JonboyE

2204 Walkley Road
Ottawa ON K1A 1A8
Canada

is the address of the Canada Revenue Agency International Tax Services Office.

International tax is VERY complex. Even many practicing accountants don't really understand all the implications unless they specialize in this area. A lot of CRA auditors will not understand it and you will be very lucky to find a tax return preparation service who does. To avoid any doubt I would recommend getting an advance ruling from the CRA at the office listed above. And, don't rely on the word of someone on the 'phone. Get it in writing.

JonboyE

They are not meaningless. The remittance rules for non-domiciled persons are a part of UK tax law. The treaty is made between Canada and the UK and so must address the position of Canadians living in the UK, as well as Brits living in Canada.

Quite.

But if something is presented as fact, but may not be 100% correct, what should the response be?

Ad 12345

So there we have it folks. Words of wisdom. Apparently the tax man makes rules that no one understands and only apply in la la land. Guess that means we can make up any rules we feel like... cool.

I think the point I am making has been lost. There are many of you out there who do not need this debate but clear guidance as you are trying to plan your move to Canada. I guess if you are debating multi million off shore accounts in the Cayman Islands there is more grey than black and white, but the issue of a lump sum is not exactly the mystic many people are making it to be. More black and white than shades of grey and we in DPM prefer it to be like this.

I do sincerely recommend you seek advice from an expert and not armchair accountants. You could end up making some poor decisions on poor int. I do however agree with one point that has been made. Any agreement you make, get it in writing. I believe mine is in the post today.

Robbie500

I retired from the police and we also receieve a tax free lump sum in the UK and I got caught by this as we had already landed.

Its quite simple once you become a permament resident and can be shown to have some permanance in Canada ie: bought property; spouse living in Canada you become a liable for Canadian Taxes and the Canadians treat your lump sum as income.

There are only two ways to avoid tax. 1. Make sure the lump sum is in your UK bank account before you land in Canada; you can then transfer it over to Canada with no tax imlications. 2. The other option is if you are already in Canada; you can declare it and pay loads of tax or you can invest the lump sum into a Canadian RRSP without any tax implications until you start taking the money out.

I had to invest my lump sum. Hope this helps
Rob.

JonboyE

Pension payments awarded under the Pension Act are for service in Canadian (or Newfoundland) forces.

However, have a look at this from the CRA's Interpretation Bulletin 397R:

Service Pensions from Other Countries

12. Pursuant to paragraph 81(1)(e), a pension payment received from a foreign country on account of disability or death arising out of war service is not required to be included in income provided the foreign country grants substantially similar relief for the year to persons receiving payments referred to in 10 above and subject to the comments in 13 below.

13. Paragraph 81(1)(e) only applies in respect of pension payments made by countries that were allies of His Majesty at the time of the war service referred to in 12 above. The countries which so qualify are as follows:

World War I
...
Commonwealth Countries...

World War II

...Commonwealth Countries

Section 81(1) says:

War pensions

(e) a pension payment received on account of disability or death arising out of a war from a country that was an ally of Canada at the time of the war, if that country grants substantially similar relief for the year to a person receiving a pension referred to in paragraph 81(1)(d);

To be honest, this is not an area of tax I know much about, but I'm learning since I joined BE!
It is clear this exemption only applies to pensions as a result of disabilities received in conflict. I would be interested to know if it would apply to soldiers disabled in a) Afghanistan (where Canada is fighting and thus an ally of the UK) or b) Iraq (where they are not).

If you get any more information I would appreciate it if you can share it with us.

JonboyE

Almost Canadian knows what he is talking about.

I'm not convinced that applies to all the posters on this thread.

DAVIE_MAC

The above in red will also affect everyone on a military pension from the age of 65 as pension payments and terminal grants paid on discharge only take into account that service up until April 2006. Any service / pension accrued after April 2006 will be paid back to you at the age of 65 in the form of a tax free lump sum @ 3x pension. So if your still in Canada at this point we'll all be caught with this.

For me it will be on a small amount of about £2300 (i.e. 06 to 09) but if I had served longer past 2006 it will obviously be bigger. If I had transfered to AFPS05 (hopefully not many did) my 2nd tax free payment would have been around £28000. This will also affect those 12yrs+ on a preserved pension when you recieve your 2nd lump sum....my OH is one of them so we'll get caught twice...


I wait to be corrected if i'm wrong please.

chumley

most interesting thread thanks all

I have yet to be able to find what the tax free allowances are in canada and have spent an age on the canadian equivalant of the inland revenue site???

I dont pay much tax on my army pension and if the uk tax free allowance of £6015 or thereabouts is more generaous than any canadian tax free allowance does this mean I will have to pay the difference?

eg if the canadian allowance was say only $5000 if indeed they have a tax free allowance????

Robbie500

Chumley,

The tax free allowances will vary from province to province. I have added a link for a Canadian tax calculator for you below. This includes all the allowances for each province. Hope this will help with the amount the dreaded tax man will sting you for.

http://www.ey.com/GLOBAL/content.nsf...8_Personal_Tax

Rob

Almost Canadian

There's the rub. If you receive a "War Pension" because of a war, you may be receive it tax free in Canada. I receive mine due to a medical discharge which, in no way, can be attributed to a war.

The UK Forces' discription of a war pension and the CRA's may be very different.

As I said, I have already tried this and failed

chumley

many thanks for the link rob much appreciated

ijjtaft

I just had a medical to see what percentage of war pension I would recieve, as my Husband and I are already living in Newfoundland on a work permit. The UK Veterans agency got the Canadian Veterans agency to carry out the medical. I was told by the doctor performing my medical that if we applied for citizenship and got it then the Canadians would take over payments give me the same help with drugs as the UK and in most cases the pension increases. Apparently the UK and Canadian Government have an arrangement in place...Just thought I'd add this incase it helps anybody.

Almost Canadian

My pension increases each year too

Souvenir

Just out of interest, do UK soldiers get lump-sum payouts if they are invalided out?

DAVIE_MAC

Yes.

http://www.mod.uk/NR/rdonlyres/37968...0/7AFPS_05.pdf

The above is to do with the new AFPS05 which will pay you a tax free lump sum depending on the Level (tier) of severity.

For the old farts like me on AFPS75 it it's Non-Attributable Invaliding you will get an immediate pension & tax free lump sum @ 3x the yearly pension which depends on time served.

Attributable Invaliding you could recieve a tax free lump sum and tax free pension but to cut a long story short these will be in result of investigation and assessments of % disability by the Veterans Agency.

All pensions are index linked