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Canadian tax

whimsical

Hero Member
Jul 21, 2016
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"Dear Dubai applicants,

I have a question with regard to taxation. Once I get PR, I am planning to send my wife and kid to Canada to maintain PR while I continue to work here in Dubai. My wife might not work initially and might use that time to gain a Canadian educational qualification and during the first 1 or 2 years, I am planning to fund her from here in Dubai.

I am aware that many people from Dubai tend to do this for a little while, save money and then at a later date join the family in Canada.

I have a question based on Canadian tax.

1 - From the day my wife, kid and I " Land" in Canada, I am bound to pay and file taxes in Canada due to the fact that residents are taxed for worldwide income? Correct?

2 - Since my wife and kid are living in Canada, I cannot claim "Non Resident" status for tax purposes even though I am living in Dubai? Is that correct?

3 - Since I have to declare my UAE income, I will have to pay roughly 30% of my income to Canada Revenue Agency? Correct?

4 - Is there anyway, I can under declare my income to pay less tax? How will the CRA know? is there anyway they can find out my actual UAE salary?

5 - IF i deposit money into my wife's Canadian Bank account every month, will she be taxed or is that termed as a Gift and hence not taxed? She wont be working atleast for a year while she studies. Of course the money I send to my wife will be less than what I am declaring as my income.

Please advice on this. Living in UAE, we are not used to tax and suddenly giving 30% of my UAE income living and working in UAE is a big amount!

Thanks in advance!"

Found the above question in a forum .. does someone have an answer for the above?
 

scylla

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Jun 8, 2010
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1. No - you won't have to file taxes if you are classified as a non-resident. However your wife will have to file taxes as a resident and will have to declare your worldwide income.

2. You can claim non-resident status but your wife cannot. She will need to file taxes.

3. No. However there may be some impact to your wife's taxes.

4. Failure for your wife to declare your worldwide income in her tax return is fraud and a crime which can result in fines and even charges. If you want advice on lowering tax rates / reducing taxes for your situation, you would be best off hiring a tax consultant.

5. No - she won't be charged.
 

Rob_TO

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scylla said:
1. No - you won't have to file taxes if you are classified as a non-resident. However your wife will have to file taxes as a resident and will have to declare your worldwide income.

2. You can claim non-resident status but your wife cannot. She will need to file taxes.

3. No. However there may be some impact to your wife's taxes.
Not quite, as having a wife/child in Canada are considered very strong ties so most likely he will be considered a deemed/factual resident of Canada for tax purposes even if living in another country. This means reporting and paying tax on your income, the details of which would depend on any tax treaty between Canada and the other country.

http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html
The most important thing to consider when determining your residency status in Canada for income tax purposes is whether or not you maintain, or you establish, residential ties with Canada.

Significant residential ties to Canada include:
-a home in Canada;
-a spouse or common-law partner in Canada; and
-dependants in Canada;


Also if he intends to eventually return to Canada, then he would be considered as working temporarily outside Canada. So based on this he could also not claim non-residency status. To avoid Canadian taxes he would need to decide to stay there permanently, and move his family out of Canada as well.

http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/tmprry-eng.html
If your circumstances change, you may no longer be a factual resident of Canada for income tax purposes. This could happen, for example, if you:
-decide to stay permanently in the country where you are working;
-sell your house in Canada; or
-move your spouse or common-law partner and dependent children with you to your new country.
 

whimsical

Hero Member
Jul 21, 2016
207
102
scylla said:
1. No - you won't have to file taxes if you are classified as a non-resident. However your wife will have to file taxes as a resident and will have to declare your worldwide income.

2. You can claim non-resident status but your wife cannot. She will need to file taxes.

3. No. However there may be some impact to your wife's taxes.

4. Failure for your wife to declare your worldwide income in her tax return is fraud and a crime which can result in fines and even charges. If you want advice on lowering tax rates / reducing taxes for your situation, you would be best off hiring a tax consultant.

5. No - she won't be charged.
Thank you for your prompt reply !!
 

whimsical

Hero Member
Jul 21, 2016
207
102
Rob_TO said:
Not quite, as having a wife/child in Canada are considered very strong ties so most likely he will be considered a deemed/factual resident of Canada for tax purposes even if living in another country. This means reporting and paying tax on your income, the details of which would depend on any tax treaty between Canada and the other country.

http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html
The most important thing to consider when determining your residency status in Canada for income tax purposes is whether or not you maintain, or you establish, residential ties with Canada.

Significant residential ties to Canada include:
-a home in Canada;
-a spouse or common-law partner in Canada; and
-dependants in Canada;


Also if he intends to eventually return to Canada, then he would be considered as working temporarily outside Canada. So based on this he could also not claim non-residency status. To avoid Canadian taxes he would need to decide to stay there permanently, and move his family out of Canada as well.

http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/tmprry-eng.html
If your circumstances change, you may no longer be a factual resident of Canada for income tax purposes. This could happen, for example, if you:
-decide to stay permanently in the country where you are working;
-sell your house in Canada; or
-move your spouse or common-law partner and dependent children with you to your new country.
Thanks a lot for clarifying that !!
 

torontosm

Champion Member
Apr 3, 2013
1,677
261
whimsical said:
1 - From the day my wife, kid and I " Land" in Canada, I am bound to pay and file taxes in Canada due to the fact that residents are taxed for worldwide income? Correct?

2 - Since my wife and kid are living in Canada, I cannot claim "Non Resident" status for tax purposes even though I am living in Dubai? Is that correct?

3 - Since I have to declare my UAE income, I will have to pay roughly 30% of my income to Canada Revenue Agency? Correct?

4 - Is there anyway, I can under declare my income to pay less tax? How will the CRA know? is there anyway they can find out my actual UAE salary?

5 - IF i deposit money into my wife's Canadian Bank account every month, will she be taxed or is that termed as a Gift and hence not taxed? She wont be working atleast for a year while she studies. Of course the money I send to my wife will be less than what I am declaring as my income.
1) Yes, you will be deemed a resident and have to pay Canadian tax on your Dubai income
2) No, you will not be a non-resident as you will have clear family ties to Canada
3) It depends on how much you earn and your resultant tax rate. Marginal rates can be as high as 48%
4) You can try if you want, but lying or misrepresenting your income to the government is a federal crime that could have very serious consequences.
 

whimsical

Hero Member
Jul 21, 2016
207
102
torontosm said:
1) Yes, you will be deemed a resident and have to pay Canadian tax on your Dubai income
2) No, you will not be a non-resident as you will have clear family ties to Canada
3) It depends on how much you earn and your resultant tax rate. Marginal rates can be as high as 48%
4) You can try if you want, but lying or misrepresenting your income to the government is a federal crime that could have very serious consequences.
Thank you for the info !! Doubts have been clarified. Thanks again, for taking the time to write back.
 

Zee2015

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May 21, 2015
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As far as I understood how tax system works in Canada; it is applied in income brackets.

For the base range there will be a rate, then a higher rate will be applied on income above that range.

Say - for illustrative purpose only so check the real rates by your own - that your UAE income is $120,00 per year, then:
  • a low tax rate will be applied on the income range between $0 and $48,000
    then a slightly low rate will be applied for the bracket between $48,001 to 58,000
    then a slightly moderate rate for the income bracket between $58,001 to $95,000
    and lastly a much higher rate for the bracket between $95,001 and $120,000

You got the picture.

The income brackets principle is fairer than a flat rate as you can imagine.

The average tax rate will be moderate if not lower than %35.

Check your province tax website for details.