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DUMB TAX QUESTION AND ALLOWANCES???

DUMB TAX QUESTION AND ALLOWANCES???

Old Dec 20th 2008, 3:51 pm
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Default DUMB TAX QUESTION AND ALLOWANCES???

I have spent many an hour pouring over the canadian tax website and numerous other sources and still have been unable to find simple answers to what should be simple questions

first question

what is the tax free alloawnce for Nova Scotia? anyone know?
eg how much can you earn before you start paying tax???

second question

husband has a Brit Army pension currently taxed in the UK, we are still visitors at the moment so will not be changing anything until we get PR ( fingers crossed this might be in the first half of 2009 if all goes well)

Once we are PR we will declare ourselves as such for canadian tax purposes

Now my husband pays very little tax on his brit army pension as he doesnt get to much more than then the tax free allowance of around £6035 ( approx I think)
If the canadian tax allowance is not as generous as the the UK tax free allowance how does this work?

eg suppose he opted to continue to be taxed in the UK? can he do this?
and if so does this then mean he would still have to pay more tax on top to Canada if the canadian tax allowance is less?

Or will he have to opt to get his army pension paid tax free in the uk then when it arrives in canada pay canadian tax on it??
sorry to ramble but just cant find answers?

my income is from interest on savings and is tax free as its under the uk the free threshold
I will obviously declare it as worldwide income to the canadain revenue but once again without knowing canadain tax free allowance I dont know if I will now be taxed on this income?

does canada have any allowance for marrieds like we use to have in the Uk or is it just individual

any hlep much appreicated I know its a yawn of a subject but still an important one unfortunately
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Old Dec 20th 2008, 4:18 pm
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Default Re: DUMB TAX QUESTION AND ALLOWANCES???

On the military pension - try searching for "military pensions" on this site. There are at least 6 relevant threads in the first page of results.

Essentially, there is a tax treaty between UK and Canada that says you can offset tax paid in one country against the tax bill in the country you live in. Experiences vary as to how tedious the process is, but that's the principle. So where the pension is paid, and whether tax is deducted at source makes little difference to your tax bill in the end.

Sorry can't help with NS allowances, but Ernst & Young's website has a tax calculator that shows you what your tax bill would be in each province.
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Old Dec 20th 2008, 4:23 pm
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Default Re: DUMB TAX QUESTION AND ALLOWANCES???

many thanks
yes I have read each and every thread on army be'ers always do but no answer hence my post

and yes I know all about reciprical agreement but still doesnt answer Im afraid

as my question is will I need to pay more on top of what is already paid if we continue to be taxed in UK??
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Old Dec 20th 2008, 4:28 pm
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Default Re: DUMB TAX QUESTION AND ALLOWANCES???

You will pay tax on your worldwide income once you become a resident for tax purposes. Each year, you will file a tax return and CRA will calculate how much tax you have to pay. Any tax you have already paid in England will be deducted from the total amount of tax you have to pay so, from that point of view, it really makes little difference whether you pay tax in England ( and claim the tax credit) or receive the money tax free in England and pay it in Canada. If you are owed tax, it is likely the CRA will reimburse you unless you earn so little that, in Canada, the amount you have to pay is less than you have paid in Canada and England
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Old Dec 20th 2008, 4:30 pm
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Default Re: DUMB TAX QUESTION AND ALLOWANCES???

Originally Posted by chumley View Post
Once we are PR we will declare ourselves as such for canadian tax purposes

PR is not the only consideration. You may be deemed to be a resident for tax purposes prior to obtaining PR. You need to research this.
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Old Dec 20th 2008, 4:45 pm
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Default Re: DUMB TAX QUESTION AND ALLOWANCES???

Originally Posted by chumley View Post
I have spent many an hour pouring over the canadian tax website and numerous other sources and still have been unable to find simple answers to what should be simple questions

first question

what is the tax free alloawnce for Nova Scotia? anyone know?
eg how much can you earn before you start paying tax???
In Nova Scotia it is $7,731, and the Federal limit is $9,600 (2008). So you effectively pay no tax on the first $7,731 you earn, then NS tax only on the next $1,869.00

second question

husband has a Brit Army pension currently taxed in the UK, we are still visitors at the moment so will not be changing anything until we get PR ( fingers crossed this might be in the first half of 2009 if all goes well)

Once we are PR we will declare ourselves as such for canadian tax purposes
It is not always a matter of choice, and your immigration status is only partially relevant. If you are a PR and living in Canada you will obviously be resident here for tax purposes. However, if you stay in Canada for more than 183 days in any one calendar year you will be deemed tax resident in Canada and will be taxed in Canada on your world wide income for the whole year.

Now my husband pays very little tax on his brit army pension as he doesnt get to much more than then the tax free allowance of around £6035 ( approx I think)
If the canadian tax allowance is not as generous as the the UK tax free allowance how does this work?
In the short-term he will make a claim when he files his 2008 tax return in Canada (necessary if he exceeds the 183 day stay limit) for a credit for the UK tax he has paid. Complete forms T2209 and T2036 and file these with his tax return. Long-term he should contact the army pension office and fill in whatever form he needs to inform them he is now resident in Canada for tax purposes. They will then pay the pension without deducting any UK tax.

eg suppose he opted to continue to be taxed in the UK? can he do this?
and if so does this then mean he would still have to pay more tax on top to Canada if the canadian tax allowance is less?
If he doesn't inform the army pension office then he will continue to pay tax in the UK, but why would anyone chose to do this? Whatever he does he will effectively pay at least Canadian tax at Canadian rates. He may pay more. The tax credit is limited to the higher of:
a) the tax deducted in the UK, or
b) the tax that would have been payable in Canada on the income.
If the UK tax is higher than the Canadian tax then he is stuck paying the higher amount.

Or will he have to opt to get his army pension paid tax free in the uk then when it arrives in canada pay canadian tax on it??
sorry to ramble but just cant find answers?
Yes. Also note that it does not matter whether or not the money arrives in Canada. Even if he keeps the money in the UK he has to declare it as income in Canada. You pay tax on the money you receive, not the money you remit to Canada.

my income is from interest on savings and is tax free as its under the uk the free threshold
I will obviously declare it as worldwide income to the canadain revenue but once again without knowing canadain tax free allowance I dont know if I will now be taxed on this income?
Each individual files a tax return so you get the same allowances as quoted above.

does canada have any allowance for marrieds like we use to have in the Uk or is it just individual
If your OH earns less than $9,600 you can claim the balance of your OH's "tax-free" amount and vice versa. Otherwise no. There are some other tax credits, such as medical expenses and charitable contributions that you can share between spouses to minimize overall tax payable.

any hlep much appreicated I know its a yawn of a subject but still an important one unfortunately
You are welcome. It is not a yawn subject to everyone.

Last edited by JonboyE; Dec 20th 2008 at 4:53 pm.
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Old Dec 20th 2008, 5:47 pm
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Default Re: DUMB TAX QUESTION AND ALLOWANCES???

huge thanks thats really helpful looks like we shal be considerably worse off then:curse:as nova scotia tax free allowance is almost half of the Uk allowance
as far as being tax resident now
I think husband should be ok as he has not spent 183 consequtive days in canada this year
last 6 months visitor stay started september? so hopefully he wouldnt be classe as tax resident for 2008

I came in April though so have done over 183 days but my income is well below the NS tax allowance so I should also be OK

do I still have to file a nil return so to speak in January? unearned income is only a few hundred dollars well under the $7731?

once again this is really helpful huge thanks
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Old Dec 20th 2008, 5:54 pm
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Default Re: DUMB TAX QUESTION AND ALLOWANCES???

In NS:

You get $2000 per child tax allowance per year.

You can also claim back taxes for money paid out for prescriptions, dental and optical, over and above the sum your health insurance pays for. You can also claim back some taxes for your health insurance premiums too.

You can also claim for work related safetywear, tools etc.

You also get a $500 dollar tax allowance for each childs' sports fees paid out.

As another posted said too, if one partner works and the other doesn't or earns below the tax thresehold, then you can transfer part or all of their tax allowance to the other partner.

You should file every year - little earnings or not
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Old Dec 20th 2008, 5:58 pm
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Default Re: DUMB TAX QUESTION AND ALLOWANCES???

Originally Posted by Yes-can-do View Post
You should file every year - little earnings or not
I absolutely agree. Many benefits available to people with low incomes can only be claimed if you file a tax return.
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Old Dec 20th 2008, 6:01 pm
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Default Re: DUMB TAX QUESTION AND ALLOWANCES???

Originally Posted by chumley View Post
I think husband should be ok as he has not spent 183 consequtive days in canada this year
It is 183 days in total, not just consecutive days.
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Old Dec 20th 2008, 6:17 pm
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Default Re: DUMB TAX QUESTION AND ALLOWANCES???

Originally Posted by chumley View Post
huge thanks thats really helpful looks like we shal be considerably worse off then:curse:as nova scotia tax free allowance is almost half of the Uk allowance
I don't think follows necessarily.

If you OH receives UKP6,035 then, at 1.8 this is $10,863. If the amount of interest you receive is less than the basic personal amount then you can transfer the balance to your husband. You could earn up to $8,000 (UKP4,444) in interest before either of you pay a penny of tax in Canada. More when you get to 65.

Don't forget that you cannot claim a credit for UK tax paid if you do not pay tax in Canada, so get onto the army tax office as soon as you can.
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Old Dec 20th 2008, 6:40 pm
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Default Re: DUMB TAX QUESTION AND ALLOWANCES???

many thanks this is getting interesting so it does sound then as if we can transfer between oursleves which would mean we wont be worse off??

we have no kids so nothing there
we dont work either
only income is army pension and a bit of interest from savings so total income betwen the 2 of us would be well under the 2 times $7301 NS tax free bit

as for health care we have a very expensive private ex pats health care policy so perhaps we should mention this?

husbands pension is over £6035 ie the uk tax allowance but not by a huge amount

think we best get onto army pensions but didnt want to tempt fate as we havent got PR yet just waiting for med requests
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Old Dec 20th 2008, 6:46 pm
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Default Re: DUMB TAX QUESTION AND ALLOWANCES???

sorry forgot to ask when does the canadian tax year run from? is it january to december or is it april for the tax year end?
I understnd I need to file in January but thinking about getting the army pension paid tax free in uk it might take them a couple of months eg wont be done by Januarys payment?
but would be done in time for end of canadian tax year if thats April?
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Old Dec 20th 2008, 6:54 pm
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Default Re: DUMB TAX QUESTION AND ALLOWANCES???

Tax year is Jan 1st to Dec 31st.

Check out these websites for some info:

http://www.gov.ns.ca/finance/en/home...x/default.aspx

http://www.taxtips.ca/nstax.htm
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