Spouse considered non-resident? Pls help.

[kamae]

Hello,

I am in a bit of a sticky situation. It is the first time for my husband and I to file taxes. We're both on a work permit in Canada. I have been in Canada since 2012 but only started working in 2014 as I was a student from 2012-2013. I never filed before because I didn't know I could file despite not having worked in Canada (So I basically do not understand how this works). The problem I have is that I do not know if my husband is considered a resident or non-resident and if he should be taxed for his worldwide income. He arrived Sept 28, 2014. He did work starting November 2014 in Canada, so I know he has to file for income earned from then till end of 2014. The problem is that he worked as a nurse in New Zealand in 2014. If he is to be taxed for the income he earned in New Zealand, he will be paying quite a big amount to Canada. I am wondering if he is to be considered a resident since in 2014, he only stayed for 3 months (appx 90 days). I understand that his wife is here, but I too am only on a work permit, so I don't know if that makes a difference. I am really confused as to what to do. We do not want to end up paying money that we do not have to. If it makes any difference, none of his income in NZ has been used to support me while I was here since my family had enough money to support me. Thank you in advance for your responses.

 

[cooldoc80]

i'm not an expert but if your not a permenant resident then why should you pay any taxes !!!! your husband is not a resident so only you should pay !

but let other experts confirm this first

 

[chimney007]

You have to consider the definition of a resident or non resident as per Canadian Tax law. There is no definition of resident as per Canadian tax law. It depends on facts and circumstances on whether he intends to establish permanent ties to Canada.

Worldwide Income

Extract from Publication T4055

For the part of the year you were considered as a resident of Canada, you have to report your world income. World income is income from all sources both inside and outside Canada.

So my understanding is that for the 1st Year your husband entered Canada he has to pay tax on worldwide income from the date he arrived in Canada. He does not have to pay on his earnings in New Zealand up to Sep 28, 2014. if you are planning to establish permanent ties in Canada then both of you have to pay Canadian Tax on worldwide income from the date of arrival. You do however get a credit from Canadian tax based on a formula for taxes if any paid in NewZealand (foreign tax credit).

For reference go to the CRA website and search for T4055

 

[kamae]

Thank you for your responses. I called CRA and was told that he doesn't have to report any income before he landed in Canada. I am so glad I got that straightened out. The person who was preparing my taxes clearly does not know what she was doing. She even told me that she has prepared a lot of new immigrants taxes and that they have always had to pay for taxes that they earned before coming to Canada as new immigrants. According to her, some of them had to pay for 2 years worth of income they earned back home before landing. I don't know if she was trying to scam me or anything. Thanks again!

 

[kcorbin]

Thank you for your responses. I called CRA and was told that he doesn't have to report any income before he landed in Canada. I am so glad I got that straightened out. The person who was preparing my taxes clearly does not know what she was doing. She even told me that she has prepared a lot of new immigrants taxes and that they have always had to pay for taxes that they earned before coming to Canada as new immigrants. According to her, some of them had to pay for 2 years worth of income they earned back home before landing. I don't know if she was trying to scam me or anything. Thanks again!

Hi kamae!

We're kinda in the same boat. I'm a US citizen but I've been here in Canada since April 2014.

What number did you call? I tried calling the number posted on CRA's website and its just busy everytime. Did you call 1800 959 8281?

Thank you!

 

[GPSiConsultant]

Hi, as a professional tax accountant for the past 12 years, you don't won't need to pay tax on sources of income earned while not a resident in Canada. However, you do need to report your world income to see if you are affected by what is called the 90% rule. The rule is simple, if your world income, which is earned outside of Canada, is less than 10% of your Canadian sourced income earned while you were a resident of Canada, your tax credits that you qualify for are not prorated, and you are entitled to the full credit.

If your world income is greater than 10%, your tax credits are prorated.

I specialize in New immigrant returns, especially those from the US. The reporting requirements are crucial to be followed, as it may affect your future immigration goals.

If you have any questions or queries, feel free to email me at pulse.financials (at) live.com

 

[kamae]

@kcorbin
I called 1-800-959-8281. I didn't have to wait too long to speak to an agent, but I called at exactly 9 am when their phone lines open so that could have made a difference.

@GPSiConsultant
Thank you for your advice! The problem is that it has already been filed and we opted not to declare his income from NZ. I have a follow-up question though: It was e-filed by the person that we hired to do our taxes. I then read on the CIC website a day after that people w/ SINs that start with 9 (temp workers) cannot file online. But for some reason, our efile went through and she even sent me copies of the confirmation. I called CRA and they said that it wouldn't go though if it wasn't supposed to and that I should probably just wait till I get a reply from them.

I also noticed that on the final copy of the income tax that had already been filed, mt husband's birthday and date of landing in Canada were both incorrect dates. It is very frustrating that I had asked for help to avoid these mistakes but ended up with so many issues. :'( CRA told me that once I receive a notice of assessment, he can call and make the changes on his file. Sorry for the long rant. Thank you for taking time to read.

 

[GPSiConsultant]

Hi Kamae,

Was it your first tax return filed in Canada? Or had you previously filed before? Here is the problem - if the Date Of Birth didn't match the date of birth used to obtain your SIN - this file will not be successfully e-filed. Even though a confirmation was printed, there likely would have been an exception error after the fact. So my money would be on that it truly hasn't been accepted, not because of the SIN, but because of the date of birth. Also, did you leave Canada before Dec 31? If that was listed - an emigrant cannot efile a tax return.

How long ago did you file your return?

 

[kamae]

@GPSiConsultant
It was filed on April 1st. Do you think I should paper file with the correct dates and include a letter explaining that it was e-filed prior to that but with incorrect dates? It is our first time to file.

Should I also include our T4s in the paper application?

Thank you so much for your guidance.

 

[GPSiConsultant]

Hi Kamae,

Yes if it was your first time filing it's highly unlikely that it was received through efile, by the International Taxation Centre (Ottawa Tax Centre). But you won't want to just include a letter. Here is the thing, the taxation centre will not even consider any additional attachments. All they do is scan the 2D barcode that is created on the tax return and process it from there. What I would do is I would file a paper return to Ottawa with the correct information. Now you can include a cover page that indicates something to the effect that this return was possibly e-filed on April 1, but you are filing it because you believe it wasn't filed correctly.

Alternatively, you would have signed a T1013 with whoever e-filed your tax return. Have them check online through Representative a Client and see the status of your 2014 tax return.

If you want, you can always email me at pulse.financials@live.com.

Thanks.

 

[kamae]

I live in Toronto.. should I send docs to Sudbury or to Ottawa? I know Ottawa is where non-residents file, but from what I know, I was considered a resident for tax purposes in 2014. Thank you again. It's a blessing to have people like you who are willing to shed some light on Canadian taxation for us first timers.

 

[GPSiConsultant]

Hey no problem. Since it is your first return in Canada, it needs to go to the international tax center in Ottawa. But like I said, you are probably better off first having the efiler verify online through represent a client to see if it is marked as received. If it is, then wait for the assessment to do an adjustment. I am surprised they didn't want you to report your world income - it is actually more beneficial to report it, to ensure the 90% rule is used, and no pro-rate based on days.

If you need anything else, don't hesitate to ask!

 

[kamae]

The one who efiled our taxes sent me copies of proof of receipt from CRA. I am not sure how it went through despite us not being able to efile yet, but it showed a confirmation number and Document control #. Would that serve as proof that it has been received?

 

[GPSiConsultant]

Yes it is proof - so the best thing to do is wait until the return is assessed and then file what is called a T1ADJ and correct the return. If you file now it may cause issues while they are assessing the already filed return.