Canadian Tax Question

[gengrant]

i have been working as an IT for a number of years now. i have no other income other than what is earned overseas. i do have student loans that i am repaying back in Canada. i looked on the Canada Revenue Agency website here:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs ... u-eng.html

My question: Should I be filing a tax return each year? Will I end up owing a bunch of money to the Revenue Agency if/when I return to Canada?

Help, please!

Thanks.

[sand_fan]

Consider spending a few dollars for a consultation with a Canadian CPA or other tax professional. Getting tax info on a message board could be hazardous to your financial health.

[TeachingAbroad]

I'm concerned about that as well. I haven't filed a tax return for over 10 years. I am in the process of having that sorted out with an accountant back in Canada. At least I am thinking of doing that though he charges $350 per hour. I may have a knowledgeable friend of mine help me sort it out. I talked with Revenue Canada about this years ago before I left and the guy said it was a grey area. If you've made a lot of money overseas they are going to try to get a chunk of it. This was years ago before you could register yourself as a non-resident before you moved abroad. Good luck.

[Gipper]

I have been expat and repatriated a couple of times. The area is grey for sure and that is why no one gives a "straight" answer. I was advised not to file taxes while I was away and it all worked out fine. There are urban legends, but from my experience, and those opinions I have trusted, the CRA is very unlikely to "come after you" for the money you made overseas----particularly if there is a tax treaty in place between Canada and the country in which you work (which there typically is).

[PsyGuy]

Agree with others its really going to depend how many ties you maintain and if you have enough income to make it worth while for the CRA to come after you.

[lostintranslation99]

If you have maintained your health insurance in Canada or maintained any other significant ties like an address (CRA also lists bank account drivers license etc) you are expected to file a return. If you changed your address to your current non-Canadian address with revenue Canada, you may qualify as non-resident for tax purposes. I would call them and clarify.

[Helen Back]

If you are out of the country you can't maintain your healthcare, it's not allowed. A residence (a house) would be considered a major tie, unless it is rented out (at arms length). Having a mailing address (like your parents house, for example) is not an issue. Having a bank account, a driver's license, credit card are all minor ties and are not going to be taken into account unless you are shown to have established major ties.

Do the following and you should be fine;
1. Don't leave you property empty (if you have one)
2. Don't spend more than a couple of months a year in Canada
3. Take your wife and kids with you
4. Stay out of the country for at least a couple of years

Incidentally, the last time I was home I applied for a new driver's license. I was asked if I was a resident of Canada (I said, yes, because I thought I was going to be denied a driver's license). However, when the lady gave the form to sign at the end, there was no mention of this question (I did not sign to say I was resident). I say this because someone discussed this same issue in the UK on the TES forum. It would seem non-resident Canadians may be denied driver's licenses in the future.

[shadowjack]

Pretty hard to do that, Helen Back, for say, women living in Saudi Arabia, where they cannot legally get a driver's licence. Or a country that is not signatory to the Geneva IDP agreement - what would their recourse be? LOL

That would be an interesting course of events.

[booboo14]

You can live outside your Province and still qualify for health care but it is a provincial jurisdiction and usually depends on the total number of days spent abroad, however for most teachers it would be hard to maintain it.

A tax treaty only prevents you from being double taxed.

Get a professionals opinion and contact CRA directly as they do each case individually and the results may differ on who makes the decision.

Also, there are benefits of keeping your residency, depends on your situation.

[IAMBOG]

I doubt if the Canadian and UK governments care about whether expats can maintain their diver's licenses.

[notyouraverageturd]

You are not a resident for tax purposes in the situation you have described, and thus, do not have to file a Canadian tax return so long as you haven't generated Canadian income. As others have mentioned, there are situations where you might be, such as if you rent or own a residence in Canada. Also be aware that non-residents can not have TFSA's and can incur a 1% penalty per month if you are caught. Have an illegitimate TFSA for a couple years, and you could really wind up in a pickle!

What CRA and several accountants told me was that the main "tie breaker" that determines your taxability in Canada is where you have your primary residence. If you really want to put your mind at ease, you can fill out a form, fax it to CRA, and they will tell you that you are a non-resident. As far as healthcare and drivers licenses go, that is a provincial jurisdicition, but I believe most provinces consider less than 183 days per calendar year to be non-residence, and thus, you shouldn't be using healthcare or a drivers license. However, a great deal of that is up to your intent, as I believe many provinces also consider you a resident the minute you return with the intent to reside...

TL;DR: Don't file, you don't have to.

[shadowjack]

However, if you have a RESP (registered education savings plan), you can keep that - but YOU cannot contribute to it. Your parents can gift your children money to it, as can aunts and uncles, but it has to be their money, not yours. You cannot continue to contribute to it as you are no longer a resident of Canada. When we left, we just stopped contributing and nobody else put money in either LOL.

[shadowjack]

CORRECTION: After looking into it, if your children are out of the country with you, then your plan must go inactive with no contributions made. When your children or beneficiary takes up Canadian residence, the money can be disbursed to them, provided they are living in Canada. If your children do not establish Canadian residence before going to school in a different country, then the money cannot be used by them without paying taxes. In country is fine.

I stand corrected (and thank goodness we didn't put any money into the RESP :-)

[jbiersteker]

Are you sure about that? We were told that we could use the money from the RESP in any country that our children chose to study in. We have not contributed to our RESP since declaring "non-residency".

[shadowjack]

I checked it out. If your children are non-resident and they do not re-establish Canadian residency, they cannot use the money to study outside of Canada because they are still non-resident. Now, will they ever be called on it if they return to Canada the summer after graduation to establish "residency" and then head off to their foreign country?

If they re-establish residency, they can use it in any country. The key is re-establishing residency.