Go Back  British Expats > Living & Moving Abroad > Canada
Reload this Page >

curious tax question

curious tax question

Old May 18th 2009, 12:39 pm
  #1  
BE Enthusiast
Thread Starter
 
Joined: Jan 2009
Posts: 720
snowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud of
Default curious tax question

I wonder if anyone can help with this:

I may be returning to the UK to work for a year, in july. this means that I will have taxable income for canada for 6 months, and overseas income for 6 months.

With regard the uk I will be tax resident there for 9 months of the tax year.

so where should i be paying tax? I am essentially self employed and so dont do PAYE. although I could do this in the UK.

there is a possibility that I will not return, but at this point the plan is to return to canada.

Any tax tips fellas?
snowshoveller is offline  
Old May 18th 2009, 12:54 pm
  #2  
BE Enthusiast
 
Joined: Oct 2008
Posts: 422
ESarge is just really niceESarge is just really niceESarge is just really niceESarge is just really niceESarge is just really niceESarge is just really niceESarge is just really niceESarge is just really niceESarge is just really niceESarge is just really nice
Default Re: curious tax question

Hire accountants - one for each country.

It's an almighty pain to try and understand. I recently moved to Vancouver from NZ, have a house in NZ still and I still don't completely understand the tax situation.

It's complex stuff so get experts.

If you really want to work it out then you need to check the definition of 'tax resident' in each country. Canada's definition is quite broad - it's based on enduring ties or some such so even though you're out of the country you'll probably still pay tax back here. I have no idea about UK tax.
ESarge is offline  
Old May 18th 2009, 4:13 pm
  #3  
Binned by Muderators
 
Joined: Jul 2007
Location: White Rock BC
Posts: 11,631
JonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond repute
Default Re: curious tax question

Originally Posted by snowshoveller View Post
I wonder if anyone can help with this:

I may be returning to the UK to work for a year, in july. this means that I will have taxable income for canada for 6 months, and overseas income for 6 months.

With regard the uk I will be tax resident there for 9 months of the tax year.

so where should i be paying tax? I am essentially self employed and so dont do PAYE. although I could do this in the UK.

there is a possibility that I will not return, but at this point the plan is to return to canada.

Any tax tips fellas?
The tax treaty says that you can't be resident in both countries for tax purposes.

Essentially, you are tax resident where your home and family is. If you are currently tax resident in Canada then you will remain so until you permanently give up your residential ties here. (I.e. move your permanent home back to the UK.)

Whether or not you will have to pay tax in the UK will depend on the nature of your income, and if you have a permanent establishment there. Regardless, you need to declare all your income in your Canadian return. If you have paid any income tax in the UK you can effectively deduct this from Canadian income tax owing.
JonboyE is offline  
Old May 18th 2009, 4:38 pm
  #4  
BE Enthusiast
Thread Starter
 
Joined: Jan 2009
Posts: 720
snowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud ofsnowshoveller has much to be proud of
Default Re: curious tax question

Originally Posted by JonboyE View Post
The tax treaty says that you can't be resident in both countries for tax purposes.

Essentially, you are tax resident where your home and family is. If you are currently tax resident in Canada then you will remain so until you permanently give up your residential ties here. (I.e. move your permanent home back to the UK.)

Whether or not you will have to pay tax in the UK will depend on the nature of your income, and if you have a permanent establishment there. Regardless, you need to declare all your income in your Canadian return. If you have paid any income tax in the UK you can effectively deduct this from Canadian income tax owing.
cheers jon, this is sounding complicated,

We will not have a residence in Canada whilst in the UK, so essentially we are moving permanent home to uk for a year. so do you think I should be doing an end of term account in canada for the 1st 6 months of the year and then shifting tax residence for the rest of the year to uk. We probably wont return to Ca for more than a year.

I think I'll have to speak to my accountant!!
snowshoveller is offline  
Old May 18th 2009, 5:21 pm
  #5  
Arrived at last!!
 
woodmanbg's Avatar
 
Joined: Oct 2005
Location: Bragg Creek, AB
Posts: 1,354
woodmanbg has a reputation beyond reputewoodmanbg has a reputation beyond reputewoodmanbg has a reputation beyond reputewoodmanbg has a reputation beyond reputewoodmanbg has a reputation beyond reputewoodmanbg has a reputation beyond reputewoodmanbg has a reputation beyond reputewoodmanbg has a reputation beyond reputewoodmanbg has a reputation beyond reputewoodmanbg has a reputation beyond reputewoodmanbg has a reputation beyond repute
Default Re: curious tax question

Originally Posted by JonboyE View Post
The tax treaty says that you can't be resident in both countries for tax purposes.

Essentially, you are tax resident where your home and family is. If you are currently tax resident in Canada then you will remain so until you permanently give up your residential ties here. (I.e. move your permanent home back to the UK.)

Whether or not you will have to pay tax in the UK will depend on the nature of your income, and if you have a permanent establishment there. Regardless, you need to declare all your income in your Canadian return. If you have paid any income tax in the UK you can effectively deduct this from Canadian income tax owing.
We have been resident in Canada now for 18 months and we have had no end of problems with the UK tax office because they do not understand the Tax Treaty! They keep insisting on taxing us on stuff we are declaring here in Canada and we have to keep proving to them that we are resident here and it is just an absolute bl.....y nightmare.
woodmanbg is offline  
Old May 18th 2009, 6:14 pm
  #6  
Binned by Muderators
 
Joined: Jul 2007
Location: White Rock BC
Posts: 11,631
JonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond repute
Default Re: curious tax question

Originally Posted by snowshoveller View Post
cheers jon, this is sounding complicated,

We will not have a residence in Canada whilst in the UK, so essentially we are moving permanent home to uk for a year. so do you think I should be doing an end of term account in canada for the 1st 6 months of the year and then shifting tax residence for the rest of the year to uk. We probably wont return to Ca for more than a year.

I think I'll have to speak to my accountant!!
Because you intend to return to Canada in the future you remain tax resident here (a factual tax resident). To lose that status you have to sever your residential ties with Canada, which you are not doing.

However, if you live and work in the UK for more than 183 days (I think this is the right time - HMRC's webite is not playing nicely today) you will become tax resident in the UK.

Because you cannot be a tax resident in both countries your status in Canada becomes "deemed non resident". I.e. you are still tax resident, but for the purposes of making the tax treaty work you are treated as though you are not. During this time you pay your taxes to the UK government, all Canada will do is collect withholding tax on any Canadian sourced income.

If you are self-employed it will be a good idea to work with your accountant.
JonboyE is offline  
Old May 18th 2009, 6:18 pm
  #7  
Binned by Muderators
 
Joined: Jul 2007
Location: White Rock BC
Posts: 11,631
JonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond reputeJonboyE has a reputation beyond repute
Default Re: curious tax question

Originally Posted by woodmanbg View Post
We have been resident in Canada now for 18 months and we have had no end of problems with the UK tax office because they do not understand the Tax Treaty! They keep insisting on taxing us on stuff we are declaring here in Canada and we have to keep proving to them that we are resident here and it is just an absolute bl.....y nightmare.
Difficult to comment without knowing all your circumstances, but it is quite common to come across people at the lower levels of the CRA who don't fully understand international tax issues, I assume the same is true of HMRC.

Don't forget that HMRC are entitled to withhold tax on certain UK sourced income such as interest, rental income and annuities. If they do you can deduct the UK tax they withhold from your Canadian income tax payable.
JonboyE is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information -

Copyright © 2021 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.