Eh, Canadians, a question about taxes!

[whoamI?]

My school is going to pay for my taxes while I reside in China, but I do also need to pay taxes back home, correct?

At my last school I paid both local taxes (in Wuhan) and taxes back home.

So my question is this: I'm not actually working at a Canadian school next year, so will I still need to pay Canadian taxes?

I've heard stories of "giving up" permanent residence in Canada in order to dodge the taxes in Canada. Though I've also heard you need to give up your health care, etc????

Can anyone shed some light on this topic?

Thanks in advance!

[Overhere]

You are going to find you are going to get a wide variety of answers on this one, even from Revenue Canada. In our case we gave up all ties to Canada, sans our passports. This includes any job that might be held for us, a year round dwelling and the entire immediate family moved so neither my spouse or I was supporting family at home. These seem to be the big three ties, however, they also don't appear to be the only ties that Revenue Canada uses to determine residency. Other ties might include things as mundane as magazine subscriptions to credit cards and Ironically enough your passport. Of course your health care will be included in that too.

It was recommended to us to consulate Revenue Canada, fill out the paperwork and get an official "you are no longer a resident" letter, and I have had friends do that. However, I felt that I didn't want to call attention to our status so we cut all those ties mentioned above and left. We have been out of the country for a number of years now and I feel pretty comfortable that when we do move back that we won't be under the magnifying glass of RC.

[PsyGuy]

I concur with @overhere. You basically have to give up everything except your passport and citizenship to not owe CAN taxes. I would also agree that you should consider writing revenue Canada, and get a response on what you need to do, then do those tasks and write back with verification included that you have completed those criteria, and request a letter that you are no longer resident.

[shadowjack]

Tax consultants that I consulted gave this advice. Leave the country. Don't file for non-resident status. Cut your ties, sell your house, your car, your furniture. You CAN have a Canadian bank credit card, especially if you are going to a country with not a great banking system, such as China. You can't use your Canadian bank account as your main account - that is a tie. You can't have a car registered in your name. You can let your licence lapse if your new country issues you one. However, to give you an example, we lived in a country where women were not issued drivers licences, so my wife kept her Canadian one. We now live in a country which is not signatory to the Convention on Automobiles, so we have Canadian ones.

If there is a tax treaty with Canada and you are paying taxes in China (even if your school pays them, it is part of YOUR salary), you would NOT have to pay taxes in Canada. Also, it is not a big deal with Canadian medical coverage if you have a decent plan with your school. Our plan covers us everywhere except Canada and the US for regular treatment (US and Canada are emergency treatment). This enables us to get medical treatment wherever we go. For going to doctors and having regular treatment in Canada or the US, we can pay $600.00 each and be covered.

Hope that helps!

shad

[teachingagain1945]

I've looked into this too over the years. In 2000 I called RC and at the time I don't think you could fill out forms to renounce your Canada residency. Anyway, RC told me to cut as many strong and weak ties to Canada. But, he said if you go back to Canada and they find out you made piles of money they are going to do their hardest to get some of it from you.

[Overhere]

:), do any teachers make piles of money? That will be the least of my worries when we move back.

[IAMBOG]

If you are going to be out of the country more than two years, then you do not need to pay tax in Canada. To my knowledge, if you are out of the country more than six months you are no longer entitled to Canadian healthcare, at least in BC anyway, even if you continue paying. We left in July 2010 from BC. We informed Revenue Canada we were leaving and that tax year was split between six months resident and six months non-resident. We have not filled out a tax return since and have never been asked to. In relation to health care in BC, when you return you will have to wait somewhere between two to three months for healthcare to kick in again . The rule is, you need to wait two full calendar months plus the remainder of the month you arrived in Canada. For example, if you arrive back in Canada on June 1st, then healthcare will kick in on September 1st. It would also kick in on September 1st if you arrive in Canada on June 30th. However, many teachers in my last school contacted BC Health and were advised to start paying a few months before returning, so their health care was valid immediately upon return.

We maintain a joint Canadian bank account (but our overseas account is our main account), a joint credit card (we can't get a credit card where we are), and we both maintain driver's licenses (however, the last time I renewed they asked if I was resident. I answered yes, just to make things easy. I didn't have to sign for this, so there is no proof I said that. However, it does make me think I may not renew next time, or at least I need to clarify the situation next time). We don't have any property, car or any other ties.

More to follow...........

[vandsmith]

you'll usually get a different answer each time with RC.

i'd suggest not to fill anything out, nor asking their advice. if you have property or any money-making items in canada, then you will have to pay tax on that anyways. if you have smaller, secondary ties - driver's license, bank account, subscriptions, affiliations, etc... - then it really doesn't matter. it is cumulative though, so you potentially could get looked into if you have a lot of these, but for most i'd say it is inconsequential. you would be considered an 'emigrant' and don't have to file taxes. this is what a private tax rep. told me many times.

also, if you're documented out of the country for 183 consecutive days, your health care lapses (in ontario at least). you have to establish residency for 3 months to reinstate it. i've never had a problem using it however but they could connect the dots if they looked into it. better just to get private insurance if you're coming home for the summer, as many ITs have a policy similar to what shadowjack describes - coverage pretty much everywhere except NA and EUR.

also the tax person told me a lot of it has to do with intent, and yes, it's a gray area. that's true for this whole situation. countries with tax treaties - i know that i asked for and was given some forms from our first post in korea years back where it showed what we paid in taxes. it's a giant headache and it's really up to you what you do but just be sure to have some documentation about what you are paid per year, and how much in taxes (if any) you are paying.

you don't "give up" citizenship (unless your name is conrad black). you could but why? unless you want to join the tea . or move completely to a different country. maybe there are other reasons. again, i would stress not to get RC involved. it's not about beating any system or trying to cheat it, it's just you don't need to. call or email if you want - they will only give you advice and to my knowledge there is no form to fill out to say you're not a resident. i believe it is an option on the income tax form though (emigrant).

bottom line - no money made in canada, no real need to pay taxes UNLESS you earn canadian income. you are a non-resident. this info should be on the government website. remember any money you make in canada can be taxed. if you have a house in canada, file a tax return. minimize the ties, pay no tax. if you want to maintain your health care, call to see what you need to do.

hope this helps!

v.

[IAMBOG]

Also, if you are saving money and plan to be non-resident for five or more years, don't send it home to Canada to invest it. Open an offshore account with TD International in Luxembourg, DBS Vickers or Saxo and buy index funds from the Toronto Stock Exchange through one of those companies. This will protect you from capital gains on future earnings. You will have to sell all stocks before returning to Canada though and then re-buy when you get home.

[PsyGuy]

@whoamI?

As you can see, you will get a LOT of different answers and advice. The most relevant poit, is that your issue are more likely to become problems the 1) more coin you bank and 2) the relationship you maintain with CAN. The more of those combined the more likely RC is going to want a cut.

@Overhere

Yes, some countries have money that is basically worthless (IE. Venezuela) that teachers make a pile of money (not a big pile, its not Italy when they were still on the Lire).

[Overhere]

PsyGuy, I literally made piles of money when I worked in SE Asia. The largest denomination was a 1000 note when the value was 10-12 k per 1USD. We used to haul money around in garbage bags. Unfortunately even then my salary was less than 30 K. Nothing like the salary many expats are making.

The point, as you stated, is to cut as many ties as you can and when you move back hope that was good enough and that Revenue Canada doesn't come with their hand out.

[IAMBOG]

> As you can see, you will get a LOT of different answers and advice. The most relevant
> poit, is that your issue are more likely to become problems the 1) more coin you
> bank and 2) the relationship you maintain with CAN. The more of those combined the
> more likely RC is going to want a cut.

Keep your ties to a minimum. Bank account, credit card and drivers license are secondary ties and will not be an issue if all your other ducks are in line. If you have a property, keep it at arms length (rent it out). Keep your family and other detectible possessions offshore (take them with you overseas). The longer you stay away the better. Keep your money offshore. Cash investments in shortly before you repatriate, and repatriate the cash after you declare residency. It may not be black and white, but there really aren't too many shades of grey either.

The amount of money you stack away while you're overseas is completely irrelevant and this is another example of PsyGuy interrupting a thread with random generalisations that just add to people's confusion.

[PsyGuy]

@IAMBOG

It is not irrelevant at all. Transfer enough of it in to CAN at some point in the future and RC may take notice. Choosing to ignore a factor does not make it irrelevant.

[IAMBOG]

ADMIN NOTE: THIS POST WAS REMOVED. We ask that forum users who disagree with another posters opinion refrain from blanket statements intended to discredit that poster. We encourage professional, constructive discourse and if you have a opinion that differs from another poster, by all means, do let other posters know this but please, do it in a manner reflective of a professional educator. In other words, take the high road.

[vandsmith]

actually, i have heard similar things, which is why we keep our transfers always lower than $10,000 canadian. in fact, this is what a canadian tax lawyer told me a few months ago. any incoming monies of private individuals get red-flagged and looked into (or there is a greater likelihood of doing so) if it's over a certain amount.

so, you both are kind of right.

v.