Korean Job Discussion Forums

[Forbsey]

I hope this isn't repetative but I've been hearing mixed responses about the taxes that I'll be paying over there (I'm leaving in 2 weeks). My friend over here (who is also going over) says she talked to an accountant and that he told her that foreign teachers still pay the same amount of taxes off their cheques in Korea as they would in Cananda. He basically stated that unless you become an emigrant, foreign teachers pay taxes to both Korea and Canada. Is this true???? If so how much do Canadian teachers end up paying in taxes each month?? I'm so confused on this point that I'm hoping to appeal to you veterans for some help.

[peppermint]

They won't deduct Canada's taxes and Korea's taxes each month, that's for sure. You pay Korean taxes while you're here, and if you're unlucky, you get dinged for Canadian taxes (minus the amount you paid for Korean taxes) when you return. ( I think)

[prairieboy]

Yup.

You could have to pay taxes when you return to Canada. But if you have stayed in Korea for at least a year, the likelihood of that is low...you'd have to have done something really messed up (like investments earning Canadian income or owning a home) to get dinged.

It's basically a crap shoot however, you can fill out the NR-73 form from CCRA and they will evaluate whether you would be considered a resident of Canada for taxes. This is just an opinion based on the information you provide so if you provide false information and they find out, you'd likely have to pay taxes when you return less what you've paid in Korea (be sure to get your pay stubs and certificate of taxes paid before you leave Korea).

Cheers

[Hanson]

What's all this, now?

As far as I knew, if you are declared a non-resident of Canada for more than 2 years, you are not going to be asked to pay taxes on ANY of your income. If, on the other hand, you spend less than two years as a non-resident, income is taxable by Rev.Can. minus the taxes already paid into the Korean system.

Please, someone, tell me I'm right about this.

[mindmetoo]

Isn't there some kind of sticky on this?

Non-residents

You're a non-resident for tax purposes if you:

* normally, customarily, or routinely live in another country and aren't considered a resident of Canada; or
* don't have residential ties in Canada; and
o you live outside Canada throughout the tax year; or
o you stay in Canada for less than 183 days in the tax year.

So, technically money you earn in Korea from now until Dec 31, 2005, is subject to Canadian tax. For the 2006 tax year, you won't have to pay tax on your Korean income. The key is "residential ties". If the government decides you do, in fact, have residential ties, you are a "deemed resident" even if you are factually non-resident. There is a lot of debate as to what residential ties constitute. The biggies are having the following still in Canada: a home you own, dependents (children/wife), using your healthcard, renewing your drivers license/plates.

In the 5 years I've lived abroad, I've had semi active Canadian credit cards, bank accounts, and an RRSP. The government has been aware of my factual non-resident status and has never demanded I file or audited me.

There is no two year rule. It's about being a factual non-resident during the tax year, the amount of time you spend outside of Canada, and your ties.

[denverdeath]

From:

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

Non-residents

You're a non-resident for tax purposes if you:

normally, customarily, or routinely live in another country and aren't considered a resident of Canada; or
don't have residential ties in Canada; and
you live outside Canada throughout the tax year; or
you stay in Canada for less than 183 days in the tax year.

Deemed residents

You're a deemed resident for tax purposes for the entire tax year if you:

stay in Canada for 183 days or more in that tax year;
don't have residential ties with Canada; and
aren't considered a resident of another country under the terms of a tax treaty.

What are residential ties?

Residential ties include:

a home in Canada
a spouse or common-law partner (see the definition in the General Income Tax and Benefit Guide) and dependants in Canada
personal property in Canada, such as a car or furniture
social ties in Canada.

Other ties that may be relevant include:

a Canadian driver's licence
a Canadian bank account or credit cards
health insurance with a Canadian province or territory.

Mindmetoo is right. If anything, you'll be responsible for claiming only your December earnings in Korea if you file for 2005. When you file in 2007 for your 2006 earnings, primarily in Korea, fill out the non-resident form and you will be deemed as a non-resident as long as you don't have to check too many of the things on the list. The first three above are the big ones and I think are referred to as primary ties, most of the others are referred to as secondary. If you want to be certain, sell your car if you have one and dump a credit card if you have more than one. Bank accounts? What about if you want to pay off a student loan? Health insurance? Your province will most likely cancel your medicare benefits soon after you leave Canada anyway...they do in NB. I think some of the stuff on the list is foolish, like the driver's license. I still have mine and have had it renewed twice. When I'm home, I may borrow a car or rent one. I know driving's a privilege not a right, but kee-rist. What the hell are "social ties?" They say something about group membership or being a member of a church, but I would hope that you're still allowed to call friends and family at Christmastime. That accountant your friend talked to sounds like he doesn't what he's talking about. I talked with a CA friend of mine before leaving and he immediately deemed me as a non-resident after asking only a few important questions and he was right. File for both 2005 and 2006 if you wish, but you will definitely be a non-resident for the 2006 tax-year.

Filing your income tax return

You must file a tax return if you:

owe tax for the year; or
want to receive a refund because you paid too much tax in the tax year.

[mindmetoo]

Social ties I think are things like memberships in the Elks club or a Canadian professional association. If you renew those that's evidence of your deemed residential status.

[prairieboy]

[mithridates]

This is one of our longest articles so far given its importance:

http://wiki.galbijim.com/Tax_issues_for_Canadian_expats

I'm just not going back. I assume I have no ties left. I made a big mistake telling them about the money I made in Japan when I lived there. I calculated that I'd have to pay another $750 and filled out the forms through H&R Block. After being nice enough to pay the extra money they later sent me a letter saying that I owed them another $800 on top of that, that it was to be paid within a week and if I had a problem with it that I would have to provide the evidence. That was when I was at my poorest and living in Vancouver by myself too - I had gotten my account up to $1300 or so and all my documents were back home so I just paid the extra before the deadline, plus $300 for rent, and I so had about $5 a day to last me for the rest of the month. That sucked.

[jlb]

Somewhat related to this topic: If I don't have any of my investments in Canadian banks, mutual fund companies, etc for reason of not wanting to be a "resident" of Canada for tax purposes, where I would invest the money?

Just a dumb question for someone who is clueless, please help me. I really am interested in how easy (or hard) it would be to not have any money tied up back in Canada.

[The Lemon]

[chronicpride]

[chronicpride]

[mindmetoo]

[peppermint]

related question. I have never filed for taxes in Korea, but according to the guy at the tax office here, that's not a problem as my employer probably did it for me(?!!!!)

Is there any chance Revenue Canada would require proof that I paid taxes here?