Korean Job Discussion Forums

[BRawk]

I sent off the form to the Canadain Revenue Agency to be deemed a non-resident. I have a bank account for student loans, a storage space, but those are my only connections to Canada. I have been gone for 4 years.

They wrote me back saying they will be wanting taxes. I am a "factual resident". The reason has nothing to do with my ties. The reason is that I am "not subject to tax on my world income in Korea"!

This means no Canadian in Korea can become a non-resident.

Can this be? Does anyone have any real experience with this and not just something they have heard?

[peppermint]

I was there for four years too. had a bank account, and a drivers licence from Canada that expired about three months after I got back. I was deemed a non resident.

Mind you, I laid my ties to Korea on thick, mentioned things like cell phone and internet contracts, mentioned that all my worldly possessions really were there, clothes, furniture etc, etc Your ties to Korea have to look stronger than your ties to Canada.

[BRawk]

I' m glad to hear that you got it. That makes feel that there is hope.

I did lay all the ties on thick as well. I have vehicles, cell phone, credit cards, etc...

The point they made was that I don't pay taxes in Korea on my world income.

[RJjr]

On the Canadian Revenue Agency form, you should've checked the "South Korea" option for the question, "Which nation's flag do you wear on your backpack?"

Jokes aside, that sucks. I don't know how it works in Canada, but I do know that if Americans renounce their citizenship, they still have to owe whatever amount the Internal Revenue Service has billed them already.

[Hanson]

[RJjr]

[blaseblasphemener]

What is "world income"?

I pay tax on my income in Korea, as a Canadian citizen.

If you are paying tax in Korea, I don't see what the problem is.

[smedini]

I'm sorry and surprised to hear ...

I can't imagine why you were denied...you'll have to go through your application and see, perhaps? I was in Korea for 15 months, came home for a vacay, applied then and was deemed a non-resident retroactive to the day I left. I had a bank account in Canada as well.

Also, as another poster said, you have to really play up your new residential ties....becoming a non-resident in Canada is a two step affair involving cutting ties in Canada (did you leave a spouse or dependents behind? A home that you haven't rented out?) and creating LOTS of new ones in your new country (i.e. bank account, cell phone, p.o.box, bills in your name, your contract, how you love the rolling hills, etc.)

I'm about to do a non-residency appy for the third time and even though I own a home here I don't expect to be denied.

Good luck, OP...there's no reason you shouldn't be accepted as a non-resident

~smedini

[smedini]

And as far as not being subject to taxes in Korea...do you pay them? Does your employer withold taxes from your salary? If so, this should be as easy as producing to the Canadian government proof that you do pay and have paid taxes in Korea...though be warned, if they still say you are a non-resident for some reason or another, you'll still be taxed in Canada - the difference between what you would have paid in Canada based on your income and what you've already paid in Korea.

Here's the link to the lowdown on becoming a non-resident...did you read it before you applied? Lots of hints in amongst the 'legalese':

http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/it221r3-consolid-e.html#P155_30600

[BRawk]

Those are great points. Thanx for the advice.

I have no dependants and no ties other than a storage space and a bank account.

The letter I recieved didn't discuss ties, only that I "didn't pay taxes on world income." By that, I think they mean money I make outside of Korea is not subject to Korean taxes, therefore I must pay Canadian taxes on everything I make.

... But, it is encouraging to hear others have been successful. I think I should reapply, or employ an accountant to reply on my behalf.

[smedini]

[Mea]

This is why I'm not going to fill out that form - they could deny me and chase after me! I don't want them looking for me. I don't plan on living in Canada again for many many years and my only ties are a bank account for students loans and a credit card, and my passport, but I'm still afraid that filling out that form would make them pay more attention to me. I did my taxes for the last year I lived in Canada and cut most of my ties - I'm not gonna worry about it til I move home someday. Why do so many people fill out that form?

[Arthur Dent]

This is very odd. In so far as I am aware, unless you earn money in Canada - through rental property, wages, etc. - or own a licensed and insured vehicle, you are not required to pay taxes. If you pay into Canadian Medicare then your will have to pay taxes. If you have earned dividends through stock or bonds that have been cashed in Canada, this may also constitute Canadian income. There may well be ways to avoid this last.

Otherwise, they have no grounds to tax you. You are not using Canadian services, and your primary residence is not in Canada. I saw a post on here some time ago about this issue, and one person even claimed they had a secondary residence in Canada and still did not pay tax. Not sure how that worked. I guess if it is not being used as income and is a secondary residence there is some kind of loophole.


I seriously doubt that simply owning belongings (couch, table chairs, collection of magazines, toaster or box of sporting equipment) in Canada constitutes a reason to pay tax. However if you are paying for a rental space and have declared that, they could construe this as a form of residency. i.e. paying a rental fee on a property. It seems a little far fetched though.
But don't just take everyone else's word for it. Find a good tax lawyer in Canada and pay a consultancy fee to find out. It may well be worth it.

[Eedoryeong]

Hi

This may prove useful. It quotes several relevant articles that may get you off the hook partially, in case your non-residency status doesn't fly.

My friend who first got me thinking about Korea showed me one of her Revenue Canada letters when I asked her about tax questions. She says she can keep her residency and there are no problems now filing taxes. I plan to follow her example when I file my first Korean income this year.

(I didn't see the original document myself, but she says it's from her notice of objection to assessment)

"Based on the NR74 "Determination of Residency Status (Entering Canada) you were considered a resident of Canada for tax purposes in the 2005 tax year."
(she tried to establish little ties, like you.)

"Pursuant to section 3 of the Income Tax Act (ITA) the resident of Canada is taxable on the world income, regardless of whether the income is from sources inside or outside Canada."

"You have requested a treaty deduction (line 256) under paragraph 110(1)(f) of the ITA. Pursuant to Article 15 of Korea-Canada tax treaty you are a subject to tax in Korea on your Korean employment income. As a resident of Canada you are required to report your Korean income (income from outside Canada) on your 2005 Canadian income tax return."

"In order to avoid double taxation you may qualify to received a foreign tax credit (FTC). Section 126 of the ITA makes the FTC available to a taxpayer who is a resident of Canada at any time in a taxation year. A foreign tax credit is a deduction from the taxpayer's Canadian tax otherwise payable that may be claimed in respect of foreign income or profits tax paid by the taxpayer for the year."

"In order to allow that credit, you must provide proof of foreign tax paid, which must be supported by a statement from the Korean tax authorities. This type of document would include a Korean income tax return, tax certificate, letter of information, or notice of assessment. This document should clearly show that you have paid tax to Korean tax authorities in the 2005 tax year. Please note that the copy of your employment contract you have provided is not a proof of taxes paid in Korea."

You can pick up a statement of global income, in English, from your local branch of the National Tax Service, for each of the four years you worked in Korea. Good luck.

[endo]

^ thanks a lot, I appreciate that post.