The International Schools Review Forum

I'm not sure where this subject goes on this website but I will try here first.

Could anyone enlighten me about how difficult it is to sever ties with Canada for tax purposes? I want to teach overseas but if Canada takes a big tax chunk out of a little salary then I will be struggling financially.

I will eventually talk to an accountant but that costs big bucks so I just need a general overview to see if it's worth it or not.

Canada expects its citizens to report worldly income. And unless you sever ties you will be taxed on this income. The country I will be going to has no tax treaty with Canada but also offers a tax free salary.

Anyway, for people who have gone through this already, did you have to sell off all or some of your investments and get hit with a 25% departure tax? Apparently, we have to stay out of Canada for many years or the tax man could still send us a whopping bill upon our return. Yikes!

As I type this I realize every situation is different and it looks too complicated to discuss in this forum. I guess I was just looking for general comments.

Thank you.

I'm no expert, but I've never heard of a departure tax.

I declared non-residency for 2011 (I left in August). I am now non-resident. I don't have a house or car in Canada, but we do return for a few weeks in the summer. We have bank accounts there, so we can pay bills and I maintain our teaching certifications there. I don't think any of these are a problem. I think they generally only look at these things, in addition to having a house that is not rented out or a car that is still licensed.

You can also have a house, as long as you rent it out.

I am also not going to file again until I return. As a non-resident I don't think I need to. The next time I file will be for the year I return.

There are definitely other threads that deal with this topic. It is obviously a sensitive topic for Canadians.

When we left we were given conflicting information by Revenue Canada. It seemed that criteria changed depending on who we were talking to. I do know you need to sever your major ties including: selling your house (or renting it at arms length), give up your job and don't support any immediate family members in Canada. However, I do know people that own empty homes in Canada and one friend that got advice on how to do it legally.

Other than that there are many lesser ties, some that are easy to give up, and others, like giving up your passport, seem oxymoronic to me. I think the secret is to minimize your ties as much as possible. We have our certification and one very inactive credit card for emergencies, and a RRSP but other than that nothing else is left in Canada.

We talked to an accountant who specialized in this area of tax law and even he couldn't tell us anything for sure. Having said that I have never known anyone to come to RC's attention and get dinged.

Is Canada much different from the States? I know in the States you are allowed to claim a "foreign tax exclusion" if you lived in a foreign country for an entire year. The excemption was high above the average teacher salary so most American teachers end up paying nothing in taxes. Like I said, that is the States, but do they have something similar in Canada?

Canadian and US tax laws are very different with regard to living overseas, I could only wish they were more similar.

Hi IAMBOG,

Did you keep a storage unit in Canada?

Also, does anyone know of a good accounting firm in the Toronto area in regards to non-residents?

Thanks!!

In my mind, it shouldn't matter if you maintain some significant ties as long as you live in a country that has a tax treaty with Canada (and there are an awful lot that do).

@Dawson

Canadians dont get the equivalent of the American Foreign Income Credit, which really, really makes a tremendous difference.

jbiersteker, no we don't have a storage locker. If you wanted one, just pay in cash a year in advance.

However, you really have to think about how much a storage locker costs. If you are paying $100 a month, that's $2400 over a two year contract. It would (possibly) be cheaper to have the stuff shipped to you so you actually have use of it.

@IAMBOG

Not if you have to ship it back, and given slow container wait times youd have to send it now, or else youd have to buy a certain number of things when you arrive anyway, waiting for your items to arrive
$100 would be a pretty big storage unit. It also assumes your going to use EVERYTHING youd put in storage, otherwise your shipping stuff to a new location overseas and having to put it in storage anyway.

If you are talking about a 20ft container load, then your storage costs, if you choose to leave your stuff in Canada are going to be closer to $300 a month or $7200 over the course of a two year contract.

We looked at this when we left Canada. I previously owned an import business and I have also worked for a storage company. We didn't have much stuff (2cbm). We could have stored it for about $2500 over a two year period or ship. Shipping (do it yourself - I boxed and palletized our stuff in the shippers yard), cost $1200. Perhaps the cost of shipping is the same as storage, but it is unlikely to be more in the long term.

PsyGuy - in Vancouver $100 gets you a 5ft by 5ft locker with a 9ft ceiling height. Believe me, I know.

Hi IAMBOG,

Maybe you can answer this, but we're trying to get a very small shipment but the company in Korea only quoted us for a 3-cubic meter container which seems awful big for shipping the following:
1. 3-4 bicycles (in proper cases or boxes)
2. 2 bags of hockey equipment
3. 6-10 boxes of teaching and household things.

I have a friend who says he can build me a crate, but I don't know how this works with the shipping company.

Any suggestions on how to handle this situation or companies that you would recommend?

Thanks!!

Are you in the Lower Mainland? If so, you could do worse than call Locher Evers on Annacis Island and tell them you will have a crate that you can deliver to the shippers yard. We didn't bother with a crate, I just palletized the stuff in the yard and wrapped it in Saran Wrap / Clingfilm (this is normal for most shipments).

A standard pallet is 40" x 48" (but ask, just in case). You'll have to build the crate around this. I can't think that you have more than 2cbm and maybe less.