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Dual resident Uk and Canada

Dual resident Uk and Canada

Old May 10th 2016, 6:12 am
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Default Dual resident Uk and Canada

Hi,

I have a very confusing situation now.

I moved from Canada to the UK on a fiancée visa but filed world income in Canada as a Canadian tax resident (no property or family in Canada), until I received a permanent resident card in the UK. It seems that I should file my Canadian bank saving interest and pension lump sum from Canada to HMRC in the UK too as I lived in the UK for 183 days in one tax year, even before I got a job, and before become permanent in UK (arising basis). So do I have to change my departing date from Canada to the actual leaving date instead of the date I received the permanent resident card in the UK to avoid a dual resident situation? Or is it ok to file tax in both countries as a tax resident to keep it as simple as possible? Is there likely to be any future problem arising from this situation? Is it possible to be two tax residents at the same time? I have advised CRA of the date of becoming permanent in the UK as my leaving date from Canada, but it seems this may be a mistake? Is it easy to change my NR73? I was a PR card holder, and became a Canadian citizenship after I left Canada.

Thank you for any opinion.
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Old May 12th 2016, 1:13 am
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Default Re: Dual resident Uk and Canada

Don't file an NR73 unless the CRA ask you to. All it does is give them a tool to hit you over the head with. There's no real point to filing it if you're moving to a tax treaty country, it's overridden by Article 4 of the UK-Canada tax treaty.

When you moved to the UK with immigrant intent, at that point you ceased to be a tax resident of Canada, so I suppose if you didn't put the right date down on your T1 you might want to file an adjustment. But the most important bit is the date you left which you put on the front of your T1. You're supposed to then pro-rate the credits on your T1 to the days you were in Canada that year, but if you forget to do so, the CRA will just reduce them and send you a bill.

If you've got a TFSA, close that, but you can keep any form of pension you had. You might be subject to deemed disposition tax, read up on that, but most people aren't. T1243 is the form. Make sure you tell any Canadian bank you deal with that you are resident in the UK for tax purposes.

After that, you're only subject to Canadian taxes on Canadian-source income, (which excludes small amounts of bank interest) in which case you would have to file a non-resident T1 each year.

You'd claim a foreign tax credit in the UK for any Canadian-source income.

As of the date you moved to the UK, you're resident in the UK for tax purposes.

So no, you're not dual resident.

as I lived in the UK for 183 days in one tax year
Not necessarily as big of a deal as some people think, it depends mostly on your intent. Article 4 of the tax treaty talks about your "centre of vital interests", so if it was in Canada, it remained in Canada.

People get too carried away with this number of days thing, it's only one test of tax residency and I think people focus on it because it's less subjective. Which is why NR73 is pages and pages of subjective questions, but really it boils down to the tax treaty definition.

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Old May 13th 2016, 3:18 am
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Default Re: Dual resident Uk and Canada

Steve, are you a tax advisor we are looking for a professional tax advisor who understands the UK and canadian systems as we have a few questions? If you are not, do you know of anyone who is? You sound like you are knowledgable rather than a grumpy know it all!
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Old May 19th 2016, 5:28 am
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Default Re: Dual resident Uk and Canada

Thank you so much Steve. Just not sure whether I need to resubmit new NR 73 to show the actual leaving date and whether there is a complicated procedure or not , like I have to provide the letter from HMRC.
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Old May 19th 2016, 5:29 am
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Default Re: Dual resident Uk and Canada

Have asked some accountants but they are not sure
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Old May 24th 2016, 11:01 pm
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Default Re: Dual resident Uk and Canada

Yes, because accountants rarely know bugger all about tax treaties or foreign tax laws. If you want an actual sensible answer to a question like that, you'll be shelling out $10,000 to PWC or KPMG.

There's all kinds of information on the CRA and HMRC websites that is a complete waste of time for 90% of people because it's overridden by a tax treaty. The "non-dom" rules for the UK being a classic example. Most people aren't moving from the UK to Belize or the Cayman Islands.

Understand the basic principle of what the CRA is - they are constantly fighting with people to stop their tax revenue from going down south, so they spend a huge amount of time trying to make sure people are resident in Canada for tax purposes. HMRC does the same thing but for a different reason, namely inheritance tax.

Don't volunteer information to them. You fill in your tax return, do the best you can, let them worry about it from that point forward. If the CRA writes to you and asks you to fill in NR73 or NR74, that's the point at which you do it, but they shouldn't because technically under the tax treaty they will ask HMRC directly.
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Old May 31st 2016, 8:22 pm
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Default Re: Dual resident Uk and Canada

Originally Posted by rugbymum
Steve, are you a tax advisor we are looking for a professional tax advisor who understands the UK and canadian systems as we have a few questions? If you are not, do you know of anyone who is? You sound like you are knowledgable rather than a grumpy know it all!
I am resident in the UK and I am currently using KIERAN LYNCH FCA, FCCA, CTA. CHARTERED ACCOUNTANT AND CHARTERED TAX ADVISER, Alsager Cheshire
to handle my UK & Cdn tax affairs. So far, I am very pleased with the service and tax expertise he is providing.
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Old May 31st 2016, 8:30 pm
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Default Re: Dual resident Uk and Canada

[QUOTE=Steve_;11955524]Yes, because accountants rarely know bugger all about tax treaties or foreign tax laws. If you want an actual sensible answer to a question like that, you'll be shelling out $10,000 to PWC or KPMG.

If it is a considerable amount of money and comes from an unusual sum its worth making sure. We had PWC look into a situation for us, goes us $16000 but better than losing considerably more in tax!
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Old Jun 1st 2016, 2:29 am
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Default Re: Dual resident Uk and Canada

One of my relatives spent about that on PWC, which is why I know how much it costs. Not that what they came back with was total rubbish, it did contain some quite useful information but as a perfect example they went blathering on about the domicile test, which as I've said is overridden by the tax treaty and in their case there is an estate tax treaty too. Which PWC didn't mention at all.

What surprises me about these large companies is they're almost equally clueless on international tax issues, you think, ah, PWC, they've got offices everywhere but they don't talk to each other.

Quite good at domestic tax planning but international tax planning for individuals (as opposed to large corporations), it's very hard to find anyone who has a clue. There are people around who know how to do it for large corporations because they have accountants on staff and they get audited.

You only have to look at what happened with KPMG recently, oh yeah, let's stick our clients' money in a Manx corporation and then the CRA won't find out. Er, dimwits, that's what T1134 is for and it's illegal not to file it.

I've spoken to many supposed international tax experts on such lightweight topics as ISAs and TFSAs and to date they're nearly always wrong. Now I've got a pretty solid understanding, that's the first question I always ask because if they don't know the answer to that, they're crap.
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