Job Discussion Forums

[smedini]

Hey all

Quick question for any fellow canucks in the UAE with property back home. Can someone explain how the withholding tax on the rental income works? Someone told me it's a 25% charge on whatever you get in rent, but that you get it back when you file income tax...is that so? Is there anyone out there who has to work with this?

Thanks

~smedini

[cmp45]

Canadian here;in the process of buying property

If my memory serves me, my accountant as well as the rental agent told me that it is in deed 25% that the gov't will skim off the rent for the first year. Then I believe that gets reduced to 10% there after.
Yes I believe that you would get some of it back when you file incometax.

[anaxiforminges]

Were you able to keep a bank account in Canada and still be deemed non-resident? I can see how you might just let the driver's license expire, but where else would you send the money you earn in the UAE?

How do non-resident Canadians in the UAE manage to save money in a Canadian bank without jeopardizing their tax-free status as non-residents?

[helenl]

You can maintain a bank account if it is used to process expenses and income related to the rental property.

More problematic is ensuring that (a) you have good tenants (b) it is transparently an "arm's length" transaction and (c) make sure the lease is annual with at least 3 months required notice to quit on the anniversary date of the lease - otherwise, if the property is empty, it's deemed available to you and therefore nullifies your non-residency status.

[cmp45]

[quote="anaxiforminges"]Were you able to keep a bank account in Canada and still be deemed non-resident? I can see how you might just let the driver's license expire, but where else would you send the money you earn in the UAE?

How do non-resident Canadians in the UAE manage to save money in a Canadian bank without jeopardizing their tax-free status as non-residents?[/quote

I have been working outside Canada for 9 years now and as a non-resident I have maintained a number of bank accounts in Canada that I transfer money on a regular basis.

As a non-resident you can maintain a bank account in Canada. The problem arises if you are receiving income from sources within Canada while abroad...you will then need to file income tax on that income. The money you make and save from outside Canada does not need to be reported.

Of course any dividends (income) that you make from investments such as stocks and bonds will be taxed unless you put it back into the investment.

I would hang on to all your receipts - bank statements that prove your salary came from outside Canada just to be on the safe side.

I have also kept my drivers licence active as well.

A few years back I asked my accountant, if I should continue to file income tax every year while outside Canada. He said it was not necessary, since I had not earned any income in Canada.

[anaxiforminges]

Thanks for the input! I'll try to find an accountant specializing in non-resident Canadian tax issues to iron out the details. Revenue Canada seems to be particularly prickly about what constitutes non-residency status.

I'm not leaving anything to chance. My only complaint is that advice from such qualified experts is unreasonably high. I'm very tempted to go it alone and save myself the $1500-$2500 that I was quoted recently. Surely not owning a home in Canada would make it much easier, right? I'll sell my car of course, but that's my only other major asset.

[helenl]

I owned property for 2 years, I got out because being a long distance landlord was more trouble than the income I made.

[UAE Canadian]

Compass Tax in Calgary specializes in taxes for expatriate Canadians. I have been a client for a number of years and never met any of the staff in person -- all correspondence has been electronic. I am very happy with their services. For tax questions about owning property, they are the ones to ask .................. I heard about Compass from other expat Canadians who have been dealing with them for many many years.

[anaxiforminges]

UAE Canadian. Would you mind providing an estimate for their services? Did you pay a one-time fee or do you keep paying per services rendered? Thanks in advance.

[UAE Canadian]

The way they charge their fees is the same way that is generally acceptable in all accounting firms -- on a per hour basis according to the time they spend in tax prep. I have 3 properties, all rented, all purchased after I left the country, all purchased at different times. My tax bill last year was less than $1000. (It has never exceeded $1000.00 in any year even when I purchased new property). Of course, this is my file -- yours might be different depending on your needs. When I initially contacted Compass, I had a long conversation by phone and they asked me to write up specific information that they needed for my file. Every year they send a 'tax organizer' document to their clients -- which guides you to collect all receipts and provide them with the info they need for completing your tax return. I return everything and they take care of the rest.

Before dealing with Compass, I dealt with 'big-city' and 'small-town' accountants. Neither had the specialty knowledge that Compass Tax have. I am very pleased with their services.

[anaxiforminges]

Thanks a million, UAE Canadian! I'll definitely get in touch with Compass. They seem to have a very comprehensive website and speedy reply system. When so much is at stake, I don't want to take chances with H & R Block-type of accounting firms.