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Tax Time...is the bonus taxed?

 
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Betty



Joined: 03 Feb 2003

PostPosted: Tue Mar 04, 2003 7:40 pm    Post subject: Tax Time...is the bonus taxed? Reply with quote

Hey,

I'm Canadian. I've paid 5% (100,000 a month) korean income tax.

Is there any way I can get that money back and pay tax instead in Canada? I know that as Canadians (and most countries) we only have to pay tax in one country, but do I have the choice as to what county I pay tax in. If I do have that choice, is my director obligated to give me that money back so that I can pay tax in Canada instead?

Also, my bonus was taxed the same as my salary (100,000) is this right? I've read that people were also getting taxed but some people say that it shouldn't be.

Maybe somebody out there knows?
Thanks.
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pglunatic



Joined: 26 Jan 2003

PostPosted: Tue Mar 04, 2003 11:57 pm    Post subject: Reply with quote

Why would you want to pay tax in Canada? You'll pay at least five times more taxes (at least) depending on your income. You can't get your money back in Canada, you CAN and WILL be taxed in both countries if you're still a resident of Canada (which isn't as simple as just living there or not, there's some criteria set out by Revenue Canada)

If you DO have to pay taxes in Canada (you're still a resident of Canada)you'll do a normal income statement and deduct the 5% income tax you paid in korea from what you'll have to pay in Canada.

Say for your income level you have to pay 25% tax on it...then you deduct 5% and have to pay 20% to Canada...fun, huh?

Dunno about bonuses in Korea, but in Canada it'd be taxable income.
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Zyzyfer



Joined: 29 Jan 2003
Location: who, what, where, when, why, how?

PostPosted: Wed Mar 05, 2003 5:02 am    Post subject: Reply with quote

Bonuses, whether legally taxable or not, in my experience get taxed by the director. I think I recall someone saying it wasn't legitimate to tax the bonus, but I don't remember details.
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Bulsajo



Joined: 16 Jan 2003

PostPosted: Wed Mar 05, 2003 6:45 am    Post subject: Reply with quote

I have always had tax taken off my bonuses.

Quote:
Is there any way I can get that money back and pay tax instead in Canada? I know that as Canadians (and most countries) we only have to pay tax in one country, but do I have the choice as to what county I pay tax in. If I do have that choice, is my director obligated to give me that money back so that I can pay tax in Canada instead?


I don't think it works that way. If you're not a non-resident, then you have to pay Canadian tax regardless of whether or not you pay tax in Korea. However, your Canadian taxes owed will be lowered by whatever you've already paid in Korean taxes (i.e. the Korean amount is deducted from the Canadian amount).

Anyway, assuming everyone involved is following the law to the letter, why on earth would you want to pay taxes at a higher tax rate?
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Ody1966
Guest




PostPosted: Thu Mar 06, 2003 5:40 am    Post subject: Reply with quote

bonuses Question
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bellum99



Joined: 23 Jan 2003
Location: don't need to know

PostPosted: Thu Mar 06, 2003 4:10 pm    Post subject: it is called a severance Reply with quote

It is not a bonus....it is a severance payment.
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Anda



Joined: 16 Jan 2003
Location: South Korea

PostPosted: Thu Mar 06, 2003 11:17 pm    Post subject: Um Reply with quote

Um I don't want to get into a fight but here goes. If you have a goverment position then they don't tax Australians, Brits, Kewi etc as Korea has a tax agreement with these countries. Canadians however are taxed as they don't have a tax agreement. Goverment department do keep earning records on us, that as far as I know our home countries can access. The private sector here but shold tax all staff.
Canadians can apply if they are going to work overseas for an extended time, for non-resident status before leaving Canada to get out of paying Canadian tax.
All your earnings can be double taxed as far as I know if you declare (the big word is declare) your earnings on return to Canada if you haven't applied for non-resident status. You have to pay the tax differance between the low tax here and the high tax in Canada. Anyway that should give you some idea of the set up.
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thaitom



Joined: 08 Feb 2003
Location: Phopphra, Thailand

PostPosted: Fri Mar 07, 2003 6:43 pm    Post subject: Reply with quote

You pay 5% income tax? that is to high it should be no more than 4% you can contact the tax department and they will make your employer pay you back. Also the severance payment is taxed at 1-2%
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loki



Joined: 09 Feb 2003
Location: Mokpo

PostPosted: Tue Mar 11, 2003 5:05 am    Post subject: Reply with quote

The tax department will help you get it back? Have you actually done this?
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Howard Roark



Joined: 02 Feb 2003
Location: Canada

PostPosted: Thu Mar 20, 2003 8:16 am    Post subject: Reply with quote

revenue canada has no jurisdiction outside canada. they have no way of knowing what you were doing or what money you made outside of the country. your best bet is to declare whatever you sent home to canada, as they do have access to that info. that is what i do. most of what i send home goes to my student loan which is tax deductable therefore i end up not paying any taxes in canada.

disclaimer: i did not get this info from revenue canada or an accountant but rather from a canadian lawyer (business law) who is a personal friend.
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Captain Obvious 2.0



Joined: 09 Jan 2003

PostPosted: Thu Mar 20, 2003 2:04 pm    Post subject: Reply with quote

Howard Roark wrote:
revenue canada has no jurisdiction outside canada. they have no way of knowing what you were doing or what money you made outside of the country. your best bet is to declare whatever you sent home to canada, as they do have access to that info. that is what i do. most of what i send home goes to my student loan which is tax deductable therefore i end up not paying any taxes in canada.

disclaimer: i did not get this info from revenue canada or an accountant but rather from a canadian lawyer (business law) who is a personal friend.


Incorrect. Canada and Korea have a tax record sharing agreement. If Revenue Canada decides to audit you or confirm that you did not work while you were in Korea, Korea has agreed to provide them with any and all tax records of employment here of any Canadian.

It's the same as not declaring your income back home. You won't get caught right away, but in the event of an audit they can very easily find out where you were working and how much money you made.

Also, your friend is retarded.

Lastly, the best bet is to simply pursue "non-resident status" which would make you exempt from paying taxes on any income made outside the country. To qualify you have to "cut ties" with Canada during your stay outside of the country.

Contact your accountant to see if you qualify, or what more you need to do to qualify.

This advice is far more useful and factually correct as compared to what your friend suggested.
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thaitom



Joined: 08 Feb 2003
Location: Phopphra, Thailand

PostPosted: Fri Mar 21, 2003 7:35 pm    Post subject: tax rate Reply with quote

So what is the tax rate on the severance pay?
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eamo



Joined: 08 Mar 2003
Location: Shepherd's Bush, 1964.

PostPosted: Fri Mar 21, 2003 9:02 pm    Post subject: Reply with quote

My hagwon have added my final pay(2mill) to my severance(2mill) and taxed the whole lot as if it were a normal pay. They insist this is the legal thing to do.

The upshot is that I won't pay my usual 47,000 won tax but a whopping 355,000. A pay packet of 4mill puts you into a vicious tax bracket.

I'm checking out the legality of this with the people you can contact using the websites posted on the stickies on this forum.

What I have found out for sure is that, by Korean law, your employer must give you an authentic tax receipt, from the KTO(korean tax office), within 30 days from the end of your contract. Not very helpful as most of us have gone home by that time. I'm having mine sent to me at home as I plan to come back to ROK.
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vdowd



Joined: 11 Feb 2003
Location: Iksan

PostPosted: Sat Mar 22, 2003 12:44 am    Post subject: Canadian Taxes Reply with quote

I just made a phone call this week to the International Tax Office in Ottawa and this is what I learned re: 2002 taxes. You can fill a non-resident form if you wish but it you lived in Canada for part of 2002 (but under 183 days) you can file a regualr tax return and still be considered non-resident without doing the paperwork.

First, where did you live the day you left Canada? - file that provincial tax form. You must have been in Canada less than 183 days in 2002. You must not have any primary ties (house, spouse, children, etc.). The secondary ties (drivers licence, bank accounts) are judged on how many -can you prove that you only retain those for student loan payments, ease of life, etc.

If you earned income in Canada you declare this. On page 1 of the form it asks if you have been a non-resident of Canada and the date of departure. Complete regular tax form. You must do the paper/pen form and cannot e-mail your return.

The completed hard-copy tax form for 2002, with T4's etc is sent to the International Tax Office, 2204 Walkley Road, Ottawa, ON K1A 1A8 ansd should be Att: Non-resident Tax. Income in Korea (from Korean employers, not Canadian government, etc.) is not taxed if you paid tax in Korea.

Canada does have a tax treaty with Korea and has had one for over 20 years. You will not be taxed twice. The office can at a later date request confirmation that you were considered a resident of Korea - paid Korean tax and Korean residential tax, etc - so keep your pay slips, Tax summary, contract.

The phone number if you have questions is (613) 941-2505 and I must say it was worth the 10 minute deduction from my Telphone Access card and the 3 minutes of on-line waiting recorded drivel.

Since the Non-resident form can take up to 3 months to process this seems the easier route if you were in Canada for less than 183 days in 2002.

PS the reason you need to do this hard-copy return is because the minute the date that you departed Canada is recorded you are bumped out of the electronic system to non-resident status.

Another thing if you received GST rebates, etc. this wil lbe noticed and shortly after you will be contacted to return the monies if cashed. If you return them uncashed you should include a note stating why you returned them (non-resident) - Keep a copy of all correspondence.

In addition, I must say that I will be making another telephone call to the International office and talk to another person next week. I have found that when talking with the government it is sometimes worth the month to make 2 or 3 long-distance calls to ensure that unlike Korea they are not making up the rules as they go along and that everyone is on the same page. My old teacher used to say that if 3 people agree on an answer, it was often the right one.

Good luck and if anyone knows questions I should ask that will avoid the leap from the frying pan into the fire, please post.

to vdowd@yahoo.com
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