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how to start paying tax in Canada?

how to start paying tax in Canada?

Old Nov 15th 2020, 8:32 pm
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Default how to start paying tax in Canada?

Hello, im currently self employed working for a UK based company and pay tax in the UK. i've since moved to Canada and now a permanent resident. i would like to start paying tax here instead as i'm not moving back to the UK.

I've tried speaking to multiple accountants here and the UK and im getting nowhere. except one that wants to charge me $460/hr plus tax...

How do you stop paying tax in the UK and start paying tax in Canada?

Also, something else i'm struggling to figure out, the UK tax year is april to april, however Canada tax year is the calendar year. as they overlap how do you calculate the foreign tax paid from jan to april for the Canadian tax return as my UK tax bill is one lump some, not broken down per month.
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Old Nov 15th 2020, 9:03 pm
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Default Re: how to start paying tax in Canada?

I left the UK sometime ago and as a self employed person over there, all I did was pay what tax I owed and let them know I was immigrating.
That was it. As for here, I still work as self employed and when it came to do a tax return, I got a local tax accountant to do it. I'm assuming you have a S.I.N # because that would be a problem if you don't.
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Old Nov 15th 2020, 9:44 pm
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Default Re: how to start paying tax in Canada?

Originally Posted by Pinnacle View Post
Hello, im currently self employed working for a UK based company and pay tax in the UK. i've since moved to Canada and now a permanent resident. i would like to start paying tax here instead as i'm not moving back to the UK.

I've tried speaking to multiple accountants here and the UK and im getting nowhere. except one that wants to charge me $460/hr plus tax...

How do you stop paying tax in the UK and start paying tax in Canada?

Also, something else i'm struggling to figure out, the UK tax year is april to april, however Canada tax year is the calendar year. as they overlap how do you calculate the foreign tax paid from jan to april for the Canadian tax return as my UK tax bill is one lump some, not broken down per month.
Have you already completed and submitted a P85 form to HMRC? That tells them that you’re leaving the UK and will no longer be paying tax in the UK.
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Old Nov 16th 2020, 6:30 am
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Default Re: how to start paying tax in Canada?

P85 in the UK - self employed in Canada (invoicing the agencies/companies you contract to for remote work).. you are required to pay taxes on world income in Canada as soon as you are resident for tax purposes - but you will get a 'credit' for taxes already paid in the UK. Advantages to paying taxes in Canada are that as a self employed person (freelancer) there are tax deductions to help reduce your taxes. You will have to pay your own CPP costs, and charge Canadian clients HST once your income hits $30,000 (accummulative, not per year). Lots of info available on the forum... and official info in the link below.
https://www.canada.ca/en/revenue-age...mmigrants.html

There's also a useful section in our wiki https://britishexpats.com/wiki/Category:Taxes-Canada

Last edited by Siouxie; Nov 16th 2020 at 6:33 am.
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Old Nov 16th 2020, 6:27 pm
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Default Re: how to start paying tax in Canada?

Originally Posted by Twitcher1958 View Post
Have you already completed and submitted a P85 form to HMRC? That tells them that you’re leaving the UK and will no longer be paying tax in the UK.
no i haven't my accountant never told me about a P85! do i login into my HMRC account to get this form? i've been here 3 years (permanent resident since feb this year), can i fill in that form now before the UK tax is due in jan?
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Old Nov 16th 2020, 6:53 pm
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Default Re: how to start paying tax in Canada?

Originally Posted by Siouxie View Post
P85 in the UK - self employed in Canada (invoicing the agencies/companies you contract to for remote work).. you are required to pay taxes on world income in Canada as soon as you are resident for tax purposes - but you will get a 'credit' for taxes already paid in the UK. Advantages to paying taxes in Canada are that as a self employed person (freelancer) there are tax deductions to help reduce your taxes. You will have to pay your own CPP costs, and charge Canadian clients HST once your income hits $30,000 (accummulative, not per year). Lots of info available on the forum... and official info in the link below.
https://www.canada.ca/en/revenue-age...mmigrants.html

There's also a useful section in our wiki https://britishexpats.com/wiki/Category:Taxes-Canada
thanks i will check out those links.

i had a quick look at the P85 and i'm not sue its the right form for me? i'm self employed (though i work full time for one company) and it's asking for PAYE reference, i'm not paid through that so i can't finish the form.
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Old Nov 16th 2020, 7:30 pm
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Default Re: how to start paying tax in Canada?

Originally Posted by Pinnacle View Post
thanks i will check out those links.

i had a quick look at the P85 and i'm not sue its the right form for me? i'm self employed (though i work full time for one company) and it's asking for PAYE reference, i'm not paid through that so i can't finish the form.

If you check the gov.uk site, under Tax if you leave the UK, it says to complete a P85 form or send your self assessment tax return by post, if you normally complete one, for example if you’re self employed.
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Old Nov 17th 2020, 10:39 pm
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Default Re: how to start paying tax in Canada?

You need to file tax returns in Canada as soon as you are a tax resident of Canada, whether you are a student, TFW, PR or Canadian, where you pay tax is not a choice, it is legislated. Determining tax residence is available on the CRA website.

If you have paid tax to a country with a tax treaty with Canada, you can claim a credit for foreign tax paid, so long as you have a 'certificate of foreign tax paid' to file with your tax return. For the 2020 tax year, the year end is December 31, filing date April 30 for employed and June 15 for self employed. Any tax due will not attract interest if paid by April 30. In the 2020 tax year a filer could claim for foreign tax paid for 2019/2020 tax year in the UK.

As a business in Canada, if you earn over $30,000, you need to have a business number with CRA. In this bracket it is mandatory to charge federal sales tax to Canadian businesses, the rate being the rate in their province of operation, i.e. in ON you would charge HST @13% to BC business GST @5%. If you sell merchandise, PST is also payable in those provinces charging it.

If you have been a tax resident for several years and not filed in Canada, seek advice from an accountant (I would not use a tax filer), there are plenty of good ones who charge way less than $460 an hour. However what you pay is less of an issue than what they save you. Saying that, having a good accountant is worth every cent in my opinion.


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