Tax for landed PR

[atzquebec]

Hi,

We completed our landing in April 2016, and returned to our home country.

1. When should we file our taxes ?
2. Is the income (job etc) that you earn in your home country after landing taxed, or do we have to file for taxes ?
3. After return to Canada permanently, and if we still have an income (from an asset) will that income need to be disclosed at the time of filing for taxes ?

 

[scylla]

1. Once you have moved to and are residing in Canada.
2. Depends if you are a resident of Canada or not. If you are residing outside of Canada - then no.
3. Yes - it will need to be declared in your taxes.

 

[atzquebec]

1. Once you have moved to and are residing in Canada.
2. Depends if you are a resident of Canada or not. If you are residing outside of Canada - then no.
3. Yes - it will need to be declared in your taxes.

Thanks for your reply.

3. Yes - it will need to be declared in your taxes. --- If i am getting income from a running business, what tax implications will be there ? How much tax has to be paid ?

 

[fkl]

Thanks for your reply.

3. Yes - it will need to be declared in your taxes. --- If i am getting income from a running business, what tax implications will be there ? How much tax has to be paid ?

Generally it would be added your income for that year in Canada. E.g. if you earned amount x from Jan to april 2016 outside of Canada.

Then you moved to Canada in May 2016 and started working here and earned amount y from May to Dec 2016.

If you are living in Canada in that province on Dec 31, 2016, you would declare your total income for the year 2016 (x+y) and would be taxed accordingly.

Generally an approximate amount is fine along with some document showing it e.g. pay stubs etc.

If you haven't earned any money in that tax year i.e. starting Jan 1 of the year you moved to Canada, you don't pay any taxes for income outside of Canada.

E.g. you were working outside of Canada until dec 31. But moved here on some date of jan and started working here. Then you didn't earn any money outside of Canada for the year you moved to Canada and hence have no other income for taxation purpose except what you earn in Canada.

 

[specialmary]

Generally it would be added your income for that year in Canada. E.g. if you earned amount x from Jan to april 2016 outside of Canada.

Then you moved to Canada in May 2016 and started working here and earned amount y from May to Dec 2016.

If you are living in Canada in that province on Dec 31, 2016, you would declare your total income for the year 2016 (x+y) and would be taxed accordingly.

Generally an approximate amount is fine along with some document showing it e.g. pay stubs etc.

If you haven't earned any money in that tax year i.e. starting Jan 1 of the year you moved to Canada, you don't pay any taxes for income outside of Canada.

E.g. you were working outside of Canada until dec 31. But moved here on some date of jan and started working here. Then you didn't earn any money outside of Canada for the year you moved to Canada and hence have no other income for taxation purpose except what you earn in Canada.

I am trying to learn taxation in Canada.

According to your scenario, should I report my income since May 2016, if I move to Canada permanently since May 2016? I thought that I would consider non-resident (Jan-Apr 2016) until May 2016. Everything else, including personal tax-free allowance and child benfits, will be prorated. In this case, I would simply report $y in my tax form.

 

[fkl]

I am trying to learn taxation in Canada.

According to your scenario, should I report my income since May 2016, if I move to Canada permanently since May 2016? I thought that I would consider non-resident (Jan-Apr 2016) until May 2016. Everything else, including personal tax-free allowance and child benfits, will be prorated. In this case, I would simply report $y in my tax form.

Tax in Canada unfortunately works on a yearly basis. If you were resident on Dec 31st 2016 in Canada for taxation, you would have to include your whole income of year 2016 (from inside Canada as well as outside of Canada in your tax return).

If you moved to Canada in May or any month in 2016, your income from outside of Canada for 2016 will have to be included.

Since you moved in may 2016 and would continue living here on Dec 31st, 2016, you would have to include.

a) your income from Jan to May 2016, outside of Canada.
b) income from may to dec 31, 2016.
You will see a separate section when filing tax return for 2016 (when filing in early 2017)

Other benefits like child benefits are prorated on a monthly basis and start from the month you start living in Canada.

Though hopefully the impact of this shouldn't be huge (assuming you are moving from a country with much weaker currency from Canada).

E.g. if living in Canada your annual income is say 80K CAD. But you only joined for 6 months and earned merely 40K CAD. Now likely the income of earlier 6 months won't be as significant to affect tax considerably, unless you are moving from US or UK (in which case there are tax treaties and taxes deducted there are given credit here).

 

[canuck_in_uk]

Tax in Canada unfortunately works on a yearly basis. If you were resident on Dec 31st 2016 in Canada for taxation, you would have to include your whole income of year 2016 (from inside Canada as well as outside of Canada in your tax return).

If you moved to Canada in May or any month in 2016, your income from outside of Canada for 2016 will have to be included.

Since you moved in may 2016 and would continue living here on Dec 31st, 2016, you would have to include.

a) your income from Jan to May 2016, outside of Canada.
b) income from may to dec 31, 2016.
You will see a separate section when filing tax return for 2016 (when filing in early 2017)

Incorrect. Foreign income earned before a person became resident in Canada is not declared.

http://www.cra-arc.gc.ca/newcomers/#whtr

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

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
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.

 

[fkl]

Incorrect. Foreign income earned before a person became resident in Canada is not declared.

http://www.cra-arc.gc.ca/newcomers/#whtr

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

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
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.

That's really interesting. I will look at it in detail. Thank you for providing that info +1.

At the moment all i have to say is

a) I was asked to do so and tax was calculated accordingly in 2014.
b) Several friends with similar circumstances, coming here on work permits were required to do the same since 2013/14.

We all came to Canada on LMIA based work permits, but for tax purpose, there is no difference between worker or permanent resident.

I am not sure if this change is recent or we were some how misguided.

 

[canuck_in_uk]

That's really interesting. I will look at it in detail. Thank you for providing that info +1.

At the moment all i have to say is

a) I was asked to do so and tax was calculated accordingly in 2014.
b) Several friends with similar circumstances, coming here on work permits were required to do the same since 2013/14.

We all came to Canada on LMIA based work permits, but for tax purpose, there is no difference between worker or permanent resident.

I am not sure if this change is recent or we were some how misguided.

It's not a recent change. That has been the rule for quite some time, so whoever told you otherwise had no idea what they were talking about.

I suggest you contact CRA about amending your 2014 return to exclude any foreign income earned before you became a resident for tax purposes.

 

[specialmary]

That's really interesting. I will look at it in detail. Thank you for providing that info +1.

At the moment all i have to say is

a) I was asked to do so and tax was calculated accordingly in 2014.
b) Several friends with similar circumstances, coming here on work permits were required to do the same since 2013/14.

We all came to Canada on LMIA based work permits, but for tax purpose, there is no difference between worker or permanent resident.

I am not sure if this change is recent or we were some how misguided.

If you come here as a LMIA foreign worker, you are considered resident for tax purpose (even though you are not eligible for most of the welfare here). Residency for immigration/citizenship is different from residency for tax purpose.

 

[canuck_in_uk]

If you come here as a LMIA foreign worker, you are considered resident for tax purpose (even though you are not eligible for most of the welfare here). Residency for immigration/citizenship is different from residency for tax purpose.

Regardless of whether a person comes to Canada on a work permit or as a PR, they are still not required to declare foreign income earned before becoming a tax resident.

 

[fkl]

Regardless of whether a person comes to Canada on a work permit or as a PR, they are still not required to declare foreign income earned before becoming a tax resident.

Adding one more thing to that, CRA specially mailed and asked back foreign income for last 3 years before Canada. This was for child benefit.

So in the light of earlier link you provided, you might not be required to declare outside of Canada income for current year before becoming PR for tax purpose (i will explore this further and evaluate my return if needed), but you still need to do it for other reasons like child benefit even for prior years.

 

[canuck_in_uk]

Adding one more thing to that, CRA specially mailed and asked back foreign income for last 3 years before Canada. This was for child benefit.

So in the light of earlier link you provided, you might not be required to declare outside of Canada income for current year before becoming PR for tax purpose (i will explore this further and evaluate my return if needed), but you still need to do it for other reasons like child benefit even for prior years.

To qualify for benefits, yes, they need previous income. However, that is separate from including it on your income tax return and paying tax on it.

 

[mpjaved]

Dear friends,

I am moving to Canada in March with my family(wife+2kids). The saving amount I have in my current bank account will be transferred to my new Canadian account. please help me to understand if I have to pay tax or not on the transferred amount? what should be your suggestion . my funds are in USD

 

[canuck_in_uk]

please help me to understand if I have to pay tax or not on the transferred amount?

No.