Hello, I was wondering if someone can help me. I am PR holder and I have fulfilled a requirement for physical stay in Canada for two years out of five. I was offered a tax-free job in a country which does not have a tax treaty with Canada. The conditions were good and I started it last October. Now I have to fill the tax form. I was told that if declare myself as an immigrant, I do not have to pay the taxes for the part of year when I was not in Canada. But would this mean that I could loose my PR as well? I would appreciate a lot any advise.
Tax return when abroad and PR status
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Dear Steaky, thank you for the reply. My friend also told me that I would not loose my PR if I declare myself immigrant for tax purposes. but we could not find any reference to it. The CRA is not talking about the PR holders. I know that if I had Canadian passport, I would not loose my citizenship but as for PR, I could not find any information on the CRA site.
As already noted, no direct impact on PR status. PRs are obligated to comply with Canadian law generally, and of course that includes tax laws. But this is not directly enforced. It is not a requirement a PR needs to prove to keep PR status (in contrast, say, to compliance with the PR Residency Obligation, which it is always the burden of a PR to prove if and when subject to a Residency Determination).tulip_001 said:
Obviously, any extended period of time spent abroad, and particularly any significant ties abroad like employment, can and will be taken into consideration during any Residency Determination.
That noted, assuming "Now I have to fill the tax form." is in reference to filing a Canadian tax return for 2016, I am afraid that it is a little more complicated than what you have been told. This side of things needs input from a competent, reliable tax authority.
In particular, it appears you were a resident of Canada for enough of the tax-year 2016 that you will need to file a tax return as a Canadian resident, which ordinarily means you will be obligated to pay taxes based on world-wide income for the year. There are indeed exceptions and such. But they are more specific and more complicated than being someone with the status of an "immigrant," and actually your immigration status has little bearing on what taxes need to be paid. So what taxes you will owe Canada based on income earned abroad during one quarter in the tax-year will depend on a number of factors and details, which it would be best to discuss with a qualified tax professional. And of course you will definitely owe Canadian taxes (as applicable) for income earned in Canada.
Dear Dpenabill, than you for the reply. I am totally okay to pay taxes on my Canadian income, but I want to minimize, if possible, the taxes from my out of Canada income. Would it be possible for you to recommend a tax layer who deals with international taxes?
Mostly, frankly, my sense is that for 2016 you are going to owe Canadian taxes based on world-wide-income. There may be some particular deductions available which will reduce (not eliminate) the total owed relative to what was earned working outside Canada. I am not sure of this. There may very well be some exceptions or larger deductions which will make a big difference. But just being a PR does not affect this. In contrast, living in Canada for more than half of 2016 probably means you will have to pay tax as a resident of Canada, which means paying tax on your world-wide-income.tulip_001 said:
Sorry, no I cannot recommend anyone.
As you recognize, you need someone who deals specifically with taxes involving international sources of income. Not easily found.
A tax lawyer is probably not necessary. There are very good, well-informed tax professionals, regarding which a certified accountant is best but for most taxpayers not necessary (meaning many providing accounting services, but not certified, can nonetheless provide competent, reliable services for many tax issues).
But for this issue, even most CPAs are not likely to be all that helpful. They just do not have the international income experience (some high-priced corporate accountants probably do, but unless you are making a huge amount of money and they can save you a lot, they are probably priced more than they would save you, and that is assuming you can find one and get him or her to help you -- note that during this time of year, qualified professionals are typically so busy they do not consider taking new clients).
A number of years ago my effort to find someone to help me proved fruitless (and that was much earlier, before the rush). But I live a long way from any large city in Canada. One accountant, however, did help point me in a direction which enabled me to do the research myself. Note, though, I had relatively simple issues and I have had more than a little experience in related matters over the years. (I would have paid for the service, however, if I could have found a credible accountant to do it.)
If you remain abroad this year, with minimal time spent in Canada, no Canadian-source income, I am not sure how it will work for filing and paying 2017 taxes . . . I know that to not file as a Canadian resident after once being a resident of Canada, the individual generally needs to terminate all major residential ties in Canada, such as have no Canadian address.
But my impression is that to avoid taxes for income earned abroad, one either has to rely on provisions which protect taxpayers from double taxation (usually dependent on a treaty with the other country; at the least, dependent on paying taxes on that income in the other country), or to otherwise be legally OK to file a NON-resident tax return or legally qualified to not file a Canadian return at all (non-resident, no Canadian source income, and such).
Thus, for last year my impression is that you are probably limited to looking for what deductions you can take relative to employment abroad, and otherwise will likely be obligated to pay taxes on the foreign income.
There are many ways in which Canada's tax structure helps taxpayers avoid double taxation, but that is indeed about double taxation not about avoiding tax altogether (that is, if taxes are paid on income to another jurisdiction, the Canadian tax system affords various ways for the taxpayer to avoid having to also pay that same tax to Canada . . . albeit, as you earlier noted, this is usually tied to a tax treaty with the respective jurisdiction).
I see, I also did some search and you are right, for the year 2016 I think I have to pay the taxes. But I am now looking on how to reduce the total amount. Also, for year 2017, if I did not stay in Canada and do not have any significant residential ties, I will fill the tax return form as non-resident or I will not have to fill the form at all?
I am not well versed in Canadian tax obligations outside my own experiences. What I have referenced so far is actually fairly rudimentary. (I have gone out my way to structure my business so as to simplify my returns as much as possible, being adverse to paying large accounting fees, but I have done so in a way which means I pay taxes to Canada based on income from abroad, and in a way which fortunately allows me to avoid there being any tax due in the other country, with which Canada does have a tax treaty, and in which I nonetheless need to file a return . . . but having to file multiple returns based on different accounting methods and different currencies, different rules governing particular deductible expenses, and so on, is indeed an administrative hassle, a real and somewhat costly inconvenience. The revenues, however, make it worth it.)tulip_001 said:
For 2017, my general understanding is that if you do certain things to terminate residency in Canada, and you are not resident in Canada during the year, and your presence in Canada is minimal, you could (as in you might) qualify to file a Canadian return as a non-resident, or perhaps legally be entitled to not file a Canadian return at all. What to do, how this actually works in a particular case, I do not begin to know the details.
Once the rush season has passed, then it would be the time to seek assistance from a qualified tax professional, which will require some serious homework on your part . . . both to first get as familiar with the CRA rules as you can (a professional's assistance tends to be much better if the client is well-informed to begin with), and to find someone both competent and willing to offer assistance (I have found some accountants who will give a consultation . . . just no one I can recommend for this situation). Waiting until late in the year will run into the beginning of the next rush season.
If you carefully go through the information which CRA provides you may be able to determine, for yourself, whether you will need to file a Canadian return for 2017. Or the alternative outcomes.
Note of caution, however, that even though there is NO direct impact on PR status based on your tax filing status . . .
. . . once you do this, these are circumstances which can be considered in assessing your compliance with the PR Residency Obligation. This is mostly about what inferences might be drawn from certain circumstances and facts. And, more particularly, about what inferences might be drawn from the absence of evidence showing permanent residence in Canada (in fact permanent residence, as in where one in fact is settled and living).
A resident of Canada tax return for a given year is affirmative evidence tending to corroborate residency, hence presence, in Canada. But it is more than that. It is affirmative evidence of permanently settling and living in Canada.
It can be a lot more difficult to prove actual presence if the contrary is indicated.
In other topics I have repeatedly addressed the impact it can have in a Residency Determination if the PR is not well-settled and living permanently in Canada. I do not mean to go into that in depth here, but just to give a heads-up that lengthy absences, particularly lengthy periods of time living and working outside Canada, can change the dynamics in how CBSA or IRCC weighs evidence of presence, and in particular what influences how certain inferences are made. In this regard, remember that most PRs need CBSA or IRCC to make the inference the PR was in Canada for many days in-between dates for which the PR has overt evidence of presence. And without such inferences, it can be extremely difficult to prove actual presence during all those in-between days.
Terminating residency in Canada in conjunction with an extended absence and working abroad is a situation which can cause serious problems proving compliance with the PR RO . . . and it is always the PR's burden to prove compliance. If and when a PR's circumstances weaken the inference that the PR was in Canada days between last entry and next exit, what will prove presence may not be at all easy to compile and present. Especially if the PR is cutting-it-close. Actually being in Canada is not enough to keep PR status; the PR may be required to affirmatively prove days in Canada.
See here for details on if you qualify for non-residency status for tax purposes. http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s5/f1/s5-f1-c1-eng.htmltulip_001 said:
Ultimately the decision on whether you really qualify as a non-resident is up to the CRA. Note that there is a large emphasis on your intent to ever return to Canada in the future, in addition to the other usual residential ties. When in doubt you should always talk to a tax accountant experienced with residency issues.
Also note that when filling in your PR card renewal app, IRCC specifically asks for your tax information and your residency for tax purposes. As mentioned, if you happen to be close to the residency obligation days when renewing, having previously filed as a non-resident may complicate your PR renewal in terms of being sent to secondary review and seeing long processing times.
Greetings!
I would like to enquire about filing the income tax return as a permanent resident landed last year but working in Singapore and staying still in Singapore. I tried to read it in CRA but I cannot understand. its my first time to file so i cannot do it online.
Am I a deemed, factual or non-resident? Do I still need to pay taxes in Canada even though I am paying taxes here in Singapore?
More experienced ones kindly help me out ,please.
Thank you
I would like to enquire about filing the income tax return as a permanent resident landed last year but working in Singapore and staying still in Singapore. I tried to read it in CRA but I cannot understand. its my first time to file so i cannot do it online.
Am I a deemed, factual or non-resident? Do I still need to pay taxes in Canada even though I am paying taxes here in Singapore?
More experienced ones kindly help me out ,please.
Thank you
Did you establish residency in Canada first and then leave for Singapore? Or did you just do your PR landing and then immediately leave?Ryanimay said:
Did you set up any accounts here i.e. bank, credit card, memberships, etc?
Do you have spouse/kids living in Canada?
There are lots of factors that go into determining exactly when you become a resident for tax purposes, and if you can later change that status to non-resident. When in doubt, talk with a tax accountant experienced with tax residency issues.
Here are my two cents:tulip_001 said:
1)Your PR status is intact because you fulfilled your residency obligation
2)If you were physically present in Canada for more than 183 days in a tax year, you pay full tax for your Canadian income.
3)If you were physically present in Canada for more than 183 days in a tax year you pay the following on your world income: The tax you are supposed to pay to CRA-Tax you paid to the foreign countries if there is a tax treaty
Conclusion: In the year 2016, you were present in Canada for more than 183 days, so will have to pay tax on your Canada income+world income. Existence or non-existence of a tax treaty is irrelevant because your foreign job was tax free to start with....
Advice: Based on my experience, most tax consultants are not very competent when multiple countries are involved! Thanks to the extensive movement of good and people between two countries,a Canadian tax consultant may know a thing or two about US tax laws; but I would not be very comfortable if any other country is involved, you are better off doing it yourself...
I just did my PR landing. I am working as a doctor in Singapore.Rob_TO said:
I opened a bank account in Canada when I landed.
I am single.
I am not sure if I should use the General income tax return and benefit form or the deemed resident/non-resident form, as its my first time to file but basing on the criteria for my situation I am deemed resident/non-resident.
Thank you for your reply. Rob_TO.
Since you never actually established residency here nor did many activities that would be considered as ties to Canada, my guess is you don't need to file a Canadian income tax return yet. You would wait until you actually come to reside in Canada.Ryanimay said:
Simply landing as a PR does not make you a resident for tax purposes, nor does simply having a bank account. Being a resident for tax purposes takes into account many factors beyond physical residency, but it doesn't sound like you meet that criteria.
When in doubt you can also call CRA to ask them if a tax return would be necessary.