New immigrant subject to Canadian taxes on world-income?

[Leon]

I got a letter from the Tax office asking me to tell them my worldwide income for 2009 before coming to Canada because I may be eligible for GST/HST return. If I declare, are they going to tax me on my income prior to moving to Canada?

No, they can not tax you based on income you had in another country while you did not live in Canada and were not even PR.

 

[tulip5664]

I was thinking to do a landing in Dec and come back to Singapore after 2-3 weeks of staying in Canada. Will I get tax since I am considered a landed immigrant? I am thinking to quit my current job next year and planning to move over to Canada permanently in June 2015. Just wanna make sure I wont get tax by landing this year. Any advice would be appreciated.

Thank you.

 

[techtalk]

Best option you have is to meet tax consultant. you can get people opinion on these forums but getting factual information is rare.

 

[Leon]

As a new immigrant who lands and leaves again, you will not be considered resident for tax purposes.

You can see this by CRA here: http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html

Even if you move to Canada in the middle of the tax here and settle and start working, you do not have to file world income for the part of the year that you were not yet a resident of Canada. You can see that by CRA here: http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nwcmr-eng.html

What income must you report?

For the part of the tax year that you were NOT a resident of Canada

You pay Canadian income tax on Canadian source income.

You have to report the following amounts:
•income from employment in Canada or from a business carried on in Canada;
•taxable capital gains from disposing of taxable Canadian property; and
•the taxable part of scholarships, bursaries, fellowships and research grants you received from Canadian sources.

For the part of the tax year that you WERE a resident of Canada

You have to report your world income (income from all sources, both inside and outside Canada) earned after becoming a resident of Canada for income tax purposes on your Canadian tax return.

In some cases, pension income from outside of Canada may be exempt from tax in Canada due to a tax treaty, but you must still report the income on your tax return. You can deduct the exempt part on line 256 of your tax return.

We consider you to have acquired (deemed acquisition) almost all your properties at fair market value on the day you immigrated.

 

[tulip5664]

As a new immigrant who lands and leaves again, you will not be considered resident for tax purposes.

You can see this by CRA here: http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html

Even if you move to Canada in the middle of the tax here and settle and start working, you do not have to file world income for the part of the year that you were not yet a resident of Canada. You can see that by CRA here: http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nwcmr-eng.html

Thanks Leon. This information is very helpful.

 

[sharedknowledge]

As a new immigrant who lands and leaves again, you will not be considered resident for tax purposes.

You can see this by CRA here: http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html

Even if you move to Canada in the middle of the tax here and settle and start working, you do not have to file world income for the part of the year that you were not yet a resident of Canada. You can see that by CRA here: http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nwcmr-eng.html

Leon,

My situation is similar to tulip5664 above.

If I leave my family in Canada after landing, while I only start living in Canada say, after 3 years (in order to maintain my residency), then will I be required to pay tax during these 3 years while I am working outside Canada?

If so, how much will I be required to pay for a family of 6 persons? Will I be entitled to children tax benefits? How much?

 

[Leon]

If I leave my family in Canada after landing, while I only start living in Canada say, after 3 years (in order to maintain my residency), then will I be required to pay tax during these 3 years while I am working outside Canada?

If so, how much will I be required to pay for a family of 6 persons? Will I be entitled to children tax benefits? How much?

If neither you nor your family are staying in Canada after landing, you will not be considered a resident for tax purposes and will not be required to pay tax in Canada on your world income for those 3 years before you settle. You will however not be entitled to child tax benefit either unless you and your children are living in Canada.

If you leave your family in Canada and only you live outside Canada for work reasons, you may be considered resident for tax purposes based on that you are keeping a second home in Canada and your family is in Canada enjoying services such as publicly funded health care and schools. In that case, your spouse can apply for child tax benefit for your children.

The taxes you must pay are based on your income and deductions, not on how many family members you have.

For child tax benefit, you can find a calculator here: http://www.cra-arc.gc.ca/bnfts/clcltr/cctb_clcltr-eng.html

Enter the number of children, your annual income, your spouses annual income and the UCCB income you are asked to report is child care benefit which would be $100 a month per each child under the age of 6.

 

[sharedknowledge]

If neither you nor your family are staying in Canada after landing, you will not be considered a resident for tax purposes and will not be required to pay tax in Canada on your world income for those 3 years before you settle. You will however not be entitled to child tax benefit either unless you and your children are living in Canada.

If you leave your family in Canada and only you live outside Canada for work reasons, you may be considered resident for tax purposes based on that you are keeping a second home in Canada and your family is in Canada enjoying services such as publicly funded health care and schools. In that case, your spouse can apply for child tax benefit for your children.

The taxes you must pay are based on your income and deductions, not on how many family members you have.

For child tax benefit, you can find a calculator here: http://www.cra-arc.gc.ca/bnfts/clcltr/cctb_clcltr-eng.html

Enter the number of children, your annual income, your spouses annual income and the UCCB income you are asked to report is child care benefit which would be $100 a month per each child under the age of 6.

Thank you for precise answer. The child benefit looks like coming to very small amount (less than $190 !!)

Okay, how can I calculate the world income tax I will have to pay?

 

[Leon]

Thank you for precise answer. The child benefit looks like coming to very small amount (less than $190 !!)

Okay, how can I calculate the world income tax I will have to pay?

I didn't find a calculator specifically for world income but here is one for payroll which should give you an idea: http://www.cra-arc.gc.ca/esrvc-srvce/tx/bsnss/pdoc-eng.html There are however all kind of deductions and you should see an accountant before you file your taxes to make sure you are getting the most of it.

If you are also paying taxes in the country where you are working and they have a tax treaty with Canada, then Canada will consider what you already paid there so if you are already paying more tax than you would have paid in Canada, you may not have to pay anything or if Canada has higher tax, you'd just have to pay the difference.

 

[sharedknowledge]

I didn't find a calculator specifically for world income but here is one for payroll which should give you an idea: http://www.cra-arc.gc.ca/esrvc-srvce/tx/bsnss/pdoc-eng.html There are however all kind of deductions and you should see an accountant before you file your taxes to make sure you are getting the most of it.

If you are also paying taxes in the country where you are working and they have a tax treaty with Canada, then Canada will consider what you already paid there so if you are already paying more tax than you would have paid in Canada, you may not have to pay anything or if Canada has higher tax, you'd just have to pay the difference.

Its scary, indeed. I have just discussed with a fellow who is also going on PR. He has heard that the tax starts on world income of more than ($10,000/month+plus $3,000/child). So, for example, for a family of couple and a child, the taxable income will be any income above $23,000 (=10000+10000+3000).

We need to confirm this.

 

[Leon]

Its scary, indeed. I have just discussed with a fellow who is also going on PR. He has heard that the tax starts on world income of more than ($10,000/month+plus $3,000/child). So, for example, for a family of couple and a child, the taxable income will be any income above $23,000 (=10000+10000+3000).

We need to confirm this.

Ask an accountant or a tax advisor.

However, as already said, if you just land and do not settle in Canada, your family is not staying in Canada and you are not keeping a 2nd home, you do not become resident for tax purposes so when you move to Canada finally after 3 years, you have a clean break, any income earned overseas before your moving date would not be taxed in Canada and you would simply start from zero, filing taxes on your Canadian income after you have moved.

However, if you are keeping a 2nd home in Canada and your family is staying in Canada, then it is only fair that you pay taxes in order to support the services your family is receiving such as public health care and schools.

 

[sharedknowledge]

Ask an accountant or a tax advisor.

However, as already said, if you just land and do not settle in Canada, your family is not staying in Canada and you are not keeping a 2nd home, you do not become resident for tax purposes so when you move to Canada finally after 3 years, you have a clean break, any income earned overseas before your moving date would not be taxed in Canada and you would simply start from zero, filing taxes on your Canadian income after you have moved.

However, if you are keeping a 2nd home in Canada and your family is staying in Canada, then it is only fair that you pay taxes in order to support the services your family is receiving such as public health care and schools.

Very logical advice, indeed. Thanks a lot.

 

[Getafix]

Hey guys,

I have a similar question so thought i should post here instead of opening a new topic. I'm planning on landing in Canada next month. I have a steady income source in Pakistan that i plan on using in Canada. I am already paying income tax on this income. Do i have to pay the difference in the taxes in Canada? I read that these taxes are only applicable once a P.R holder has spent more than six months in Canada?

 

[Leon]

Hey guys,

I have a similar question so thought i should post here instead of opening a new topic. I'm planning on landing in Canada next month. I have a steady income source in Pakistan that i plan on using in Canada. I am already paying income tax on this income. Do i have to pay the difference in the taxes in Canada? I read that these taxes are only applicable once a P.R holder has spent more than six months in Canada?

I think I answered your question in an older post on this thread:

As a new immigrant who lands and leaves again, you will not be considered resident for tax purposes.

You can see this by CRA here: http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html

Even if you move to Canada in the middle of the tax here and settle and start working, you do not have to file world income for the part of the year that you were not yet a resident of Canada. You can see that by CRA here: http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nwcmr-eng.html

So once you move to Canada, as long as you are actually moving to Canada, not just visiting, you become a tax resident and after that date, you should file taxes including your world income.

The definition of moving to Canada vs. visiting would be that you are staying more than 6 months a year. Even if you are not staying more than 6 months a year, you may however still be considered a tax resident based on other things like having a 2nd home in Canada and/or your spouse and children living in Canada.

 

[kurtrules]

However, if you are keeping a 2nd home in Canada and your family is staying in Canada, then it is only fair that you pay taxes in order to support the services your family is receiving such as public health care and schools.

What if the family is self sufficient i.e. my wife is working and will pay taxes. She is a PR and supports my daughter. I am a PR but only have my name on the lease (in addition to my wife) and no other ties and I work and pay Significant taxes outside canada. Do I still have to pay taxes?