the best year to wire in your money ?

[cooldoc80]

Hi guys ,

I landed at august/2015 ,only stayed for a couple , and during that same year (2015) i wired half of my savings .

at 2016 , my wife would live in canada for 4-5 months , she would hopfully have a baby there and she already have a bank account and health card but she is not working . for me i would live with her for 2 months before going back home and moving permenantely to canada at 2018

My question is that i have money that i want to transfer to canada , from what i understood by reading the forum is that my wife and i are considered tax residents for the year 2016 ( because we had a baby there and my wife4-5 months in canada ) so if i wire money during the same year my wife had a baby ( 2016) would that mean the money would be taxed ?

do you think its better that i transfer the money at 2017 ( as we would only spend 2 months in canada during that year ) so we wont be considrered residents for tax purposes ?

thanks

 

[ana-1970]

the date of transferring your money has nothing to do with your tax residency. you are taxed on your worldwide income not on the money you transfer. you will be considered resident for tax purposes as long as you have strong ties to Canada (spouse and kids living in Canada, residential property..etc). if you are planning to relocate to Canada in 2018, I recommend either transferring your money as soon as possible to avoid CRA considering the money as income generated overseas which is not the case or declaring all the money you have overseas in your first tax return you submit as resident so you avoid taxing the amount when transferred.

 

[cooldoc80]

Dear Anna

Thanks alot for your reply , you are recommending i transfer the money as soon as possible , I landed at 2015 but didnt transfer all my money during that year , as i only stayed for 3 weeks .

now because my wife would have our child there and she already have a bank account and health card ( she would be staying for around 4.5 months in canada during this year ) so thats why i'm afraid of moving my money this year ?!!! people are telling me i may be required to pay taxes for this year and recommending i dont wire money now ?

thanks

 

[ana-1970]

In principle, tax is paid on income not on money transfer. if you have no income you owe no tax even if you transfer $$$$$. for your case, you are not resident in 2015 as you did not establish residential ties in Canada. you stayed for a few weeks and came back to your home country, where you have the main residential ties. The situation gets more complicated in 2016 as your wife is moving to Canada and establishing residential ties so she might be considered as resident for tax purposes. Although, staying for only 4 months doesn't force deemed resident situation. However, getting health card could be viewed by CRA as intention to stay. this area is grey. But in my opinion, although there is a risk of considering your wife as deemed resident, you are not. you have not established residential ties with Canada then moved to other country. your first tax return will be for 2018 once you move to Canada (unless you already submitted tax return for 2015 as resident and collected benefits available for residents (HST refund, child benefits) which will complicate your situation).

For the purpose of transfer, the transfer WILL NOT be taxed no matter the timing of transfer. However, it may bring the attention for the source of money if you declared no income. If I were you, I would transfer the money just before moving permanently to Canada.

 

[cooldoc80]

Dear Anna first of all pluse one for your ;D , I asked many people and nobody gave me a clear answer like you
I woud be grateful if you could give me your opinion about the following points


1- You are saying that my wife maybe considered as a tax resident this year because she used health card and stayed for 4.5 months , Could you please let me know how do we know if she will be or not? in other words she would also return home and not come 3- back to canada until we move permenantly at 2018 , does this mean this would be figured out when we submit our 2018 taxes at (2019)....
(Me and my wife havent submitted any tax returns for year 2015 neither 2016 yet neither did we apply for any benefits like child tax benefit.....ect)


2 -you mentioned that i would not be considred as tax resident because i only stayed with my wife for 2 months during her birth ? but dosent the law of CRA say that anybody who have a spouse who is tax resident should pay tax himself ???
so if i move the money this year would it be better if i move to my wife or my account ...?

3- actually the reason i'm in a hurry to move money is that i live in a war torn country and anything could happen suddently and i cant move the money , but i understand your point regarding if i transfer the money the would regards as an income , i actually have an income which is 1500USD per month , but the amount of money i want to transfer is 100 thousand usd , so i'm afraid they may thing that this is my income and tax me on it !!!

thanks anna

 

[ana-1970]

1- most probably she will not be considered tax resident- she stays temporarily with the intention to leave, no work or income in Canada, no residents' benefits (except health card. I recommend to cancel the card once she leaves Canada).
2- same applies to you. even if your wife is considered tax resident for following years, she will not affect your situation as she is not physically staying in Canada. Spouse living in Canada is one of the strong residential ties when doing residency test. but staying in Canada means "physically living in Canada"
3- to which account: it doesn't matter. Bank account is not considered strong residential tie. if there is nor other ties, it has no effect alone
4- when you enter Canada in 2018 with the intention to stay, the date you enter Canada is the date of establishing residential ties so the following in 2019 when submitting tax return for 2018, you will declare this date as the start of becoming resident in Canada
5- with your current income, chances that CRA will later come to you is NIL. your annual income even if declared in full is not taxable (I believe non taxable bracket is around CD$ 24,000 for family of 3) so you are in the safe side
6-Canada banking system is one of the safest in the world, I believe. it is your call. you may reduce the risk by diversifying the location of your money.

one more thing not mentioned above but might not relevant in your case, the country a person living in currently affects whether this person is resident in Canada. if this country has a tax treaty with Canada and the person principle residential location is in this country, this person is considered NON-resident for tax reason in Canada and will only pay tax on income generated in Canada ONLY.

hope above make things clear for you. Good Luck

 

[cooldoc80]

Thanks alot dear anna for this detailed information ! you should work as a tax expert , I actually live in a country with has no tax treaty with anyone neither does it tax us for anything so i'm really overwhelmed by all of this new information about finance and tax !

I went and red all of your replies and belive it or not i'm still confused ;D , as in your first reply you told me to transfer funds as soon as possible ,but later you told me to move it just before i move permanently , could you please tell me which option to go by ?

Thanks again for your help

 

[ana-1970]

Actually I am tax/financial adviser

my first recommendation was based on the assumption that you will be tax resident starting 2016 (moving to Canada in 2016). however, considering your situation, you will not be tax resident until 2018 so there is no rush in transferring your money.

 

[cooldoc80]

Hi Dear Ana , thanks again , and oh i'm lucky to found you here !

I actually decided to move money now as anytime somthing bad could happen in my country and all banks stop wiring !!!

please bare with me this question

-you mentioned my wife could or could not be taxed at 2016 ( for staying 4-5 months and having a baby/health card +bank account ) .....in case she would be considered as tax resident for the year 2016 , does this make me automatically a tax resident of canada of 2016 also ?

becuase one of the Main resedetial ties is (having a wife who lives in canada)

and i'm assuming if the above is true then this will lead them to question the money i will wire this year to my bank account as an income and eventually tax us on it !!!

by the way i really had a feeling that you are some how related to tax business in a way or another because the content and details you are giving are veeeeery different from other members here ;D , i tried to add another plus to you but it says i still have to wait for 196 hours ;D

thanks anna (A.K.A : Canadavisa.com forum tax expert ) 8)

 

[ana-1970]

even in the extreme if you are considered resident for tax purposes (I do not believe you will), your transfer will NOT be taxed. As a resident, you are responsible of paying tax on income you generate AFTER becoming resident, not the money you had before :'( CRA can not simply "assume" that the transfer is an income. They need to prove it in order to tax it. it could be saving, loan, inheritance, etc. Again, if your main concern is the transfer, do not worry. You are safe.

 

[cooldoc80]

thanks you ever so much anna for your help , you helped me alot understanding the situation.

-I decided I'm going to move the money to MY ACCOUNT in canada , because as you mentioned my wife might be considered tax resident because of her 4.5 months stay in canada and having baby there , So thats why i will transfer into my account as I maybe more safer than her because i will only stay with her for 2 months max . while if my wife is considred as a tax resident this money may get her into trouble as CRA might question it as an income?


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regarding your recommendation about cancelling the card , my wife went to the health services that issued her the card yesterday and told them about her intention to cancel card because as she would only stay in canada around 4.5 months

we expected the person to tell us that we should pay for coasts when we cancel but his answer was a little surprise for us !!

He said that as long as they are concerned " if person lives 6 months out of 12" after issuing the card then we dont have to cancel card !!! he said because my wife will stay 4 months this year and next year she also plan to come back for 2 months so for them thats enough !!! I dont know if we should listen to him or ask to meet somone else and insist to cancel card !!!


thanks again for your time and plus one to you