Living in Canada but being paid in GBP
Jan 31st 2021, 5:48 pm
#1
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Joined: Dec 2017
Location: Hamilton, Ontario
Posts: 345
Living in Canada but being paid in GBP
We live in Canada and wife is self-employed, being paid mostly by UK clients in GBP and I have two questions:
1. When filing a Canadian tax return and declaring the self-employed income, she will presumably have to convert the GBP earned to CAD. Should she do the conversion of each payment separately using the exchange rate on the date she was paid, or lump it all together and use the rate on the day she files the return?
2. She is required to charge HST to Canadian clients if she earns over $30,000 in the previous year, and the GBP earned counts towards this figure. Again, to decide whether she's over or under $30,000, should she convert the GBP to CAD for each payment separately using the rate on the date of payment, or as a lump sum on the date of working it out?
1. When filing a Canadian tax return and declaring the self-employed income, she will presumably have to convert the GBP earned to CAD. Should she do the conversion of each payment separately using the exchange rate on the date she was paid, or lump it all together and use the rate on the day she files the return?
2. She is required to charge HST to Canadian clients if she earns over $30,000 in the previous year, and the GBP earned counts towards this figure. Again, to decide whether she's over or under $30,000, should she convert the GBP to CAD for each payment separately using the rate on the date of payment, or as a lump sum on the date of working it out?
Jan 31st 2021, 6:54 pm
#2
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Location: Whitby, Ontario
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Re: Living in Canada but being paid in GBP
We don’t have self employed income to deal with, but do have rental income etc through the year. We use Bank of Canada annual average exchange rate throughout - we do it automatically now but can’t remember where we initially got that advice - Turbotax?
Jan 31st 2021, 7:24 pm
#3
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Joined: Apr 2009
Location: SW Ontario
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Re: Living in Canada but being paid in GBP
Originally Posted by crofty82
We live in Canada and wife is self-employed, being paid mostly by UK clients in GBP and I have two questions:
1. When filing a Canadian tax return and declaring the self-employed income, she will presumably have to convert the GBP earned to CAD. Should she do the conversion of each payment separately using the exchange rate on the date she was paid, or lump it all together and use the rate on the day she files the return?
2. She is required to charge HST to Canadian clients if she earns over $30,000 in the previous year, and the GBP earned counts towards this figure. Again, to decide whether she's over or under $30,000, should she convert the GBP to CAD for each payment separately using the rate on the date of payment, or as a lump sum on the date of working it out?
1. When filing a Canadian tax return and declaring the self-employed income, she will presumably have to convert the GBP earned to CAD. Should she do the conversion of each payment separately using the exchange rate on the date she was paid, or lump it all together and use the rate on the day she files the return?
2. She is required to charge HST to Canadian clients if she earns over $30,000 in the previous year, and the GBP earned counts towards this figure. Again, to decide whether she's over or under $30,000, should she convert the GBP to CAD for each payment separately using the rate on the date of payment, or as a lump sum on the date of working it out?
2) She is required to charge HST to Canadian Clients - if her clients are outside of Canada she should Invoice them at a rate of 0% for services provided to overseas clients.
3) She needs to invoice her clients if she is self employed (I can give you links to free accounting software) - and keep track of her 'use of home office' expenses
(suggest using Studio Tax (approved program) or similar for her tax return)https://www.canada.ca/en/revenue-age...ed-income.html
https://www.canada.ca/en/revenue-age...ietorship.html
4) She will also have to pay CPP on her earnings (as well as taxes) - EI is optional.
If she isn't using her own name for the business she may need to register: https://settlement.org/ontario/emplo...ss-in-ontario/
Business guide for newcomers to Canada | FedDev Ontario Small Business Services
https://sbs-spe.feddevontario.canada.ca/en
Last edited by Siouxie; Jan 31st 2021 at 7:27 pm.
Feb 11th 2021, 1:04 pm
#4
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Joined: Dec 2017
Location: Hamilton, Ontario
Posts: 345
Re: Living in Canada but being paid in GBP
Originally Posted by Siouxie
1) I would convert to CAD on the date it was received - not the date it was 'earned' or bulk over the year - https://www.taxtips.ca/filing/foreignamounts.htm - exchange rate changes daily/hourly (it can work to your advantage on days when the exchange rate drops). Use the official site to obtain the exchange rate for that day.. https://www.bankofcanada.ca/rates/ex...xchange-rates/
2) She is required to charge HST to Canadian Clients - if her clients are outside of Canada she should Invoice them at a rate of 0% for services provided to overseas clients.
3) She needs to invoice her clients if she is self employed (I can give you links to free accounting software) - and keep track of her 'use of home office' expenses (suggest using Studio Tax (approved program) or similar for her tax return)
https://www.canada.ca/en/revenue-age...ed-income.html
https://www.canada.ca/en/revenue-age...ietorship.html
4) She will also have to pay CPP on her earnings (as well as taxes) - EI is optional.
If she isn't using her own name for the business she may need to register: https://settlement.org/ontario/emplo...ss-in-ontario/
Business guide for newcomers to Canada | FedDev Ontario Small Business Services
https://sbs-spe.feddevontario.canada.ca/en
2) She is required to charge HST to Canadian Clients - if her clients are outside of Canada she should Invoice them at a rate of 0% for services provided to overseas clients.
3) She needs to invoice her clients if she is self employed (I can give you links to free accounting software) - and keep track of her 'use of home office' expenses
(suggest using Studio Tax (approved program) or similar for her tax return)https://www.canada.ca/en/revenue-age...ed-income.html
https://www.canada.ca/en/revenue-age...ietorship.html
4) She will also have to pay CPP on her earnings (as well as taxes) - EI is optional.
If she isn't using her own name for the business she may need to register: https://settlement.org/ontario/emplo...ss-in-ontario/
Business guide for newcomers to Canada | FedDev Ontario Small Business Services
https://sbs-spe.feddevontario.canada.ca/en
Feb 11th 2021, 2:08 pm
#5
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Joined: Jan 2008
Location: Moncton, NB, CANADA
Posts: 44,997
Re: Living in Canada but being paid in GBP
Originally Posted by Twitcher1958
We don’t have self employed income to deal with, but do have rental income etc through the year. We use Bank of Canada annual average exchange rate throughout - we do it automatically now but can’t remember where we initially got that advice - Turbotax?
Originally Posted by Siouxie
1) I would convert to CAD on the date it was received - not the date it was 'earned' or bulk over the year - https://www.taxtips.ca/filing/foreignamounts.htm - exchange rate changes daily/hourly (it can work to your advantage on days when the exchange rate drops). Use the official site to obtain the exchange rate for that day.. https://www.bankofcanada.ca/rates/ex...xchange-rates/
Long ago I set up a spread sheet for my rental income - albeit that was Canada - and I did the same for my monthly UK superan.
I use the exchange rate 'on the day' so I have an annual total in £ and an annual total in $.
But then I also use the bank of canada annual average. Since both are acceptable, I'm ready to use the one most favourable to me. But there's little difference. For example, the difference between the two figures for 2020 is $5.05. Obviously with higher amounts than my apparently gold plated pension, the difference will be higher.
But you never know...when it comes to things like a drug plan a couple of $$ extra taxable income per year can put you in a different income band and can double your premiums and co-pays
