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Aoisagi
Joined: 21 Jul 2009
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 Posted: Thu Oct 29, 2009 2:10 pm Post subject: Canadian residence + income tax |
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Hello everyone,
I'll probably be heading to South Korea in February to teach English. I read that if I'm out of Canada for at least 90 days, I'll lose my Canadian residency. Has anyone dealt with this before? If so, how did you go about in renewing or is this a non-issue?
Secondly, would I have to fill out my income tax from January 2010 to the day I leave?
Thanks! |
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bombenhagen
Joined: 21 Jun 2006
Location: NL
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| Posted: Thu Oct 29, 2009 4:59 pm Post subject: |
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| You are going to get several different answers to the residency question and they all will only be half right. You absolutely need to get an official answer to that question, you won't find that here. Search through this board and you'll get an idea of how many different opinions there are about this. Not much of a help I know, sry. |
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some waygug-in
Joined: 25 Jan 2003
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| Posted: Thu Oct 29, 2009 7:01 pm Post subject: |
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You do not lose your Canadian residency, in fact you have to apply to get non-residency status.
If you plan on returning to Canada, you should expect to pay tax on your foreign earnings.
If you are leaving Canada and not returning, that is where the fun comes in because the rules are so conveluted and vague that it's not really clear.
If you do apply for non-residency, I've read the best thing to do is close all Canadian bank accounts, cancel all Canadian credit cards, memberships, hospitalization, licences etc.
http://wiki.galbijim.com/Tax_issues_for_Canadian_expats |
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Big Mac
Joined: 17 Sep 2005
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| Posted: Thu Oct 29, 2009 7:21 pm Post subject: |
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You can't really apply for non-residency...all you can do is ask Revenue Canada for their OPINION of your residency status. Depending on what you put on the form, they may say that they think you are a factual resident or a non-resident. But their opinion is non-binding and kind of pointless. That form is called NR73. Do a search on Google for it.
Basically, if you own property or have children living in Canada you will have to pay tax.
If you don't have those things, then as long as you keep your ties to Canada to a minimum (ie. bank accounts, credit cards, etc...try not to go over three ties) then no one is going to make you pay tax on your foreign earnings, unless you want to.
You should file a tax return every year though. If you made earnings in Canada in 2009, then file a tax return for that tax year for ONLY YOUR CANADIAN EARNINGS. If you stay in Korea for an entire tax year and have no Canadian earnings, then file a tax return for that year with "0" in all the boxes. I have been doing that for several years now and I've never had a problem. Make sure you send your tax return to the International Tax Office in Ottawa, not the one you would normally send it to.
Also, call Revenue Canada and change your address to your Korean one. That way they won't be able to claim that you have been using a Canadian address and count that as a tie if they ever do an assessment on you.
I wouldn't worry about losing your Canadian residency. It's only important for tax purposes. In fact, it's much better for you if you are considered a non-resident. You will still be a Canadian citizen and have all the rights of a Canadian should you ever return. |
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The Lemon
Joined: 11 Jan 2003
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| Posted: Mon Nov 02, 2009 9:20 am Post subject: |
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| bombenhagen wrote: |
| You are going to get several different answers to the residency question and they all will only be half right. |
The responses after yours prove you right on the first count. But I disagree about "all" being "Half right" - one of them might be all right. But with so many opinions, how can one tell which one is correct?
The answer, I believe, is researching credible sources (ie Canadian government documents), looking at your own situation, and determining how it applies to you. Assuming you have a high enough reading comprehension level - and if you don't, what business do you have claiming to be an English teacher? - that should put you on the path towards truth.
Big Mac's post is full of useful points, though I don't think there's any magic number of secondary ties (he cites three) that turn you from good to bad.
Some Waygug-in: "in fact you have to apply to get non-residency status." No, in fact you do not. In fact in fact, you can't. Big Mac has it right about the NR73.
Aoisagi: "I read that if I'm out of Canada for at least 90 days, I'll lose my Canadian residency." I don't think you read this anywhere authoritative. It is not true. Do you think all those snowbirds who winter in Florida lose their Canadian residency?
Frankly, I think the tax treaty covers Canadians working in Korea.
http://www.fin.gc.ca/treaties-conventions/Korea_2-eng.asp
Here's Article 15, my personal favourite. It comes after a long discussion of what a "resident" is, but is not nearly as complicated as the primary/secondary ties regime:
Article 15
Dependent Personal Services
1. Subject to the provisions of Articles 16, 18, and 19, salaries, wages and other remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the calendar year concerned; and
(b) the remuneration is paid by, or on behalf of, a person who is not a resident of the other State; and
(c) the remuneration is not borne by a permanent establishment or a fixed base that the person has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable only in that State unless the remuneration is derived by a resident of the other Contracting State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the calendar year concerned, and
(b) the remuneration is paid by, or on behalf of, a person who is not a resident of the other State, and such remuneration is not borne by a permanent establishment or a fixed base which the person has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft, operated in international traffic by an enterprise of a Contracting State, shall be taxable only in that State unless the remuneration is derived by a resident of the other Contracting State. |
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youtuber
Joined: 13 Sep 2009
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| Posted: Mon Nov 02, 2009 9:52 am Post subject: |
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| Big Mac wrote: |
You can't really apply for non-residency...all you can do is ask Revenue Canada for their OPINION of your residency status. Depending on what you put on the form, they may say that they think you are a factual resident or a non-resident. But their opinion is non-binding and kind of pointless. That form is called NR73. Do a search on Google for it.
Basically, if you own property or have children living in Canada you will have to pay tax.
If you don't have those things, then as long as you keep your ties to Canada to a minimum (ie. bank accounts, credit cards, etc...try not to go over three ties) then no one is going to make you pay tax on your foreign earnings, unless you want to.
You should file a tax return every year though. If you made earnings in Canada in 2009, then file a tax return for that tax year for ONLY YOUR CANADIAN EARNINGS. If you stay in Korea for an entire tax year and have no Canadian earnings, then file a tax return for that year with "0" in all the boxes. I have been doing that for several years now and I've never had a problem. Make sure you send your tax return to the International Tax Office in Ottawa, not the one you would normally send it to.
Also, call Revenue Canada and change your address to your Korean one. That way they won't be able to claim that you have been using a Canadian address and count that as a tie if they ever do an assessment on you.
I wouldn't worry about losing your Canadian residency. It's only important for tax purposes. In fact, it's much better for you if you are considered a non-resident. You will still be a Canadian citizen and have all the rights of a Canadian should you ever return. |
Yup I think this is sound advice. The reason you will get so many different answers is because the friggin Revenue Canada agents don't even know. My dad's accountant didn't even know. I was getting inconsistent answers from different agents. What a gong show.
I wouldn't fill out that non-residency application. It is not required. And if they say you are considered a resident, well, you are hooped I guess.
Filing tax returns is not required either, since you are a non-resident and have no taxable income.
Basically, as I understand it:
Resident of Canada - has a house in Canada, wife, children, car, or loans
Non-resident - none of the above
Student loans are a tie to Canada. So is healthcare. But since those are unavoidable, you need to minimize the rest.
And establish as many ties as you can in Korea. The ties that you need in Korea are the same ones that you want to sever in Canada.
So in Korea, it would be best if you: bought a house, got married, buy a car, take out some loans. Those are kind of the big ones. You can also get a credit card, gym memberships, health insurance (NHI) ect. |
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Draz
Joined: 27 Jun 2007
Location: Land of Morning Clam
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| Posted: Mon Nov 02, 2009 6:34 pm Post subject: |
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| youtuber wrote: |
Student loans are a tie to Canada. So is healthcare. But since those are unavoidable, you need to minimize the rest. |
I was under the impression that ONLY RESIDENTS can claim health care. It goes by province too, so you must be a resident of Alberta for Albertan health care, resident of Saskatchewan for that plan, etc.
The Saskatchewan government wouldn't even let me renew my driver's license last year without signing a form saying that I am a resident. (I didn't do it.) They are cracking down on tax dodgers. |
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youtuber
Joined: 13 Sep 2009
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| Posted: Mon Nov 02, 2009 10:18 pm Post subject: |
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Healthcare is considered a tie to Canada. However, THERE IS NO WAY IN HELL THAT YOU SHOULD CANCEL YOUR HEALTH CARE.
I did cancel my health care for my first year, but looking back now I see how foolish that was.
Korea's national health insurance is totally insufficient on its own. The best course of action is to buy emergency travel insurance in addition to having the national insurance (NHI) while you live here. But you can only buy travel insurance in Canada if you have provincial health coverage.
It is much more important to choose your health over saving a few bucks in taxes. If you get seriously sick in Korea, you can always fly home (by medivac if need be). If you cancel your provincial health insurance, you are stuck in Korea with thousands in medical bills.
Get rid of the major ties (house, loans, ect) but keep your healthcare.
It sounds like a judge would make the final determination. If you have lots of primary ties you are a resident. If you have severed most primary and secondary ties, but have healthcare, it would appear that you would be a non-resident. |
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