live in Canada work in UK???
Nov 20th 2010 | 10:47 am
#31
BE Enthusiast
Joined: Jun 2009
Posts: 704
From: Cheltenham, UK was Vancouver, BC
Re: live in Canada work in UK???
This is not correct. Once you become tax resident in Canada you are taxable on your world wide income. You get a credit for income tax already paid on the income (and as I said above, this credit is in the Income Tax Act and not the tax treaty). If the taxes due in Canada on this income exceed to tax deducted in the UK you have to pay the difference in Canada. Paying tax properly in the UK doesn't get you out of this.
You could be liable for a bit more. You should be OK for 2010 as the calculation starts from the day you move here. Your marginal rate in Canada will be low - less than your UK marginal rate. The top marginal rate in BC is 43.7% and that is for income over (approx) £80,000. You could have some exposure in 2011.
[edit: I'm not sure of your working arrangements in the UK. If you are an employee then no problem. If you are a contractor there could also be a timing exposure. The foreign tax credit is on tax paid, not tax payable.]
Of course, it is always a good idea to see an accountant.
You have to pay tax in each country according to the laws of that country - you don't get a choice. Where the laws conflict the tax treaty sets out which country has the right to tax various sources of income. Of course, you are correct that you don't pay tax twice but you end up paying at the rate of whichever country has the highest rate for that income.
You could be liable for a bit more. You should be OK for 2010 as the calculation starts from the day you move here. Your marginal rate in Canada will be low - less than your UK marginal rate. The top marginal rate in BC is 43.7% and that is for income over (approx) £80,000. You could have some exposure in 2011.
[edit: I'm not sure of your working arrangements in the UK. If you are an employee then no problem. If you are a contractor there could also be a timing exposure. The foreign tax credit is on tax paid, not tax payable.]
Of course, it is always a good idea to see an accountant.
You have to pay tax in each country according to the laws of that country - you don't get a choice. Where the laws conflict the tax treaty sets out which country has the right to tax various sources of income. Of course, you are correct that you don't pay tax twice but you end up paying at the rate of whichever country has the highest rate for that income.
Nov 21st 2010 | 12:12 am
#32
BE Forum Addict
Joined: Feb 2005
Posts: 1,533
Re: live in Canada work in UK???
Thanks for clarifying that...hopefully my husband will be with us here before it will affect us in this way.
lol
Stef
lol
Stef
This is not correct. Once you become tax resident in Canada you are taxable on your world wide income. You get a credit for income tax already paid on the income (and as I said above, this credit is in the Income Tax Act and not the tax treaty). If the taxes due in Canada on this income exceed to tax deducted in the UK you have to pay the difference in Canada. Paying tax properly in the UK doesn't get you out of this.
You could be liable for a bit more. You should be OK for 2010 as the calculation starts from the day you move here. Your marginal rate in Canada will be low - less than your UK marginal rate. The top marginal rate in BC is 43.7% and that is for income over (approx) £80,000. You could have some exposure in 2011.
[edit: I'm not sure of your working arrangements in the UK. If you are an employee then no problem. If you are a contractor there could also be a timing exposure. The foreign tax credit is on tax paid, not tax payable.]
Of course, it is always a good idea to see an accountant. You have to pay tax in each country according to the laws of that country - you don't get a choice. Where the laws conflict the tax treaty sets out which country has the right to tax various sources of income. Of course, you are correct that you don't pay tax twice but you end up paying at the rate of whichever country has the highest rate for that income.
You could be liable for a bit more. You should be OK for 2010 as the calculation starts from the day you move here. Your marginal rate in Canada will be low - less than your UK marginal rate. The top marginal rate in BC is 43.7% and that is for income over (approx) £80,000. You could have some exposure in 2011.
[edit: I'm not sure of your working arrangements in the UK. If you are an employee then no problem. If you are a contractor there could also be a timing exposure. The foreign tax credit is on tax paid, not tax payable.]
Of course, it is always a good idea to see an accountant.
You have to pay tax in each country according to the laws of that country - you don't get a choice. Where the laws conflict the tax treaty sets out which country has the right to tax various sources of income. Of course, you are correct that you don't pay tax twice but you end up paying at the rate of whichever country has the highest rate for that income.
Nov 23rd 2010 | 5:25 am
#33
Grumpy Know-it-all
Joined: Jul 2010
Posts: 8,928
From: Calgary, Alberta
Re: live in Canada work in UK???
I just wanted to pitch in a bit more info here:
Be careful of reading "guidance" from the CRA and the CIC. Guidance is not a restatement of law, it's merely a generalization to assist in comprehension. The CRA and the CIC are not responsible for enforcing the law, they merely administer it. Courts enforce laws. If you actually want it chapter and verse you start by reading the statute which they usually link to and the regulations also. They can be difficult to understand because they're written in legalese, hence the general guidance they post on their websites. This is why lawyers have jobs. E.g.: http://www.cra-arc.gc.ca/E/pub/tp/it...consolid-e.pdf
As far as tax residency goes, the CRA are famous for deeming people resident based on pretty flimsy circumstances, this is because they're paranoid about Canadians moving to the US. There are forms you can file, NR73 and NR74 to get the CRA to rule on what your tax residency is and one of the mistakes I've often seen people make is to file this form because they think this will help them out. It doesn't help you out - it helps the CRA out because now they have documentary evidence they can present in a court and they're aware of your existence. Don't file it unless the CRA asks you file it and has a very good reason for doing so. Figure out your residency status either by reading up on it or talking to a good accountant.
The other mistake I've seen people make is becoming tax residents of Canada and not being aware of departure tax - this is a capital gains tax levied on anything you have subject to CGT (e.g. stocks, valuables, etc.) at the point you leave Canada. A lot of people move to Canada, are never aware of this tax then things don't work out for them and they leave and find themselves hit with departure tax.
Be fully aware of how that tax will affect you before you move to Canada. If all you have is a principal residence in Canada, a car and an RRSP then it won't affect you (unless it's a classic car that goes up in value).
None of the immigration blurb I've ever read mentions departure tax and it's probably one of the most important things immigrants with assets need to know about.
Be careful of reading "guidance" from the CRA and the CIC. Guidance is not a restatement of law, it's merely a generalization to assist in comprehension. The CRA and the CIC are not responsible for enforcing the law, they merely administer it. Courts enforce laws. If you actually want it chapter and verse you start by reading the statute which they usually link to and the regulations also. They can be difficult to understand because they're written in legalese, hence the general guidance they post on their websites. This is why lawyers have jobs. E.g.: http://www.cra-arc.gc.ca/E/pub/tp/it...consolid-e.pdf
As far as tax residency goes, the CRA are famous for deeming people resident based on pretty flimsy circumstances, this is because they're paranoid about Canadians moving to the US. There are forms you can file, NR73 and NR74 to get the CRA to rule on what your tax residency is and one of the mistakes I've often seen people make is to file this form because they think this will help them out. It doesn't help you out - it helps the CRA out because now they have documentary evidence they can present in a court and they're aware of your existence. Don't file it unless the CRA asks you file it and has a very good reason for doing so. Figure out your residency status either by reading up on it or talking to a good accountant.
The other mistake I've seen people make is becoming tax residents of Canada and not being aware of departure tax - this is a capital gains tax levied on anything you have subject to CGT (e.g. stocks, valuables, etc.) at the point you leave Canada. A lot of people move to Canada, are never aware of this tax then things don't work out for them and they leave and find themselves hit with departure tax.
Be fully aware of how that tax will affect you before you move to Canada. If all you have is a principal residence in Canada, a car and an RRSP then it won't affect you (unless it's a classic car that goes up in value).
None of the immigration blurb I've ever read mentions departure tax and it's probably one of the most important things immigrants with assets need to know about.
