is shown that you use them for your day to day expences..Why would you?? I did and it was OK.
You can do almost anything if you stay whithin the guidelines of a long term expatriate.
CRS is your friend in all this..Get what YOU want to do witthin the guidelines in writing and have them sign it...Governments change.

If you work for a resource company here that sends you overseas you can get a tax credit..That is shaky in that unless you are an airborne taxi driver those assignments come and go and you need to be away for six months in a twelve month period..

I have worked overseas off and on for thirty-five years and if you are thinking that you can jump from being a non-resident to a resident because you got sick and still have a provincial medical card, well, you are on your own.

My best advise is..If the company or better still the country you are invited to work for has all the emenities that you feel will make you comfortable then go for it...You are on your own so do your homework.
You are doing the right thing by using this forum to gain knowledge...I first went out of this country in the mid-seventies and was lucky to work for another countries national airline and so was somewhat protected..
I soon learned however that once I had gained some experience that it was much better to be a third party national..
A canadian working for company or country X in country Y.
You need to take care of MEDICAL INSURANCE and education for the kids and look after your wife if she is along (some countries look at this as your personal problem) also bonuses may be negoteable and make sure to read the FINE print and don't be afraid to negotiate these points..Overseas, most points ARE negotiable... The larger the company or country, the less negoitiable and the less risk. Of coarse the more you have to offer the the better positon you are in.
Geez.. I could write a book.
MM
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wingnut2
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Re: Overseas taxes

Post by wingnut2 »

I have accepted a job in Africa and am now trying to figure out how to work out this tax issue. I took a look at the various post which seems to be very involved...trying to be a non-resident in Canada .I will be doing rotational tours as a Aircraft Engineer and would like to know more about having a Bank Account Offshore and using a debit card to bring the money into Canada. Is there anybody out there that is using this method...how does it work...how do you set it up. My employer is based in Germany...........

Would really appreciate some insight about this as it is my first time working Overseas. Please post or contact me directly. Thanks.
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bilko
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Re: Overseas taxes

Post by bilko »

wingnut2 check your PM's
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wallypilot
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Re: Overseas taxes

Post by wallypilot »

Youngback wrote:Ok, I've checked on Revenue Canada, I'm in touch with a tax company that specializes in overseas taxes but I have yet to go through all the paperwork. Is there anyone who can explain overseas taxes? I am leaving for Africa in just over a week and I'm not planning on being back in Canada for quite awhile although circumstances may require me to be back in March. I was under the impression that you did not pay income tax if you were a non-resident. I was also told about a year ago that if you pay tax in the country you are working in, that you don't have to pay tax on that same income back in Canada. That was a year ago though and in a fairly casual conversation so I'm not putting too much weight on that. For anyone who's done this before, the shortest, easiest explanation would be very much appreciated as well as any tips or advice.

Thanks in advance
Are you employed by a canadian company, with contracts over there and you are getting paid in Canada, or will be working for and paid by a non-canadian company?
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jamesbay
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Re: Overseas taxes

Post by jamesbay »

Pretty simple, open a bank account when you get to Africa, apply for 2 debit cards, send 1 card home by mail to someone you trust, let your bank in Africa know there will be withdrawls from your account in Canada, have that person make your financial obligations with the withdrawn money and "voila"... no paper trail. 8)
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Cat Driver
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Re: Overseas taxes

Post by Cat Driver »

Getting paid in Cash is also a safe way to do things..just be careful where you put it...and don't get caught bringing more than ten thousand through immigration at one time.

Of course you should declare it on your tax returns and pay your taxes every year.
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