Tax on income earned abroad and not taken into Canada

[aurobind]

I want to know if I earn from business or on stocks and forex trading into my accounts in foreign countries, based on my previous operations and still rewarding me for the same in a foreign country, is such income taxable in Canada 1) if I am a PR and 2) if I become a citizen?

 

[links18]

Canadian tax liability depends on residence rather than citizenship or PR status, although PR status may be one thing they take into consideration in determining your residence for tax purposes. The more important factor is whether or not you had "residential ties" with Canada when you earned the income. The definition of "residential ties" is not always clear, but CRA lists a few things that might constitute residential ties, like having a spouse or dependents in Canada, maintaining a residence in Canada and/or having a vehicle registered there. Obviously, if you are living in Canada than your income is probably subject to Canadian tax.

 

[aurobind]

Thanks for the input. But I presume it is still vague and depends on what is declared as a source of income. Will try to get a lawyer to interpret the details.

 

[agrisiva]

did u talk to any lawyer Aurobind on the foreign income issue? Your experience would help others, please post it if possible.

 

[Jonboy]

Any foreign income you earn after you move to Canada to start living here is taxable in Canada.

 

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[steaky]

Any foreign income you earn after you move to Canada to start living here is taxable in Canada.

Until someday you move back to your country the foreign income will be non taxable in Canada.

 

[toby]

Until someday you move back to your country the foreign income will be non taxable in Canada.

I wish it were that easy, Steaky.

Just returning to the home country will not necessarily make one a non-taxpayer in Canada. Only if you cut major ties to Canada can you stop paying taxes. The major ties are (as you know): (1) having a full-time residence available to you throughout the year, (2) having a spouse or dependants living in Canada, and living in Canada more than 183 days per year.

There are a host of secondary ties that might lead CRA to deem a person a taxpayer, such as having bank accounts and club memberships in Canada; or having a vehicle in Canada; etc. But these are not by themselves fatal; one can have a few of them and still not be a taxpayer. But accumulate enough of them, like adding grains of sand to a balance scale, and at some point the scale tips in favour of taxpayer status.

When that tipping point occurs exactly is left to the subjective decision of a bureaucrat at CRA -- they won't give us guidelines. This is a worrisome thing, since Canada will need more and more tax dollars to pay for its expensive social programs.

 

[steaky]

Oh yes, Toby. One need to severed his residential ties to Canada before being consider as a non-resident of Canada.