Paying taxes when working abroad?
- Thread starter CaBeaver
- Start date
All depends if you are considered a resident for tax purposes. For example if your family remained in Canada while you worked abroad you’d be a resident for tax purposes. I’d recommend googling and if you need more clarification you can always call CRA.
Thanks. I did google the question before I posted it here, and I found too much information, and now I am confused. It all boils down to, it seems, if you have ties with Canada or not to be considered a resident or a non-resident. In my case, I won't have any ties as I am leaving my rented apartment, and I don't have family members here (no wife, no kids in school), and I don't have a car or any other possession. The only thing I might keep is some money in my bank account. Is this enough information to know if I will be considered a resident or non-resident for tax purposes?
Yes it does sound like you are a non-resident but it is best to check with CRA if you have any doubts. I am not a professional.
If you are covered by your provincial healthcare, you are considered as a tax resident.
Beside ties with Canada, CRA also takes into account of your intentions. If CRA feels that it is always your plan to return to Canada after working overseas for a short period, CRA will consider you a tax resident.
OK, this doesn't sound good. Even intentions are taken into account? I emigrated to Canada, and of course I have the intentions to live in Canada someday if I find a job, but I have been struggling to find a job in Canada and I have been unemployed for almost a year. That's why I am thinking to go abroad and make some money.
This is a big problem for me, because my job abroad won't get me paid good money. If I pay taxes twice (where I'll be getting paid and in Canada), I probably will decline the offer. This is the problem. If I will be making good money, I won't care too much. As I said, I need some money after being unemployed for sometime now.
Any one with personal experience with this?
This is NOT a question which can be reasonably or reliably answered in a venue like this forum.
For one thing, a very big thing, there is NO ONE right answer since, at the very least, one big factor is where it is you are living and working. (For example, if the job is in the U.S., NO problem . . . especially for a job that does not pay well . . . there will be no double taxation.)
To be clear, there are MANY factors at play in determining whether filing a tax return is required or otherwise a good idea. And even if it is determined that a tax return needs to be filed, or that otherwise it is a good idea to file one, there are many factors to consider in deciding whether that should be a *RESIDENT* return or a *NON-RESIDENT* return.
There is NO point trying to determine what tax needs to be paid to CRA UNLESS you are required to file a return, or you elect to file a return. Then you need to determine if you should file a resident or non-resident return. Then, once you determine which is the appropriate return to file, follow the instructions (or get help if they are too complicated to work through) to determine what tax needs to be paid.
As already noted, one of the biggest factors is which country you are working and residing in, and whether that country has a tax treaty with Canada. Which country it is can make a huge, huge difference.
Note, for example, that if you are a tax resident in many countries, Canada will consider that a big, big factor toward concluding you are NOT a resident of Canada for tax purposes. This does not apply to all countries. And there are wrinkles in how it applies in respect to particular countries.
Even if it is NOT a country which has a tax treaty with Canada, if you are a bona fide resident of that country AND you have no Canadian source income, odds are good you will NOT need to file a Canadian tax return or pay Canadian taxes on that income. Sure, it is a little more complicated than that. Sure, respective "ties" can be considered and balanced, but unless a person is maintaining a residence in Canada, or spending much of the year in Canada, as long as they are a bona fide resident of another country AND have NO Canadian source income, it is likely there is NO need to file a return for that tax year. Still, yes, YOU need to sort through the criteria for determining if you are required to file a return (see CRA site), but suggestions above that this or that "tie" will require filing a return and paying Canadian tax on worldwide income are grossly overstated.
Of course there are collateral consequences. Of course there is likely to be some degree of fraud if one claims to be a Canadian resident for benefits and claims to not be a resident for tax purposes.
My problem is not in filing tax returns but if I will pay taxes to Canada on my abroad income. My concern is how they will treat this international income when I have no ties in Canada (no family, no driver's license, no health care, no homes, ... etc) while I was working, but I am currently a PR and will be a citizen shortly and at some point in the future I want to live in Canada if I find the right job.
How to know the countries that have a tax treaty with Canada? And will CRA answer my question more accurately, or I will have to wait and see what happens when I file my tax returns? And if I don't file my tax returns for the year I was abroad, what could be the consequences in the future if I settled in Canada?
First some repetition:
As I previously observed, odds are very good there will be NO required filing of a tax return AND NO Canadian tax obligation for a PR who:
-- has not maintained a residence in Canada for most of the tax year
-- has not been physically present in Canada for six months or more
-- has NO Canadian source income
-- has a bona fide residence for most of the tax year in the country where the PR is employed
-- and especially if the PR is paying tax in that country
-- has not been physically present in Canada for six months or more
-- has NO Canadian source income
-- has a bona fide residence for most of the tax year in the country where the PR is employed
-- and especially if the PR is paying tax in that country
BUT yes, it can be more complicated than that. That is why you cannot get a reliable, for sure answer here. That is why you will need to do some real homework, starting with the CRA website.
It can be simpler as well. For example, for many of the countries with a tax treaty with Canada, if the individual is a bona fide tax resident of that other country, for a given tax year, then CRA will ordinarily recognize that person is NOT a tax resident of Canada (which means no Canadian tax on income earned in that other country . . . thus NO Canadian tax unless the individual has Canadian source income), with little consideration given to other "ties" (but this has to be about being a bona fide resident of the other country).
Beyond that, as I said, the tax questions themselves can NOT be reasonably or reliably answered in this venue. There are too many variables.
You will need to do your homework, a good deal of homework (starting at the CRA website), or obtain professional guidance . . . but even the latter can be difficult to find. Unlike a few too many free sources of "advice," tax professionals tend to avoid spouting general advice rife with potential error . . . so it could require a good deal of homework just to find a reliable tax professional who will be able to reasonably and reliably advise you about living and working abroad in a particular country. (Well, that can depend on the country -- many Canadian accountants are familiar with situations and rules for Canadians working in the U.S., for example, and similarly for a number of other countries . . . but it is likely to be difficult to find professionals familiar with other countries; but even this may vary among different locations in Canada.)
There is NO need to file a Canadian tax return to keep PR status or even to become a citizen. Except to qualify for citizenship a PR must comply with tax filing requirements for at least three of the five tax years prior to making the application. BUT any year during which the individual was not required to file a return counts as one of those years even though NO return was filed. That is, the requirement is to comply with CRA tax filing obligations, which does NOT necessarily require filing a return.
Of course not being a resident in Canada can have an impact on both maintaining compliance with the PR Residency Obligation and qualification for citizenship. Moreover, residence abroad is a relevant evidentiary factor in the assessment of a PR's claims about presence in Canada. Obviously, if a PR checks "no" not required to file a tax return for a given tax year because the PR was not a resident of Canada for tax purposes that year, that is a clear indication the PR spent most of the year absent from Canada.
I searched the CRA website, but it was vague and I didn't know what case applies to me. Maybe I need to search harder. My physical presence obligation for my PR and citizenship is not an issue. I will be meeting these requirements soon and before I leave. And I have filed all my tax returns for all the 8+ years I have stayed in Canada.
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