Notice of re-assessment from CRA

[jigs040]

Hello All,

I'm Canada PR holder and working and living in USA on H1B visa and never worked in Canada and filed tax return in Canada for 2019 but got Notice of Reassessment to pay CAD $35k. I paid $33k USD in USA through payroll in 2019. I thought Canada-USA has tax treaty where i need to pay difference. Is this normal or i should file dispute to CRA ?

According to below link step -2 i think i'm considered as deemed non-resident of Canada for tax purpose but i filed the tax since i seek advice from tax consultant and they said that i have to file tax.
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/determining-your-residency-status.html

• If you established ties in a country that Canada has a tax treaty with and you are considered a resident of that country, but you are otherwise a factual resident of Canada, meaning you maintain significant residential ties with Canada, you may be considered a deemed non-resident of Canada. The same rules apply to deemed non-residents as non-residents of Canada

Appreciate any guidance on this..

Thank you !!

 

[harirajmohan]

Hello All,

I'm Canada PR holder and working and living in USA on H1B visa and never worked in Canada and filed tax return in Canada for 2019 but got Notice of Reassessment to pay CAD $35k. I paid $33k USD in USA through payroll in 2019. I thought Canada-USA has tax treaty where i need to pay difference. Is this normal or i should file dispute to CRA ?

According to below link step -2 i think i'm considered as deemed non-resident of Canada for tax purpose but i filed the tax since i seek advice from tax consultant and they said that i have to file tax.
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/determining-your-residency-status.html

• If you established ties in a country that Canada has a tax treaty with and you are considered a resident of that country, but you are otherwise a factual resident of Canada, meaning you maintain significant residential ties with Canada, you may be considered a deemed non-resident of Canada. The same rules apply to deemed non-residents as non-residents of Canada

Appreciate any guidance on this..

Thank you !!

They would have clearly told why the added that tax. Most probably in 2020 they would have asked you to submit relevant documents such as IRS transcript, W2/some other documents proving the tax/exemption for the amount you claimed. So if you havent sent those documents then you would have received the updated assessment with those tax amount for the relevant amount in question/lines.

I dont know about non-resident filings but above is true for resident filing. This is what i get asked for years to prove to get exemption of the tax paid.

Didnt you receive document request first, before this tax reassessment bill?
Did you file as non-resident?

I am thinking that the consultant included US income hence i believe that you cant claim taxes paid in US since you are not resident. I may be wrong but lets wait for other experts to weigh in.
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/non-residents-canada.html
"As a non-resident of Canada, you pay tax on income you receive from sources in Canada. "

 

[jigs040]

@harirajmohan
Thank you for your reply.

Yes, i have received document request first and i submitted all document they requested. After 2 month later i got re-assessment notice with amount i need to pay. I filled as resident since all tax consultant and CPA i inquired said i need to file as resident since my wife lived in Canada for 6 months.

 

[harirajmohan]

@harirajmohan
Thank you for your reply.

Yes, i have received document request first and i submitted all document they requested. After 2 month later i got re-assessment notice with amount i need to pay. I filled as resident since all tax consultant and CPA i inquired said i need to file as resident since my wife lived in Canada for 6 months.

Canada is not like US. Even for citizens, whoever are non-residents, dont need to include/file for the income outside of Canada.

Which documents they asked and did you submit the mailed originals(or copies of originals)?

My thinking is that you should amend the tax return and specify that the source of income within Canada is less and attach relevant documents and paper file(so that you can send needed documents along with the amended return instead of simply efiling/netfiling without evidence and will again come back with more documents).

 

[jigs040]

Canada is not like US. Even for citizens, whoever are non-residents, dont need to include/file for the income outside of Canada.

Which documents they asked and did you submit the mailed originals(or copies of originals)?

My thinking is that you should amend the tax return and specify that the source of income within Canada is less and attach relevant documents and paper file(so that you can send needed documents along with the amended return instead of simply efiling/netfiling without evidence and will again come back with more documents).

@harirajmohan Sorry, i thought i sent reply. i have hired tax consultant in Canada and he said i would have to pay total around ~13k in Canada but would like to know how much it should be per $100k if i'm not contributing anything to RRSP? I have 401 in USA though.
- Do you do your tax on your own or from CPA/tax consultant ?
- i have not lived in Canada single day in 2020 but my wife lived in Canada less than 180 days and worked for few months. we have health card as well. I read online on CRA site that i would be considered as deemed non-resident but would like to confirm if my understanding is correct ?

Thank you and appreciate your response.

 

[harirajmohan]

@harirajmohan Sorry, i thought i sent reply. i have hired tax consultant in Canada and he said i would have to pay total around ~13k in Canada but would like to know how much it should be per $100k if i'm not contributing anything to RRSP? I have 401 in USA though.
- Do you do your tax on your own or from CPA/tax consultant ?
- i have not lived in Canada single day in 2020 but my wife lived in Canada less than 180 days and worked for few months. we have health card as well. I read online on CRA site that i would be considered as deemed non-resident but would like to confirm if my understanding is correct ?

Thank you and appreciate your response.

I am not an expert but during my first year it was asking how many days i am inside canada and how much i earned while i was outside(before moving to Canada). So i am sure that they did not tax me for that.
So not sure how well they calculate it while your family was inside Canada for few months.

Possibly you might have given all the salary amount as the income while you were resident of Canada hence you are seeing this much tax. You need to amend in reducing the income shown inside Canada to pay correct tax.
I havent used any services from anyone.
https://turbotax.intuit.ca/tax-resources/canada-income-tax-calculator.jsp

 

[jigs040]

I am not an expert but during my first year it was asking how many days i am inside canada and how much i earned while i was outside(before moving to Canada). So i am sure that they did not tax me for that.
So not sure how well they calculate it while your family was inside Canada for few months.

Possibly you might have given all the salary amount as the income while you were resident of Canada hence you are seeing this much tax. You need to amend in reducing the income shown inside Canada to pay correct tax.
I havent used any services from anyone.
https://turbotax.intuit.ca/tax-resources/canada-income-tax-calculator.jsp

@harirajmohan Thank you for you quick response. Yes, i have given all salary. so do i need to give them month of salary while my wife was in Canada or i have to give out full salary since i have health card as well as bank account in Canada ?

 

[canuck78]

@harirajmohan Thank you for you quick response. Yes, i have given all salary. so do i need to give them month of salary while my wife was in Canada or i have to give out full salary since i have health card as well as bank account in Canada ?

You need to first contact CRA and determine your residency status. You mentioned earlier that you were a non-resident but then mentioned your wife lived in Canada for some time, you have bank accounts in Canada, etc. Without knowing if you have been a tax resident for the years since you became a PR it is impossible to know if you need to file taxes. Would add that if you are not living in Canada you likely are not meeting the residency requirement to use Canadian healthcare even if you have a valid card and can be charged for any services if you do use the health system. I would suggest getting a CPA that is familiar with US/Canadian tax systems once CRA has determined your tax resident status.