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tastyfish · Joined: 17 Jan 2007 Posts: 1

I've been told that keeping your Canadian health insurance while in Japan can cost you thousands and thousands of dollars in taxes when you return to Canada. Anyone know anything about this?

Also, should I get my taxes done professionally before I go? Big company or an independent adviser? How much is too much to pay for such a consultation? Any advice would be hugely appreciated!

Thanks all!

Chris21 · Joined: 30 Apr 2006 Posts: 366 Location: Japan

If you maintain any ties with Canada (credit cards, bank accounts, health insurance), you're still considered a Canadian resident (even though you live in Japan). As a Canadian resident, you can be taxed by the Canadian government on your Japanese income.

The best thing would probably be to change your residency status so you don't have to worry about Canadian taxes.

canuck · Joined: 11 May 2003 Posts: 1921 Location: Japan

canuck · Joined: 11 May 2003 Posts: 1921 Location: Japan

JimDunlop2 · Joined: 31 Jan 2003 Posts: 2286 Location: Japan

Thanks for the linky, canuck. Ya beat me to it. Razz

craven · Joined: 17 Dec 2004 Posts: 130

Da*m you guys are fast!! It would seem my work here is done Razz

Willy_In_Japan · Joined: 20 Jul 2004 Posts: 329

I wouldn't suggest getting your taxes done 'professionally'.

I got H&R Block to do my taxes for the year I left Canada. I left Canada at the end of October. The gist of it is, that because I was in Canada more than 228 odd days (approx number) that I was taxed as a Canadian resident for the full year. They took my Japanese taxes into consideration, did the exchange on my Japanese income and handed me with an 1100 dollar bill along with the charge to do the taxes.

The problem is, that they were wrong. That would have been accurate if I coming BACK to Canada, but not if I was LEAVING! I felt wronged by Revenue Canada, and was told by H&R 'dems da rules'.

After doing the research some year and a half later, I made an appeal. Actually, the wording of the rules seems a bit confusing to me. However, Revenue Canada eventually refunded my Canadian taxes based on my Japanese income. I was deemed to be a non resident from the time I left, and NOT a resident for the whole tax year.

JimDunlop2 · Joined: 31 Jan 2003 Posts: 2286 Location: Japan

Gordon · Joined: 28 Jan 2003 Posts: 5309 Location: Japan

I have found virtually every tax advisor knows zilch about non-residency. Many have not even heard of it, let alone can give advice.

If you want advice, go to someone who specializes in it, but you will have to pay for it. A friend of mine sees someone and it cost him $8,000 up front and $3,000 yearly. Not worth it for me, this is really only for expats making the big bucks.

johanne · Joined: 18 Apr 2003 Posts: 189

In my experience, having left Canada twice in the later half of the year, I was treated as a non-resident from the moment of my departure. Each time the amount of "personal tax credits" I was eligilble for were pro-rated for the time I was in Canada. My tax was then calculated accordingly. I declared my Japanese income in both cases, but it was just used to see if I was a non-resident for the while tax year or not. Apparently (and I'm certainly not an expert), if you make more money out of Canada than in Canada in a calendar year, then this affects how the government regards you. I'm not really sure how this all works. Anyway, in both cases I had made more money in Canada those years and was taxed only on the income I had made in Canada and not at all what I had made in Japan. Since I had been taxed at source as if I would collect my salary for the whole year I had in essense been over-taxed and both times received a refund of over $1,000. When I returned to Canada after my first stint in Japan, this policy worked against me. I had returned in July and even though I had been out of the country for more than 6 months that year I was still considered a resident from the moment I returned and again my tax credits were pro-rated and so there was a much lower amount to offset the tax I had paid and I ended up owing the government about $200. It's all a bit confusing, but basically I've only ever been taxed on money I've made in Canada, no matter how many months of the year I worked overseas as opposed to in Canada.

shoosh · Joined: 21 Mar 2006 Posts: 31

$$$$ TAXES!

you knew someone was going to say it!

Seriously though...I've always wondered how to handle the situation of taxes for when I go toeach. Someone who went to Korea told me that he didn't bother letting the government know that he was going away to teach ESL. I figure that they don't really need to know what I plan on doing. Me going away for a year could very well just be me visiting a relative or a friend in the government's eyes.

Of course the problem is that because I will be making money in Japan (hopefully) I would like to be able to bring it back easily. Now it seems the only thing I can do is wire the money to my bank account here in Canada. This would be fine until my bank account started to grow past a certain point in which it will get flagged and it's possible the gov't is going to be thinking "ok what is he doing depositing all this money if he's not working at home?" I imagine this will lead to being audited which then may end up in me being taxed on everything I brought back, so I may not be left with any money.

If it sounds like I don't know what I am talking about I don't! I am just trying to learn how best to handle this. If anyone has any info that would be great.