Job Discussion Forums

[jen]

I hear that I have to pay taxes in Canada when I go to Japan because Japan's tax rate is lower than ours. Now, do I HAVE to say that I'm overseas working? Can I just say I'm travelling[for a long time]? Also, can I claim only a small portion of my earnings, eg say I was a contract worker? I have very little intention of paying these taxes to a country in which I won't be living but I'm just curious as to how the can gov't can find out the truth - or can they? Mwah ha ha...
Anyone know anything about this?

[Celeste]

do I HAVE to say that I'm overseas working? Can I just say I'm travelling[for a long time]?

You can lie to the tax man, but you won't be able to bring any of your money home with you then. Who really wants to get audited? I suppose there is no way for them to find out the truth, but if you are going to be away from Canada for 2 years or more, then just have an accountant do the paperwork to apply for non-residents status. To do this you do need to jump through a few hoops, but it is the only legal way to not pay taxes to the true North. I know that many people do the non-resident application themselves. (If you don't own much, it's easy, but if you have real estate, investments, or dependants back in Canada, it gets more complicated). Good luck to you.

[matko]

Also, if you have no property, storage or tangible links to Canada other than a bank account and credit card AND you stay out of the country for mare than 2 years you are automatically considered a non resident for tax purposes.

[Celeste]

You still have to fill out the application form and wait for them to approve it or not. Granted, if you have no ties as you described, then approval is almost 100% guaranteed. If you don't fill out the forms, and just don't file taxes, you could get audited.

[Sunpower]

I have heard what the others have posted also.

However, after saying that, don't take our word for it alone.

Go and talk to an accountant personally.

Again, it would be in your best interest to talk to an accountant the next time you go back to Canada.

Or you could do a search on the internet and send an accountant an e-mail - Explain your situation and see what they have to say in terms of taxation advice.

There are no hard and fast rules to this. And there are exceptions and appeals and grey areas when it comes to Canadians working abroad and paying taxes.

So, talk to an accountant - everyone has a somewhat different and unique personal situation, financially, etc.

[Justin Matthews]

It was my impression there you have to pay tax in Japan, and then again in your home country.

[GambateBingBangBOOM]

Depending on assets and maybe income etc, I thought you just enter the amount of foreign earned income, and then later write "tax treaty" on a certain line (next to the non-taxable income line) and subtract everything you earn in Japan (maybe up to a certain point, I don't know, I'm not exactly rich). You have to give them proof that you are actually working in Japan (I just photocopied my contract and had a letter from my employer). I didn't have any problems.

You do have to pay tax on everything you earned in Canada during the year (and do the normal subtractions if you were a student).

I say I didn't have any problems, but in fact I'm not very good at doing this kind of thing, and so I had a tax programme to help me with all my non-Japanese earned income, had very detailed instructions available online from JET related websites (I think the JETAA Toronto page) telling me what to do with the Japanese income, and it still took a few full days to do because of having to find, and print out all the required forms. For some reason I was unable to get a hold of a paper application with a ll the forms I needed, and the computer programme couldn't handle the out of country income (or probably more accurately, it could but I couldn't handle the programme) so I ended up filling in the information by hand, just copying directly from the computer programme for the Canadian income part and adding in the Japanese part (a few numbers end up changing a bit because you ahve to add some stuff, and then subtract it again etc), and finding the forms I needed as instructed by the paper tax forms. I didn't have other stuff to "write off" though, and I'm sure an accountant could have gotten me a far more beneficial tax return (but I didn't have to pay anything, so I don't really care).

At least this year all of my income is Japan based so it should be a lot easier (plus I have a photocopy of the last time so I have at least a clue as to what to expect).

[JimDunlop2]

In the eyes of the Canadian gov't I've become a "non-resident." I.e. one who has renounced all ties (except citizenship) to Canada. That means, when I left Canada, I closed most of my bank accounts, stopped contributing to my RRSP, sold my property (as in real estate) cancelled my Alberta Health Care, closed my business (returned my GST number) and esentially met the basic requirement of living outside the country for 6months+1day.

In short, I don't owe Canada anything! Now, if I were to return to Canada, that becomes a whole different issue. Then, they can try to recover earnings from abroad (that is my understanding) so talk to an accountant that has experience with ex-pat returnees and their holdings.

Now, I would never advocate that anyone break the law... But I have one word for you. Off-shore. They can't touch what they can't get and what they have no information on. There are some wonderful ways to stash your money in secure foreign banks that will not honor another government's requests for divulging info.

Then again, I'm not planning on returning to Canada for a long time. To visit -- at some point... To live... probably never again.

Good luck!

[Gordon]

Jim
Any places or info on offshore accounts. I'd be interested, you can PM me if you'd like to keep it a secret.
I'm also a non-resident Cdn and don't think I will have to pay anything when I do eventually return since I easily have met the requirements and will be away for a number of years.

[Willy_In_Japan]

My understanding is that unless you are a non resident for tax purposes, you have to pay Canadian taxes on world wide income.

If for example, say you have to pay 1,000 dollars taxes in Japan, but the same level of income would cause you to pay say 5,000 dollars in taxes in Canada, you have to file a tax return, indicate that you paid 1000 in tax in Japan and then they subtract the japanese taxes paid, and hit you with a 4,000 dollar bill.

Of course, the way around this is to be a non resident for tax purposes. They determine this by how many ties you have to Canada. Too many ties, and you are a resident for tax purposes even if you don't live in Canada. This really sucks in my opinion.

You also have to be away from the country for 2 years in order to be considered a non resident. So, if you stay in Japan for 1 year and 11 months,.......be prepared for approximately 10,000 dollars in a tax bill.
Go to Thailand, or anything! Just don't move back home before the 2 years is up.

You can be assured that you have non residency by filling out the application, but it is not totally necessary. It helps to know for sure, but if you have very few ties, and have been out of the country for 2 years or more, you should be fine. Of course, when you go back to Canada, you will start paying taxes again. I intend to go home in January or February of whatever year I decide to go back.

I came to Japan at the end of October .......I had to pay Canadian taxes on my Japanese income for November and December, because I was a resident of Canada for most of that year, despite the fact that I planned to be out of the country for more than 2 years and not have any ties. Of course, I wasn't allowed to claim the GST credit, (because I wasn't a resident) and I wasn't allowed to claim my Japanese rent (because I wasn't a resident) but I got to pay Canadian taxes on my Japanese income.

I am not a whiner against taxes, but heck, if I am not in the country, what gives?

To answer the question of the person thinking of trying to hide their income.......Japan has a tax treaty with Canada and share information that way. If you work in Japan, as a Canadian, the Japanese government will tell Canada, and vice versa.

It really isn't worth working in Japan for a year, if all your savings get eaten up in a big tax bill handed to you when you come back.

I know a girl who spent a year in Japan, and had to pay 5,000 dollars when she came back. I think that was about what she had saved.

[JimDunlop2]

Gordon: sure. If you like, I can hook you up with an investment agent in Tokyo. He's a super-nice guy and can give you some solid info. (He's also a Canadian ex-pat, incidentally) and I think, like me, he's not going home any time soon either...

I'll PM you the details in the next few days, as well as some of the other info I've scrounged... I hope I can find it all.

As an aside -- yeah, I made sure to fulfil all my non-residency requirements... Which even meant not voting in the last federal election. (I still strongly disagree with that though). I didn't fill out the forms but I also know I'm OK -- the government recently sent me a letter denying me my GST refund, stating that I "did not meet the residency requirement." Which is just FINE by me.

JD

[Mike L.]

As a resident of Japan you are liable for tax in japan only. Canada and Japan have a reciprocal tax treaty!

As long as you don't owe the Canadian government any money you don't even have to file!

I registered myself officially as a non-resident a few years back for business reasons.

I have plenty of "connections" back home too! I'm only liable for taxes on interest / proffit generating investments!

Every few months this question comes up and people jump on proposing the insane "Double taxation."

How does one pay taxes in a country they don't reside and where they're not entitled to any social services?

Call the international tax office, even your local one can help, read the Rev. can site! Fill in the form (PDF), mail it off and your set.

good luck!

[grace]

Oh my God!!!!!! You folks have me so worried now!!!!! I arrived in
Japan on 21st July 2003 and will be returning home on 29thNovember
2004. I've been away from Canada for 16 months and have saved a bit
over $11, 000. The only ties I have in Canada is my bank account which
my mom used to deposit money I sent her to pay off my student loan, which I've paid off completely. What do you make of my case?????

[Gordon]

[Willy_In_Japan]

Heck, I think an 8 month back packing trip would cost less than what you are going to be hit with in taxes.

Less than 2 years away and you pay Canadian taxes on Japanese income.