Enigma368

Hi,

I am a contractor and the Director and sole employee of a UK LTD. company who provides services solely to a US Client. I will eventually be moving to the US to work for the client on site but until my visa is processed I plan to move to and work from Canada.

I have received the invitation to apply for the IEC working holiday visa in Canada. I plan to work in Canada for my US client so that I can on the same time zone. I will most likely be in Canada for 6-9 months. I have no plans to return to the UK before moving to the US.

• I've read several threads and believe I can continue to trade and pay corporation tax to my UK Ltd. Company?
  
• Is there any tax I will need to pay in Canada?
  
• I assume if I draw a salary while in Canada, I need to pay Canadian income tax on this.
  
• Is it at all more tax efficient to dissolve my UK company and work under a Canadian sole proprietership? Im assuming no point for such a short period of time.
  
• Any other tax efficiencies I can avail of doing this? Anything else I need to be aware of.
  
• Can I claim any relocation benefits - I am moving to be on same time zone as company but I am not being required to do so? I am guessing answer is no.

PB65

Might be best to get professional advice for these questions . As far as IEC is concerned sure a few people might not be that happy taking a valuable 24 month IEC slot and only intending to use 6- 9 months of it but hey no rules say you cannot just not a purpose IEC intended for.

dbd33

From which tax authority would you claim a relocation benefit? Not the US, you don't pay tax there. Not Canada, you'd have to be resident in Canada before the move. Perhaps the UK? That seems unlikely, they UK authorities aren't likely to subsidise your fleeing the country.

Enigma368

TBH I think it is unlikely I would qualify for relocation, it is just that it was listed on a couple of sites as a benefit of moving abroad as a UK Ltd. Company contractor. I guess it may be a benefit or your client is requiring you to move for a temporary period.

Well I would completely disagree with such people but I can sympathise with those who are waiting for an IEC visa invitation in the lottery. That said, I am a "young" person planning to work and travel in Canada so I am definitely using this visa within its defined purposes, even if my situation is a less common one. I am sure there are a wide variety of people who use this visa. This is not a whim, I am very excited about moving to Canada and seeing the country prior to my move to the US down the line. I am sorry you feel it is unfair that I will not be using the visa for the maximum length allowed.

JamesM

I applaud the chap.

Using IEC how it's intended with a clear exit strategy.

Too many folk trying to use their 2 year IEC to migrate here instead of it's proper purpose of work experience and travel.

Aviator

[QUOTE=Enigma368;11858973]pay corporation tax to my UK Ltd. Company?[QUOTE]

Most likley

• Quote:

  I assume if I draw a salary while in Canada, I need to pay Canadian income tax on this.

Yes

• Quote:

  Is it at all more tax efficient to dissolve my UK company and work under a Canadian sole proprietership? Im assuming no point for such a short period of time.

Only you can answer that.

• Quote:

  Any other tax efficiencies I can avail of doing this? Anything else I need to be aware of.

You should talk to an accountant in the UK before leaving and in Canada when you arrive.

• Quote:

  Can I claim any relocation benefits - I am moving to be on same time zone as company but I am not being required to do so? I am guessing answer is no.

You guess right. Your corporation could pay it and try for a tax deduction in the UK, which may or may not be allowed, or ask you client. Nowhere else, it is to your benefit alone.

rivingtonpike

I don't see a problem with this at all. I imagine there are lots of people that don't use the full 2 years. I doubt I would have done. A 2 year working holiday seems pretty long to me. If you're not using it as a back door way into staying as a PR, then I think a year would be all I'd want.

Enigma368

Interesting. Apparently if a relocation qualifies, my company (of which I am Director and sole employee) could pay me(as employee) £8000 tax free for relocation expenses.

I'm not sure if it would qualify though. The rules appear to be:

1)a new employee is moving area to start a job with you
OR
2)an existing employee is changing their place of work within your organisation
AND
3)the costs are paid before the end of the tax year after the one in which the move took place
AND
4)the employee’s new home is reasonably close to the workplace and their old home isn’t"

I will be changing my place of work within my organisation, but this is by choice rather than requirement. I guess many relocations are by choice though. As my home is my workplace, number 4 seems fine, my new home and workplace will be 10 hours flight from my old one.

I guess Ill have to ask the accountant.

bc2015

I know of plenty of people who got an IEC visa and then never bothered to use it.

Aviator

If you are a tax resident of Canada when you receive it, it could be taxable to the recipient. Tax rules from the UK don't apply here.

Enigma368

Yeah but at what point do I become tax resident in Canada? TBH I doubt I'll be in Canada long enough to pay any tax there. I mean legally I should yes, but the advice seems to be for that short a period, to just continue paying UK tax and they wont even notice. I'll seek advice from a professional of course.

R I C H

I employ around 25 IEC visa holders each year. Sometimes they ask to be paid in cash, to avoid Canadian taxes. I politely tell them to f@@k off back home.

Who the hell is giving you that advice?

Oh, and my first business here got audited by CRA after only 3 months of trading. You might want to keep tax affairs up to date.

PB65

Ok but if the Op is continuing to be paid into UK bank account then no need i would think to pay any Canadian tax especially as the client is based in the US anyway so no Canadian involvement and OP is on a working holiday visa but not planning this stage to enter the Canadian work place . Relocation expenses sound a bit dubious though as would guess that implies company being registered in Canada so liable Canadian taxes and pushing the boundaries as a one man company. If only planning stay in Canada for short term then question would be why bother if not required to register company just go straight from uk to us at the time and be paid to UK in the interim

Aviator

CRA require all tax residents to report income and pay tax, no matter where it is deposited. By the nature of the permit the OP is entering Canada and by what other actions they take determines their tax residency status. IEC holders mor eoften than not will be paying tax.

If they came on a visitor visa and no IEC, this may show no intention to reside in Canada. They need to research tax resicdency in Canada and also talk to an accountant. One could end up a tax resident on day one in the country.

Aviator

If you want to leach off our services and avoid paying tax, go work in the US and skip coming to Canada. Give someone who really wants to make a go of the the opportunity.