Job Discussion Forums

[Socrates]

All right,
this is my very first post here. I'm currenty studyng taxation at a reputable Canadian business school, I hate it, and I want to move to Japan for 5 years to teach English and eat real sushi every day. Here are the clarifications (taken from the tax act, 2004)

1) An income shall be paid as required by this act on the taxable income for each taxation year of every person resident in Canada at any time in the year.

2) The scope of income taxation on a resident of Canada in wordlwide.

3)Canada has a reciprocal tax agreement with Japan to avoid double taxation.

4) A person is deemed to be resident in Canada throughtout the taxation year if he or she sojourned in Canada in the year for an aggregate of 183 days or more. Spending less than 183 days in Canada does not necessairly make an individual a non-resident if ceratin ties are there.

5) Generally, an individual will be either a full-time resident of Canada, or a non-resident. A full-time residnet is taxable on worldwide income. A non-resident is taxable in Canada only on Canadian-source income.

6) A person can become a non-resident partway though the year; the 2-year rule is bogus and misleading.

7) Things to consider when determining residence (as used by the CRA (based on IT 221 1R3)

Significant Residnetial ties:
-dwelling place
-spouse or common-law parnter
-dependants

Secondary Residential Ties:
-personal property in Canada
-social ties with Canada
-economic ties with canada
-hospitalization and medical coverage form Canada
-driver's licence from Canada
-canadian passport
-memebership in a Canadian union or professional organization

Tertiary Ties:
-retention of a Canadial mailing adress
-Canadian post box
-Canadian safety deposit box
-personal stationery or business cards showing Canadian address
-telephone listing in Canada

what this all means is that residency is a touchy issue, and there is some personal judgement involved. I would suggest you sever your primary and secondary ties, and apply for the status using the necessary forms. It will be up to the CRA to actually recognize you as a resident or not. Good luck with it.

Now a question to all - is there a high demand for teachers who teach Business English? I am one such teacher; I would appreciate the names of any organizations that cater to this group.

Cheers, Socrates

[canuck]

Excellent information and it's consistent with what I've been saying. Six ties or less of the above mentioned.

Most anyone over here can teach business English. Do you have a degree yet? You'll need a visa. Depending on how far you're at with school, grind it out, then come over here.

[Willy_In_Japan]

[Socrates]

Hey,
I'm in my 4th year, and will get my BBA at the end of the next school semester.

To answer the other question:

If the individual is a full-time resident under common law, he or she will pay Canadian tax on worldwide income for the full year.

If the individual is deemed to be a resident (this deeming business is where the problem's at), he or she will pay Canadian tax on worldwide income for the full year.

If an individual was a resident for part of the year, he or she will pay Canadian tax on worldwide income for the part of the year while they were a resident of Canada.

---all of the above are subject to tax treaties with countries Canada has treaties with (to prevent double taxation).

Finally, if a person is a non-resident, they will pay taxes only on canadian-source income. If they earned no Canadian-sourced income, then they are not subject to Canadian taxes.


It seems to me that in your case, if you've been deemed a part-time resident, you will pay taxes on the world-wide income you've made during that time. The income you've made when not a resident should not be taxed in Canada. However, if you've been deemed a full-time resident of Canada, you will pay taxes on all the income you've made, regardless where you've made it (keep in mind that there are tax treaties with Japan which will limit the amount of taxes you will pay (something around a 20% tax rate runs around my head; I'm too tired to go looking for it in the tax act)).

Hope this helps.

Cheers, Socrates

[Socrates]

Oh yeah,
as well, my interpretation of the 183 day rule is as follows:

If a person comes from another country to canada for 183 days or more, they will be deemed a resident (think of american businessmen conducting business in canada). But, if a person who is a full-time resident breaks residential, spousal and other ties with Canada and moves elsewhere, they will be deemed a part-time resident only for the time they spent in Canada before the move. Hence, the 183 day rule is mostly applied to people coming to Canada to work, and not leaving from Canada to work someplace else.

I will not bet my life on this interpretation, but I'm fairly confident that this is how it is.

Cheers, Socrates

[Willy_In_Japan]

Thanks Socrates........that makes sense. So, in your opinion, should I seek a refund from HR Block for making this mistake?

They told me that I had been in the country for mor than 183 days, so I was liable on world wide income for the full year. As I have stated before, the CCRS seem to be saying both things, and none too clearly. It was clear to HR that I no longer was a resident. I had left the country and broken a lot of ties. I still have a bank account and credit cards because I owed money on them, but had little else.

I thought it sucked that they would tax me for the whole year on my Japanese income too and then have the gall to deny me GST credit and the ability to deduct my rental payments in Japan which is what I would get in Canada.

[canuck]

Why would you be able to deduct your rental payments?

[Willy_In_Japan]

[Socrates]

Was it the Hr people who ended up making the mistake and made you pay tax on the full amount, yet considered you a part-time resident, or was it the government? If the gorvernemtn is fine with you being a part-time resident, then yell loudly and clearly at Hr, demand your money back, call them incompetent idiots and ask for free tax returns for the next 5 years. If it's the goverenment, then you might have problems - they are very bureaucratic in that respect. You might want to challange them, but get to know why you should be considered a part-time resident precisely. To me, it seems like you've broken most ties with Canada, and are therefore a part-time resident.

I'll get back to you with the rent issue.

Cheers, socrates

[Willy_In_Japan]

Yes, the HR people told me when I had them do my taxes in April 2003, that I had been a resident of Canada for more than 183 days, therefore I was a resident for the full year and had to pay taxes on 'Worldwide income'.

They said they 'checked it out'. I of course thought that stunk. The tax return was submitted to Revenue Canada and my Japanese 'T4"s too.....it was noted on my tax return that I ceased to be a resident on October 26, 2002. They put it through.

It has been an irritant ever since. I will find the charge for HR block on my visa and demand a refund. No need to demand free tax return services, as I no longer need to file Canadian taxes. I do feel that paying approximately 100 dollars to have them make a 1500 dollar mistake really is quite bad.

On the other hand, I can see how it would be easy to misinterpret that 183 day rule. I was pissed off that it seemed that they tried to stack the deck in their favour whenver possible.

Regarding the rent issue. I am not upset that you cant claim rent paid in Japan. I was just illustrating, that it seemed to really be unfair that they would make you pay tax on 'world wide income' because you were in the country more than 183 days, but you couldnt claim GST or Rental fees because you were a 'non resident'........obviously, having to pay Canadian taxes on world wide income only up until the time you cease to be a resident is the fair way to do it.

I think I will complain to HR Block and ask for a refund. Costing me close to 1500 dollars is no small mistake.

[zander7990]

i moved here in dec 2003 but didnt declare for non residency. i dont plan on going back for quite some time. and my ties are under 6. no property or anything like that. just a bank acct and visa card. DL, and my bc medical will expire this april when tax time comes. do i need to declare or am i recognized as a non resident when i return? i also didnt make any income for that year of 2003 in canada. and if i do declare, can i back date it to the day i left canada?

[Gordon]

I would apply now and then you will know what your status is. It should start when you left Canada, not now.