Enigma368

I am not trying to avoid paying tax, I am trying to understand to whom I pay tax to. I feel like you are not understanding the thread.

Enigma368

"In practical terms, for very short assignments, you can keep your UK company. For periods of up to six months, while you are technically liable for tax where you are working, the authorities won't really be able to catch up with you if you continue paying tax at home. So long as you pay tax in the UK on that earned income you will be effectively within the law."
ContractorCalculator.co.uk

Its not exactly my situation as I *may* need to stay slightly longer than 6 months but I also may not. BTW the example you give is not relevant to my situation or this thread as it is of people who want to avoid paying any tax in any country. I am not in no way trying to avoid paying tax, ultimately I pay roughly the same tax wherever I pay it, its just a matter of keeping things simple, and legal, for what is a very short period. I am seeking professional advice on this.

Aviator

Maybe this is the bit that was confusing?


The link posted above does not apply to Canadian tax rules. If you are a tax resident of Canada (this is determined by CRA not you) then you are liable for tax on your worldwide income. Where a tax treaty exists you can claim any tax paid in the UK against Canadian tax liability if you get a certificate of tax paid from the company.

Determining your residency status

Enigma368

Ok well if you read it again you will see that I am very clearly stating that there is advice online from some "reputable" sources that suggests for very short periods, while one may technically and legally be liable for tax while residing temporarily in a foreign country, continuing to pay tax in the UK will neither be noticed or considered a big deal. You may feel this is terrible advice, or you may think this is a black and white issue, which is fine, I am just saying that is the advice from some sources. Ultimately I am going to pay the same amount of tax wherever I pay it, more or less, so I am not going to gain anything financially regardless. Accusing me of wanting to "leach" off the system as if I am trying to avoid paying tax completely is misinterpreting the thread and my intentions.

I will seek professional advice on my specific situation and will follow that.

JonboyE

It is the bolded bit that causes other posters to wonder. If you are technically and legally liable for tax and don't report this then you are involved in tax evasion and no one is going to condone that.

A discussion of all the implications of the above would fill a book. Essentially, you need to clarify:

a) will the company create a permanent establishment in Canada. If it does, the PE will fall within the Canadian tax regime.
b) will you become tax-resident in Canada. If so, then your world-wide income will be taxable in Canada.

There is some guidance in the tax treaty Convention Between the Government of Canada and the Government of the United Kingdom of Great Britain and Northern Ireland but both of these questions are determined after a consideration of all the facts so we cannot offer certainties.

Enigma368

Yeah, fair enough. I repeated advice I read such as the quote below and, through my own poor choice of words, gave the implication that I was going to do this. This was my mistake. I should have more clearly asked whether this was good or bad advice and it seems the consensus is that it is bad advice. To be clear going forward, I intend to pay all taxes due in the correct jurisdiction and am seeking professional advice so that I can do this correctly.

"In practical terms, for very short assignments, you can keep your UK company. For periods of up to six months, while you are technically liable for tax where you are working, the authorities won't really be able to catch up with you if you continue paying tax at home. So long as you pay tax in the UK on that earned income you will be effectively within the law."
ContractorCalculator.co.uk

Yeah I need to find out whether I can keep my company in the UK and also at what point I will be considered Canadian tax resident.

Aviator

That is UK law though. If the corporation is a UK company UK tax law applies to the UK corporation. It doe snot extend to employees living in Canada and being tax resident of Canada who are subject to Canadian tax laws. One should not rely on CRA not catching up with them.

Enigma368

Ultimately this is all very complicated.

I wonder if I can take sufficient dividends from my company before moving to Canada, and live solely on that while in Canada. If I draw the dividends while still a UK tax resident, then that is subject to UK tax law right? Equally, if I do not draw any salary or dividends while living in Canada, then I have no income earned during that period to pay Canadian tax on?

I suspect I am probably looking at this too simplistically...

JonboyE

I don't think so. This sounds like a plan for your personal income.

For the company the question is if it has a PE in Canada. You can see what the Canada Revenue Agency think here Meaning of Permanent Establishment in Subsection 123(1) of the Excise Tax Act (the Act). In particular, look at the paragraph headed Continuity and permanency.

Enigma368

NT

Stinkypup

My guess- National Trust.....


I love the way you had to edit this.... What did you put initially?? NB, BS, PO?