Job Discussion Forums

[lyla]

I'm just wondering if there are any Canadian teachers who can tell me what our income tax obligations are if teaching overseas.

Thanks for your help!

[Celeste]

You have to pay!

Actually, if you are going to be out of the country for 2 years or more, you should apply for non-resident's status, and then you are not responsible for paying taxes to the Canadian government for that time. Be aware that not everyone is eligible, and that you may still end up having to pay. BY and large, I would say that most Canadian EFL teachers are eligible for non-resident's status and don't end up having to pay, but it is a good idea to get a jump on the paperwork before you leave.

Check out these links:

http://www.cra-arc.gc.ca/tax/nonresidents/individuals/nonres-e.html

http://www.cra-arc.gc.ca/tax/nonresidents/individuals/temporary-e.html

Clear as mud? Don't worry, this is a much debated topic on these boards. Make sure you get in touch with an accountant who specialises in this area as the rules seem to change regularly, and it can all be a bit confusing if you haven't done it before.

[lyla]

Thanks again Celeste I'll check out those links and get a head start on it!

[Gordon]

The important component of becoming a non-resident is to cut your ties from Canada. For example, a bank account, medical (a biggie), driver's license, spouse, a job, passport (absolutely ludicrous), furniture, real estate, to name a few. You don't have to cut all these ties, but most of them.

I think it is best to apply for non-residency before you go overseas and you probably won't hear the results until you leave.

[mci]

The most important thing is that you cannot have any financial ties in Canada. There is no reason to give up your passport - my God! the country isn't abandoning you and neither are you abandoning it.

No bank account, assets, rental income, investments etc. all of these are revenue Canada alleys to take a bite of your overseas income. The biggest headache, assuming that you don't have to give up assets at home, is getting medical coverage for when you come home to visit - it can be expensive.

mci

[Gordon]

mci,
When I go back to visit for the summer I take out insurance from BCAA. Costs about $800 for a family of 4 for 2 months. Good piece of mind.
I don't think you have to give up all your financial ties, at least I haven't had to do so and I'm a non-rez.
Of course, you don't give up your passport. Canada is the only place that will give us one, but somehow they do count a passport as a tie.

[mci]

Hmmmm, that sounds good - I must admit, I've heard so many different versions of what is good/bad - I was told that you can't have any revenue source at all - ie, rental property, investment dividend or interest, even a bank account with interest or an asset which is appreciating - I was told it was like a red flag going up and if you make 1 dollar in Canada, then the rest of your income from elswhere is automatically added to that dollar, making the whole shabang taxable.

Who knows? my mom also happens to be an accountant and so my accountant by default - she may not be up to speed on all of the nuances in Rev. Can. - who is ??

mci

[Gordon]

[mci]

Rev Can is about as straight -up as a stick in water, I figure, so It's probably better to ask a professional acct. who deals with their ins and outs.

When I left, the most important stipulation was the two year out-of -country detail - maybe my mother was just trying to get rid of me?? Oh, well....she can forget the souvenirs this year!

mci

[schwa]

I posted this info before on another thread but it might be helpful again.

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 from the RevCan site 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

[Scott in Incheon]

Besides cutting your primary ties in Canada, you can also create some ties with your new country.

It has been a long time since i sent in the form but I am sure that there was a place to state ties to your new residence...like joining a teacher organization or getting a driver's lic...things like that. I joined the teacher's union in Hong Kong when I was there to have some new ties to my new home. Don't know in the the end if it will matter much but every little bit helps I think.