Job Discussion Forums

Hoser · Joined: 19 Mar 2005 Posts: 694 Location: Toronto, Canada

Then what the hell was that business about Canada and Japan having a tax agreement so that you only have to pay it to one country? Is someone posting false information on the intertubes?

jwbhomer · Joined: 14 Dec 2003 Posts: 876 Location: CANADA

Just to clarify the tax treaty situation...
Canada and Japan have a tax treaty but that does not mean that you ignore your Japanese income and taxes paid in Japan when you file your Canadian return. Because of the disparity of levels of taxation -- Canada's income tax is higher than some other countries', lower than others -- you have to declare your Japanese income on your Canadian return. Then you claim a credit for the income tax paid to the Japanese government. Any difference between what you paid in Japan and what you would have paid on the same income in Canada is (effectively) owed to the Canadian government.
There is a form which you attach to your T1 which takes you through the calculation. The CRA also publishes a table of foreign exchange rates to be applied.

craven · Joined: 17 Dec 2004 Posts: 130

I'm not sure that's actually the case...I talked to people at the CRA on different occasions, and was told that if you had not generated any Canadian income during the year, there was no need to file a tax return unless you felt you were owed. Sean McGuinty right on the money in his description of the process. The CRA's website has a self-assessment section where you can determine for yourself whether or not you are a non-resident, and if you need extra assurance, you can call and discuss your situation with them directly.
My first year here I filed a return because during part of the year I had lived and worked in Canada. Thereafter, it was unnecessary.
Keeping large amounts of money in a Canadian Bank Account can cause you some pain...simply maintaining a bank account and credit card will not.

jwbhomer · Joined: 14 Dec 2003 Posts: 876 Location: CANADA

Sorry, Craven, but the rule is clear and it's there in black and white. If you are deemed to be a Canadian resident, you are taxed on your world-wide income. Whether or not you had any income in Canada is not the test.

If you want to take a chance and not file a tax return because you had no Canadian income, go ahead. But when you return to Canada and have to file a tax return when you start working again, don't be surprised if they ask you what happened the year(s) before. The CRA doesn't like gaps in your record!

I should make it clear that I am not an apologist for the CRA. I hate them with a passion. The buggers WILL get you if they can!

vancouver_syndicate · Joined: 09 Sep 2004 Posts: 46 Location: Canada

you should apply for non-residency asap. getting non residency is very subjective and quite often ends up being the call the the agent who handles your case. i've heard of people who maintain bank accounts or whatever and still got non residency and some who got rejected. if you don't get it, call them up and appeal the case or ask them the reasoning and make the changes.

johanne · Joined: 18 Apr 2003 Posts: 189

craven · Joined: 17 Dec 2004 Posts: 130

I didn't mean to imply that you wouldn't be taxed if you were determined to be a Canadian resident...simply that you need not file every year when you are not generating any Canadian income. The Johanne's experience seems to confirm this, as do several of my friends who returned over the past couple of years. As both Johanne and Sean McGuinty have pointed out, this is actually a lot simpler than it's often made out to be.

Definitely don't take a chance...do the assessment yourself, talk to someone at CRA (a couple of someone's if possible), and file or don't file accordingly.
FYI, for those who do hold credit cards/bank accounts in Canada, it definitely helps if you also have accounts HERE in Japan that you can use to prove that you are in fact a non-resident.