Job Discussion Forums

[Crazy Eagle]

Are Canadians tax exempt in all other countries? What about the South American countries?

Thanks!

[ls650]

In a word, no.

If you have 'ties' to Canada such as a mailing address, drivers licence, credit card billing address, property, etc. you're considered a "virtual resident" of Canada for taxation purposes, even if you are living and working overseas for a lengthy period of time. Yep, the government wants to squeeze every possible dime out of you.

Canadians are legally required to file a tax return, even if they have no "world income" to report. That said, Canada has tax treaties with several nations, and so often taxes paid abroad can be counted as a tax credit towards any tax owed in Canada. To do this, you'll likely have to file an NR73 "Determination of Non-Residency Status". You can find a downloadable PDF if you search for NR73 on the internet.

You can find more Canadian tax information on the offical web site for the CRA. http://www.cra-arc.gc.ca/

[valley_girl]

When I left for Korea, I was told that if I stayed 'out of country' for two or more years and did not maintain any "ties" (bank account, house, land, etc.) in Canada during that time, I would be tax exempt upon my return (to visit). If you have no such ties and plan to be out of the country for more than two years, I see no reason to file income tax for the time you are gone (but do file for the time you were living/working in Canada!). Upon your return, find out if you are exempt or if you will need to (then) file a return. While you are out of country, it is basically a non-issue.

[Guy Courchesne]

I'm not sure how common this is, but Mexico has a tax treaty with Canada, so that workers aren't taxed twice. The two governments share tax revenue based on residency.

[ls650]

[Gordon]

You don't need to file a tax return in Canada if you were out of the country. For example, you leave Dec. 1, 2002 and return Jan. 20, 2005. You would of had to file for 2002 in the spring of 2003 and apply for non-residency. You wouldn't have had to file for 2003 or 2004.

[VanKen]

[schwa]

Theres a lot of misinformation on this thread.

There is no magic 2-year goal line -- this was changed in 2001. You can qualify after a short time, or be abroad for years & still be deemed a resident for tax purposes.

You are not required to submit any forms to become nonresident. You can send in the form mentioned above but it will only get you an opinion about your status -- not binding in any way.

The tax guys weigh a number of factors in determining your status. Its all open to interpretation. Theyre looking for significant ties (house, spouse, dependants) & secondary ties (drivers licence, bank accounts, medical insurance, furniture in storage, club memberships, all sorts of stuff). If youre maintaining primary ties, you can probably forget it. If you want to maximize your chances of getting nonresident status, its a good idea to sever as many secondary ties as possible.

Heres the goods (from the Canada Revenue Agency website):
http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/it221r3-consolid-e.html

[schwa]

Then on rereading the thread I see that that isnt what the OP was asking.

Exempt from tax in the country youre in? No. But if the country youre in has a tax treaty with Canada, the money you pay will be subtracted from any taxes due (in Canada) on your foreign income, if you dont have nonresident status.

But nonresidency is the way to go if you can. I'm paying under 5% tax on my income in Korea but Canada would want 25% at least.

[yaramaz]

I had problems with revenue canada the first year I was in Turkey because the Turkish tax system is different (at least for foreigners) in that tax is taken off a fixed salary before we even see it so that our quoted salary remains constant all year even though taxes increase as the year goes by (low taxes in january, higher in december). There was no such thing as an income tax form for me to fill out so revenue canada didnt know what to do even though I gave them all the info they needed. I had to pay them some money that year even though my income was piddley. However, with the foreign tax credit etc and a lot of wrangling from my accountant, I now only file a form as a matter of formality but pay nothing more. You might want to get an accountant to help you too as they can deal with the weird rules better...

[valley_girl]

[Crazy Eagle]

Thanks for all the info, guys.

For what it is worth, I lived in the US for two years, and paid NO Canadian tax. I did not earn any money in Canada at that time, and so I did not pay any tax. I was told that you only pay Canadian taxes on money earned in Canada.

I don't own any property in Canada. So, if I were to go to Venuzuala, for instance, for a year or two, I don't think I would have to pay any Canadian taxes. Is this correct?

What about the Asian countries? Same thing?

Crazy

[Celeste]

[struelle]

[ls650]