Does Canada charge tax for income earned from business overseas?

[Carpediem]

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Hi, I'm a new immigrant. I have a running business in my home country. Income from this business will be our primary source of income for at least a couple of years as both my wife and I plan on pursuing studies in Canada initially. My question is, I am, and will continue to pay taxes on this income in my home country. What will be my tax situation here in Canada? Do I need to pay taxes here as well, or will this income be tax Exempted as it will already be taxed once in my home country. This amount will be transferred from my home country account to account in canada quarterly.

Thanks.

 

[Bs65]

Others can correct me but if you become resident for tax purposes you must declare all WW income and all income may be subject to tax in Canada unless there is some reciprocal arrangement with another country where can offset the tax already paid. Its all explained on the CRA site starting here http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/104/frgn-eng.html

 

[keesio]

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My question is, I am, and will continue to pay taxes on this income in my home country. What will be my tax situation here in Canada? Do I need to pay taxes here as well, or will this income be tax Exempted as it will already be taxed once in my home country.

Thanks.

Does your home country have a tax treaty with Canada?

 

[Carpediem]

Thank you, BS65 & Keesio.

I'm from Pakistan, and it has a tax convention with Canada since, I think, 1976. But the online document detailing the terms of this treaty is very very very long and tedious and full of legal jargon. :-X I was hoping someone might shed a little light and make it easier to understand.

Thanks

 

[COPRQuestion]

Thank you, BS65 & Keesio.

I'm from Pakistan, and it has a tax convention with Canada since, I think, 1976. But the online document detailing the terms of this treaty is very very very long and tedious and full of legal jargon. :-X I was hoping someone might shed a little light and make it easier to understand.

Thanks

You will need to declare all of your world wide income in your tax return each year. It is then up to the CRA to calculate if you owe any further tax in addition to that you have already paid.

I haven't checked but will take your word for it that there is a tax treaty between Pakistan and Canada, in this case you'll be given a tax credit for the amount you've paid but may well have to pay additional tax on the remainder.

IMHO at times like this is really is worth consulting a tax accountant as the fine for not reporting or getting it wrong may end up costing you more than the tax you owe.

And as you say it will be transferred quarterly, if it's over a certain amount and coming into your bank account, your bank will automatically report this to the CRA in any case.

Good luck

 

[keesio]

IMHO at times like this is really is worth consulting a tax accountant as the fine for not reporting or getting it wrong may end up costing you more than the tax you owe.

Yes, completely agree. Preferably one who is experienced with both Canadian and Pakistani taxes

 

[Carpediem]

Thank you for your response. Yes, I also did not think there was a treaty between Canada and Pakistan, but the link shared on this thread shows Pakistan in the list of countries with tax treaties with Canada, and gives details in a loooong document. But, as you rightly said, I need a tax lawyer/ accountant to tell me exactly how to proceed. I don't want to get stuck in an awkward situation between tax laws of two countries :'( Better take expert counsel.
So, just for clarification, I need to declare my worldwide income, and pay appropriate tax, and CRA itself will tell me if I get tax credit or if I have to pay the differential etc etc. Right?

Thanks again for your response.

Cheers.

You will need to declare all of your world wide income in your tax return each year. It is then up to the CRA to calculate if you owe any further tax in addition to that you have already paid.

I haven't checked but will take your word for it that there is a tax treaty between Pakistan and Canada, in this case you'll be given a tax credit for the amount you've paid but may well have to pay additional tax on the remainder.

IMHO at times like this is really is worth consulting a tax accountant as the fine for not reporting or getting it wrong may end up costing you more than the tax you owe.

And as you say it will be transferred quarterly, if it's over a certain amount and coming into your bank account, your bank will automatically report this to the CRA in any case.

Good luck

 

[specialmary]

Thank you for your response. Yes, I also did not think there was a treaty between Canada and Pakistan, but the link shared on this thread shows Pakistan in the list of countries with tax treaties with Canada, and gives details in a loooong document. But, as you rightly said, I need a tax lawyer/ accountant to tell me exactly how to proceed. I don't want to get stuck in an awkward situation between tax laws of two countries :'( Better take expert counsel.
So, just for clarification, I need to declare my worldwide income, and pay appropriate tax, and CRA itself will tell me if I get tax credit or if I have to pay the differential etc etc. Right?

Thanks again for your response.

Cheers.

Yes, IF YOU ARE A RESIDENT IN CANADA, you are required to declare your income within and outside Canada. Even though you are not in Canada, you are regarded as resident if your wife/children are in Canada. Things are more complicated if your wife/children are actually not in Canada most of the time.