Tax implications for Canadians Working Overseas

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If you are a Canadian Working Abroad, whether permanently or temporarily there are many tax implications you must be aware of.

 

Canadians working overseas permanently

A Canadian working permanently abroad must determine their residency status. The Canadian Revenue Agency (CRA) looks at three primary factors when determining an individual’s Canadian residency status:

1.     The permanent home location

2.     Spouse and/or common law partner and children home

3.     Where the individual lives

Other factors that the CRA consider when determining a Canadians residency status:

·      Canadian Diver’s licence

·      Brank account and credit cards

·      Investments in Canada

·      Health Cards

·      Social ties

·      Personal possessions

If you are considering leaving Canada or already have, you should assess whether it is appropriate to:

·      File a Departure Return

·      Submit Form NR73

·      Stop receiving Tax Credits

·      Disclose Canadian assets

·      Pay Departure tax

 

Withholding tax for Canadians Living abroad

Once you leave Canada, you will be subject to withholding tax. Withholding tax is applied at a rate of 25% on the Canadian source income that you receive. These items include interest, dividends, CPP, old age security and pension, RSP income and rents from real estate property.

 

Canadians living temporarily abroad

 As a Canadian briefly living abroad you are considered a factual resident of Canada because of your residential and personal ties with Canada. As Canadians working abroad, you could be a factual resident of Canada under the following circumstances:

1.     You worked temporarily outside of Canada

2.     You teach or attend a school outside of Canada

3.     You commute daily or weekly outside of Canada

4.     You regularly vacate outside of Canada

 

Canadians temporarily outside of Canada still have too:

 

1.     File a regular personal tax return which is due April 30th

2.     Pay tax on worldwide income

3.     Claim deductions and tax credits

4.     Pay both Federal and Provincial tax

 

Foreign Tax Credit for Canadians working abroad temporarily

Canadians temporarily working abroad can claim foreign tax credit in order to avoid double taxation.

The foreign tax credit is the lesser of either:

1.     The income tax you paid on the foreign country

2.     The Canadian tax payable on the foreign source of income

 

Contact us for more Canadian tax advice

 

 

alistair bambridgeComment