Working Holiday Visa - Tax income

[marcosanderson]

Hi all,

Well, I am a completely newbie in tax income, since in my country I don't need to fill in any files.
So I will tell my story, and please help me to understand.

I got a WHV and arrived in Canada in July 10th 2017.
Then I got a job as a independent contractor since then.

By what I could understand for tax purposes, I would not need to fill any files, because I stayed less than 183 in 2017 in Canada.
However I was told (by some friends) that, since I wanna immigrate to Canada, I needed to fill the income taxes.
I guess he said I would need to fill as non-resident, is that right?

Also, there are any guides in how to do that?


Thank you in advance!

 

[marcosanderson]

Ok, I understand I need to fill it as a Non-resident for tax purposes.

However, since I work as an independent contractor I have no idea if I am subject to Part XII or Part I, could anyone help to understand?


Part XIII tax
Part XIII tax is deducted from the types of income listed below. To make sure the correct amount is deducted, it's important to tell Canadian payers:

• that you're a non-resident of Canada for tax purposes; and
• your country of residence.

The most common types of Canadian income subject to Part XIII tax are:

• dividends;
• annuity payments;
• management fees

Part I tax

The payer usually deducts Part I tax from the types of income listed below. However, if you carry on a business in Canada, or sell or transfer taxable Canadian property, you may have to pay an amount on account of tax:

• If you carry on a business in Canada, see Guide T4002 Self-employed Business, Professional, Commission, Farming, and Fishing Income, to find out if you must pay tax by instalments.

Even if the payer deducts tax from your income or you pay an amount of tax during the year, you may also have to file a Canadian income tax return to calculate your final tax obligation to Canada on:

• income from employment in Canada or from a business carried on in Canada;
• income from providing services in Canada other than in the course of regular and continuous employment.

Link:
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/non-residents-canada.html

 

[canuck_in_uk]

Ok, I understand I need to fill it as a Non-resident for tax purposes.

However, since I work as an independent contractor I have no idea if I am subject to Part XII or Part I, could anyone help to understand?


Part XIII tax
Part XIII tax is deducted from the types of income listed below. To make sure the correct amount is deducted, it's important to tell Canadian payers:

• that you're a non-resident of Canada for tax purposes; and
• your country of residence.

The most common types of Canadian income subject to Part XIII tax are:

• dividends;
• annuity payments;
• management fees

Part I tax

The payer usually deducts Part I tax from the types of income listed below. However, if you carry on a business in Canada, or sell or transfer taxable Canadian property, you may have to pay an amount on account of tax:

• If you carry on a business in Canada, see Guide T4002 Self-employed Business, Professional, Commission, Farming, and Fishing Income, to find out if you must pay tax by instalments.

Even if the payer deducts tax from your income or you pay an amount of tax during the year, you may also have to file a Canadian income tax return to calculate your final tax obligation to Canada on:

• income from employment in Canada or from a business carried on in Canada;
• income from providing services in Canada other than in the course of regular and continuous employment.

Link:
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/non-residents-canada.html

Residency is not determined solely by the 183 days. There are many other considerations. It is likely that you are a resident for tax purposes.

 

[marcosanderson]

Hi canuck,

Thanks for the concern.

Well, I think following the information, I would not say I am a resident.

1. I usually live in Brazil (I am here for 1 year - Working Holiday Visa).
2. I am not considered resident of Canada.
3. I stayed in 2017 less than 183.

I think the only thing left would be the residential ties.
But since there is a OR there... I guess it means that I am already seeing as a non-resident


You are a non-resident for tax purposes if you:

• normally, customarily, or routinely live in another country and are not considered a resident of Canada; or
• do not have significant residential ties in Canada; and
  • you live outside Canada throughout the tax year; or
  • you stay in Canada for less than 183 days in the tax year.

Significant residential ties to Canada include:

• a home in Canada; - I dont know if rent a room is the same of have a home... guess not.
  
• a spouse or common-law partner in Canada; and - NO
  
• dependants in Canada; - NO

Secondary residential ties that may be relevant include:

• personal property in Canada, such as a car or furniture; - NO
  
• social ties in Canada, such as memberships in Canadian recreational or religious organizations; - NO
• economic ties in Canada, such as Canadian bank accounts or credit cards; - Yes, I have a bank account
  
• a Canadian driver's licence; - NO
• a Canadian passport; and - NO
• health insurance with a Canadian province or territory. - NO

Thats why I understand I am not a resident for tax purposes.


This thing is too complicated... but I guess I am starting to understand the process...

 

[pie_vancouver]

You are non-resident for tax purposes.
How much income did you earn?
For example, if you had an income earned in Canada for $100,000, you might owe income tax for that big income, even if you stayed for less than 6mos., you could also have a refund if your employer withheld income tax more than the computed income tax.
If the income was small, you might not owe income tax, therefore, you are not required to file.

 

[marcosanderson]

Hey,
thanks for answering.

Well, I am filling the docs through SimpleTax.
I did not found anything to say I am not resident for tax purposes.
Maybe I should select NonResident? Even though I was living in Vancouver in Dec 31, 2017

However, filling the way it is. (I put I was living in BC at Dec 31) I have to pay.
Since I worked as a freelancer (independent contractor) I have to fill the T2125 file, and it says I need to pay the CPP .
Just for future information, is there a way to pay it over the year ?( lets say in 3 to 3 months)

 

[pie_vancouver]

So did you owe income tax using SimpleTax?

 

[marcosanderson]

Yes,

the value referring to CPP.

Bu for the value there is a trick thing... For example. I worked December, however, my invoice for December work, was issued on January 10th. and therefore I received the amount in January this year.
I have no idea if I have to place december value or let it for next year.
I heard that I wouldnt need to fill in, because I am a freelancer who operates not large amount. for the period (counting December) it would be less than 14k.

I understand since this is my first time, I have to print the documents, pay the tax (how it will generate the bill? or how I would pay it? ), print and send though post to Otawa office... Is that right?

 

[pie_vancouver]

That's accrual accounting, you record revenues and expenses when they are incurred, regardless of when cash is exchanged, so that income was for 2017.

How to pay the income tax owing?

• a wire transfer in Canadian dollars;
• an international money order drawn in Canadian dollars;
• a bank draft in Canadian funds drawn on a Canadian bank.

Where to mail the ITR:

Country of residence Tax centre
USA, United Kingdom, France, Netherlands or Denmark
Winnipeg Tax Centre
Post Office Box 14001,
Station Main
Winnipeg MB R3C 3M3
CANADA

All other countries Sudbury Tax Centre
1050 Notre Dame Avenue
Sudbury ON P3A 5C2
CANADA

Please read the guide here-
https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package/non-residents.html

 

[marcosanderson]

Thank you so much for the guidance.

In this case, should I say that put as an income, but should I say Bad Debt? Or since I already received, just leave.. and next year discount that.??


Sorry just saw it:

You are non-resident for tax purposes. - So in the form when ask if I am resident. It means always for tax purpose?

How much income did you earn? 11725 was my income last year. ( 13165 if I calculate value I worked in december but received in January )

 

[pie_vancouver]

Why bad debt? That income would be under Self-employment income page 2 of T1

 

[marcosanderson]

Why bad debt? That income would be under Self-employment income page 2 of T1

Yes, I know, but there is something like, bad debts in business expenses. It is something I dont know if I will receive...

Well, since I am in doubt is better to not put.

 

[pie_vancouver]

Did you contact the client? Are you sure that they are not going to pay? It's only been a couple of months.
Are you still in Canada and working here?

 

[marcosanderson]

Just a question..

-------- In turbotax says -------

Where did you live at the end of the year?
Generally, where you lived on the last day of the tax year determines what credits you're entitled to.

If you moved during the tax year or since, it's still where you lived on December 31st (or the last place you lived in Canada during the tax year) that will decide what applied to you
----------------------------------------

I was here in Vancouver on December 31st.
However as I mentioned, and you as well, I think am considered as non-resident of Canada for 2017

My concern is that I though the tax would be around 25% of my net income, and it not what I got. By the calculations it is less than 10%... CAD 900 for CPP purposes

----------------------------
Did you contact the client?Are you sure that they are not going to pay? It's only been a couple of months. - Yes, he already paid
Are you still in Canada and working here? - Yes, still working here.

 

[pie_vancouver]

Did you have income abroad?