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jeonju jett
Joined: 27 Oct 2004
Location: jeonju
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 Posted: Tue Nov 09, 2004 9:28 am Post subject: For Canadians: Income Tax while teaching in Korea |
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| Hi there, Im just wondering what other Canadians are doing about income tax from Canada while in Korea. Do you claim non-resident status, declare your Korean income, something different? I heard of some teachers who had been here for 3 months and got taxed 1500$CAD...imagine the whole year......thanks! |
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Grotto
Joined: 21 Mar 2004
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| Posted: Tue Nov 09, 2004 2:22 pm Post subject: |
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| Declare non resident status. Then you only have to pay Korean income tax 3% VS 40% |
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goombs
Joined: 08 Sep 2004
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| Posted: Tue Nov 09, 2004 6:10 pm Post subject: |
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| But what if you fill out the form for non-residency and they decide that you do not qualify? Then what would you do? Wouldn't that sort of flag you in a way?? |
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No L
Joined: 17 May 2004
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| Posted: Tue Nov 09, 2004 7:52 pm Post subject: |
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Advice depends on how long you're going to be in Korea. If you're here from only 3 months (or anything less than a year), call it a holiday and hope the Revenue Canada doesn't find out because you won't get non-resident status for that short of time and you'll have to pay CDN tax on your Korean income.
For longer stays, you can be declared a non-resident and not pay any CDN taxes. You don't even have to file a return unless you are making money in Canada (e.g. interest on investments.) To be declared a non-resident, you can fill out form NR-73 (available on the tax website), but I wouldn't recommend it. It's an unnecessary step. Make sure you change your address on everything bank accounts, tax office, health insurance, etc. Personally, I changed my tax address when I filed the previous years' tax return and that was all it took to get me declared a non-resident.
Being declared a non-resident in Canada is done on a case by case basis, so no one can give you an exact answer for your situation. It's stupid and makes me envious of the clearcut American version. Even, Revenue Canada calls their evaluation of the NR-73 form "an opinion". |
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CanadaCommando
Joined: 13 Feb 2004
Location: People's Republic of C.C.
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| Posted: Tue Nov 09, 2004 8:17 pm Post subject: |
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| Theres a large posting on this in the FAQ section, including what my accountant told me. Check it out if interested. |
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prairieboy
Joined: 14 Sep 2003
Location: The batcave.
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| Posted: Wed Nov 10, 2004 1:32 am Post subject: |
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| goombs wrote: |
| But what if you fill out the form for non-residency and they decide that you do not qualify? Then what would you do? Wouldn't that sort of flag you in a way?? |
It's Canada. Appeal it. However, if they still decide you are a resident for tax purposes then you'll likely have to pay...unless you are allowed more than one appeal.
That information should be on the letter they send you when they've made their decision.
Cheers |
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JAMZ
Joined: 18 May 2004
Location: Ori Station, Bundang
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| Posted: Wed Nov 10, 2004 1:48 am Post subject: |
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| ok i've got what might be a stupid question... how are they gonna know how much money you made in korea in the first place?? im on a 6 month so i've always assumed i'll be paying taxes... but one thing i've always wondered is how is revenue canada gonna know what my total income was if my hagwon doesnt issue me a T4 or the korean equivalent??? |
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mindmetoo
Joined: 02 Feb 2004
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| Posted: Wed Nov 10, 2004 3:22 am Post subject: |
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| JAMZ wrote: |
| ok i've got what might be a stupid question... how are they gonna know how much money you made in korea in the first place?? im on a 6 month so i've always assumed i'll be paying taxes... but one thing i've always wondered is how is revenue canada gonna know what my total income was if my hagwon doesnt issue me a T4 or the korean equivalent??? |
Rev Can has no idea. Rev Can only knows about you via your T-slips. People drop off the tax radar all the time: they shack up with a rich bf/gf, they save a lot of money and bum around for a year. Further earning 10K in your last year of university and then earning no income the next year isn't going to red flag you. Earning 60K for five years and then earning 0K while you're filing a tax return to get your GST refund will red flag you.
Also note, you don't have to file a return if you don't owe tax. You only have to file if you owe tax. If you make under $7,000 or whatever it is these days then you don't have to pay tax and you don't have to file.
How does Canada even know you're in Korea? Unless you send them a change of addy, they won't know. Rev Can falls under the auspices of immigration and they could maybe connect the dots when you return and get a "returning Canadian" stamp in your passport. (If you're here for 6 months, as far as they are concerned, you were shacking up with your sweet Korean GF who you met over the Internet...)
Alternatively if you register with the Canadian embassy and indicate you're a teacher, they might know. When you return to Canada they will ask you if you're bringing in $10,000+ in cash. If you say yes you might be subject to tax. If you say no, you won't be. So don't try to move your money home in blocks over $9999.99.
You are a deemed resident and subject to tax if you have significant ties back in Canada. Rev Can is a little obscure in this, suggesting things like credit cards, bank accounts, a $500 bond, etc are significant ties. However in practice if you have a home or dependants (wife/kids) in Canada, you're instant deemed resident. If you try to use your health card, you're toast. If you try to renew your drivers license, you might be in trouble. Anything else, you're golden.
Unless you're super paranoid, don't even fill out the non resident form. That's probably the worst thing you can do, in fact. Some low level pencil pusher might decide you're having too much fun banging exotic Korean hoo hoo while the only thing he's been in is a puddle of slush and you should pay.
So let them figure it out.
Some people get paranoid about having a bank account, credit cards, rrsps, etc. but I say don't worry about it. I've lived outside of Canada for 5+ years, had rrsps and semi active Canadian credit cards/bank accounts in Canada and never filed a return. I never heard a peep out of them. Rev Can was even aware I was living in America for 4 years and never even so much as sent me a letter wondering why I haven't filed.
So in sum. Do nothing. Declare nothing. Mail Rev Can nothing. Move your money back to Canada in blocks under 10K. You're good to go (unless you own a house/kids back home). |
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schwa
Joined: 18 Jan 2003
Location: Yap
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| Posted: Wed Nov 10, 2004 3:30 am Post subject: |
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They are wise to the number of new graduates heading over for a year. 'Vacation' probably aint gonna cut it -- fair chance you'll be flagged & theyre quite capable of estimating your income & charging accordingly. Be aware, short-termers.
Exceed a year (2 is surer) with minimal ties & youre sailing. No forms required. |
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sistersarah
Joined: 03 Jan 2004
Location: hiding out
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| Posted: Wed Nov 10, 2004 4:00 am Post subject: |
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| Quote: |
| Exceed a year (2 is surer) with minimal ties & youre sailing. No forms required. |
why is this? sorry, i'm slow about these things. |
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schwa
Joined: 18 Jan 2003
Location: Yap
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| Posted: Wed Nov 10, 2004 4:07 am Post subject: |
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| Qualification for nonresident status is automatic once you meet their (vague) requirements. |
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JAMZ
Joined: 18 May 2004
Location: Ori Station, Bundang
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| Posted: Wed Nov 10, 2004 4:28 am Post subject: |
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| ok im pretty sure i wont qualify for non-resident status... but my boss is doing direct deposit for my pay straight into my canadian bank account from a business account in the US... even though im not getting a T slip couldnt they assume that this money being deposited is my earnings from working here?? i mean i have an E-2 visa so its pretty obvious im working over here |
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cdnguy
Joined: 07 Apr 2004
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| Posted: Wed Nov 10, 2004 4:43 am Post subject: Tax |
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For those Canucks looking to pull a fast one on our Gov, we are all aware how inefficient our bureaucracy is so maybe your con will go undetected. However, for everyones info, Canada and Korea have a international tax aggreement and that is how they will find out how much you made.
Cheers, |
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paperbag princess
Joined: 07 Mar 2004
Location: veggie hell
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| Posted: Wed Nov 10, 2004 6:51 pm Post subject: |
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| that's assuming that your place of work actually declares your taxes properly. i figure that my "taxes" have been going into the make my boss even richer category, so i'm not too worried about my tax forms. |
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mindmetoo
Joined: 02 Feb 2004
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| Posted: Wed Nov 10, 2004 9:15 pm Post subject: Re: Tax |
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| cdnguy wrote: |
For those Canucks looking to pull a fast one on our Gov, we are all aware how inefficient our bureaucracy is so maybe your con will go undetected. However, for everyones info, Canada and Korea have a international tax aggreement and that is how they will find out how much you made.
Cheers, |
An international tax agreement means governments agree their citizens are not taxed twice. If you make $30,000 in Korea and you've paid $1,000 in income tax to Korea and the Canadian government says "if you made $30,000 in Canada you'd owe $5,000 but since you already paid $1,000 to the Korean government we will only demand $4,000."
An international tax agreement doesn't mean the Korean government automatically transmits what Canadian citizens are earning in Korea. |
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