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

Military pension question

Military pension question

Old May 28th 2007, 10:14 pm
  #16  
Lost in BE Cyberspace
 
Almost Canadian's Avatar
 
Joined: Aug 2005
Location: South of Calgary
Posts: 13,373
Almost Canadian has a reputation beyond reputeAlmost Canadian has a reputation beyond reputeAlmost Canadian has a reputation beyond reputeAlmost Canadian has a reputation beyond reputeAlmost Canadian has a reputation beyond reputeAlmost Canadian has a reputation beyond reputeAlmost Canadian has a reputation beyond reputeAlmost Canadian has a reputation beyond reputeAlmost Canadian has a reputation beyond reputeAlmost Canadian has a reputation beyond reputeAlmost Canadian has a reputation beyond repute
Default Re: Military pension question

Originally Posted by ex_REME
Hi Almost

I plan that my pension will always be taxed in the UK, so under the Taxation Treaty I will not pay any Canadian tax on it. Is this the way you see the Taxation Treaty?

Say I earn £12,000 a year in Pension, take off the UK personal allowance of approx £5,000, then I'm taxed on the remaining £7,000 at 20% (from Apr 2008) makes £1,400 in tax. I declare £12,000 on my Canadian tax return, then deduct it under the tax treaty, so pay no Canadian tax on it.

If I opt to have the pension tax free from the UK I'll escape UK tax but I'll pay Canadian tax at my highest (think they call that "marginal") rate which I expect to be about 38% and on all of the £12,000. That makes about £4,600 ie lots more than when I declare the pension in UK.

Does that add up to you?? There must be some smart brains out there that can see the problem with my simple sums!!

Ex
You will only pay no tax on it in Canada if the amount you are due to pay in Canada is less or the same as what you have already paid in the UK. If you are due to pay more in Canada, then Canada will take it. For example: let's say, in Canada, you were due to pay $10,000 (I don't have a pound sign) and you had already paid $12,000 in England, you would pay nothing in Canada. But, is you were due to pay $10,000 in Canada and had only paid $6,000 in England, then Canada would take the other $4,000 off you.

HTH
Almost Canadian is offline  
Old May 28th 2007, 10:37 pm
  #17  
BE Enthusiast
 
Beastie's Avatar
 
Joined: Mar 2007
Location: Shropshire
Posts: 305
Beastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of light
Default Re: Military pension question

Sorry ex-reme but I am sure that on this occasion the advice you have been given about government pensions is inaccurate.

The following link to HM Revenue and Cusoms refers to 'Government Pensions' ( http://www.hmrc.gov.uk/cnr/uk_gov_pensions.htm ). Whilst the advice you were given was correct for most worldwide destinations, Canada is not one of them. It is clearly stated that

"Usually Government Service and Local Authority Service Pensions paid to British nationals living overseas remain taxable in the UK. You will still be eligible to receive full UK Personal Allowances and reliefs.

The main exceptions are Australia, Canada, New Zealand and Cyprus where exemption for Government Service and Local Authority Service Pensions can be claimed".


I will be receiving a Civil Service Pension when/if we move and have been advised by a Tax Advisor in Calgary that my pension has to be declared in Canada and will be taxable in Canada.

This next link is to the HM Revenue and Customs form that needs to be completed once residency in Canada is taken up
( http://www.hmrc.gov.uk/cnr/canada-individual.pdf ).

Not sure how Revenue Canada can find out that you are receiving a pension in the UK if you do not declare it and simply transfer funds from a UK bank when it is paid in. Someone else will no doubt have the answer to that. However, it would be classed as tax evasion if a UK pension was not declared.

Part of my pension is non taxable in the UK as I was retired due to an accident at work. In Canada however, it looks like even this non taxable part becomes taxable, costing me about £4k per year extra in tax if we move. Not pleased about it but not a lot I can do about it either. Only found this out recently hence the when/if we move position.

Still open to being corrected if I am wrong and someone with Canadian tax expertise is out there waiting to comment. Hope I am, could save me 4 grand a year.
Beastie is offline  
Old May 31st 2007, 8:04 pm
  #18  
Just Joined
 
Joined: May 2007
Posts: 25
ex_REME is an unknown quantity at this point
Default Re: Military pension question

Originally Posted by Beastie

"Usually Government Service and Local Authority Service Pensions paid to British nationals living overseas remain taxable in the UK. You will still be eligible to receive full UK Personal Allowances and reliefs.

The main exceptions are Australia, Canada, New Zealand and Cyprus where exemption for Government Service and Local Authority Service Pensions can be claimed".
Thanks Beastie, I'll follow up on those leads.

Sadly it looks like I'll lose the double personal allowance
Ex
ex_REME is offline  
Old May 31st 2007, 8:08 pm
  #19  
Just Joined
 
Joined: May 2007
Posts: 25
ex_REME is an unknown quantity at this point
Default Re: Military pension question

Originally Posted by Almost Canadian
You will only pay no tax on it in Canada if the amount you are due to pay in Canada is less or the same as what you have already paid in the UK. If you are due to pay more in Canada, then Canada will take it. HTH
Hi HTH

I did wonder if they might catch me for an additional amount of tax to bring it up to what I would have been taxed if I declared it all in Canada. From the next post it looks like I'll be declaring it all in Canada anyway!

Ex
ex_REME is offline  
Old May 31st 2007, 8:18 pm
  #20  
Just Joined
 
Joined: May 2007
Posts: 25
ex_REME is an unknown quantity at this point
Default Re: Military pension question

Originally Posted by Souvenir
Taxation, particularly the double-taxation treaty, appears to be a subject of much confusion. Maybe we need a Wiki article on it.

I live in Canada. I am resident and domiciled in Canada. I file my tax return in Canada. My tax return reports my worldwide income. None of that income arises in Canada. Some of my income is paid to me gross. Some (from a trust fund) has had tax deducted in the UK before I see it.

When I file my Canadian tax return, I declare my total gross income. I also declare what tax has been deducted in the UK. That is knocked off my tax hit here.

You don't get done over twice, unless you fail to estabish where you are resident for tax purposes.
Hi Souv, can I explore the tax return with you??

When you declare UK income that has been taxed in UK, do you declare the income after UK tax is deducted, then declare what tax you have paid on it. Or, do you just declare the UK income to the Canadian tax man and state that you have already paid UK tax? Hopefully I've explained that well enough?

The point I'm trying to get to is: is the Canadaian tax man interested in HOW MUCH UK tax you have paid, or is he just happy that UK income has been declared to the UK tax man regardless of how much tax has been paid.

Appreciate your words of wisdome!

Ex
ex_REME is offline  
Old Jun 1st 2007, 3:58 am
  #21  
Just Joined
 
Joined: Mar 2006
Location: Calgary
Posts: 12
Mech is an unknown quantity at this point
Default Re: Military pension question

I declared to Revenue Canada the amount I received in the UK after tax and also stated the tax I paid to the UK Inland Revenue Service. Revenue Canada sent me a bill for tax I owed them plus interest as I had not declared the amount to them as gross. This meams I paid tax twice but as I have previouly stated I will get all my UK tax back after having filed 2 Canadian tax returns and sending my form FD3 to the UK.
I did query this with them in a telephone conversation but it appears this is the way the system works. At least in my case!!!!
Mech is offline  
Old Jun 1st 2007, 11:36 am
  #22  
Forum Regular
 
Joined: Jul 2003
Posts: 204
brit_in_fizroy will become famous soon enough
Default Re: Military pension question

Originally Posted by Mech
I declared to Revenue Canada the amount I received in the UK after tax and also stated the tax I paid to the UK Inland Revenue Service. Revenue Canada sent me a bill for tax I owed them plus interest as I had not declared the amount to them as gross. This meams I paid tax twice but as I have previouly stated I will get all my UK tax back after having filed 2 Canadian tax returns and sending my form FD3 to the UK.
I did query this with them in a telephone conversation but it appears this is the way the system works. At least in my case!!!!
I declared it all and put down the tax paid too, if I recall the bank statements indicated the tax deducted. Canada took some too - of course. After 2 tax returns I sent off all the forms and got a tidy sum back from HMRC. Now it's all sent here tax free. Back then (98) the web was easy to browse and I saw the requirement to pay tax in the country of residence. Sorry, can't find it now. Only 6 years to go for the commute payments to end
brit_in_fizroy is offline  
Old Jun 1st 2007, 10:47 pm
  #23  
riding the saltchuck
 
Edna Bucket's Avatar
 
Joined: May 2007
Location: The Warmland
Posts: 874
Edna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond repute
Default Re: Military pension question

Originally Posted by Beastie


Part of my pension is non taxable in the UK as I was retired due to an accident at work. In Canada however, it looks like even this non taxable part becomes taxable, costing me about £4k per year extra in tax if we move. Not pleased about it but not a lot I can do about it either. Only found this out recently hence the when/if we move position.
I receive an injury pension due to an accident at work and I don't pay tax on it in UK or Canada. I used an expensive accountant to check this out for me so that I could rest easy and not have to worry about whether it was right or not.
Edna Bucket is offline  
Old Jun 2nd 2007, 7:51 pm
  #24  
BE Enthusiast
 
Beastie's Avatar
 
Joined: Mar 2007
Location: Shropshire
Posts: 305
Beastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of lightBeastie is a glorious beacon of light
Default Re: Military pension question

Hi Edna,

you have offered me a glimpse of hope and I would be gratefull if you could expand a little on your reply either on this thread or by sending me a pm.

Is your pension a civil service ill health retirement one with an element of injury benefit? If so could you give me the name of your expensive accountant so that I can find out how he arrived at his conclusion.

This tax issue is a worry and it would be a big weight off my mind if I could get some official confirmation that my pension will not be taxable in canada.

Thanks.

By the way, is it Bucket or Bouquet lol

John
Beastie is offline  
Old Jun 2nd 2007, 8:51 pm
  #25  
riding the saltchuck
 
Edna Bucket's Avatar
 
Joined: May 2007
Location: The Warmland
Posts: 874
Edna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond reputeEdna Bucket has a reputation beyond repute
Default Re: Military pension question

Originally Posted by Beastie
Hi Edna,

you have offered me a glimpse of hope and I would be gratefull if you could expand a little on your reply either on this thread or by sending me a pm.

Is your pension a civil service ill health retirement one with an element of injury benefit? If so could you give me the name of your expensive accountant so that I can find out how he arrived at his conclusion.

This tax issue is a worry and it would be a big weight off my mind if I could get some official confirmation that my pension will not be taxable in canada.

Thanks.

By the way, is it Bucket or Bouquet lol

John

I have sent you a pm
Edna Bucket is offline  
Old Jan 13th 2008, 10:24 am
  #26  
Forum Regular
 
Joined: Oct 2007
Location: Richmond, Vancouver, BC
Posts: 161
kazchug is just really nicekazchug is just really nicekazchug is just really nicekazchug is just really nicekazchug is just really nicekazchug is just really nicekazchug is just really nicekazchug is just really nicekazchug is just really nice
Default Re: Military pension question

Originally Posted by ex_REME
Hi Byreboy and other ex military heading Canada way,

I've just been to the Financial Aspects of Resettlement (FAR) brief last week and asked this exact question of the Forces Pension Society guy and the Independent Financial Adviser who followed him. (We're Canada bound in August this year). Both of them had come across this issue many times before.

Their advice was that you/we cannot "transfer" the military pension to Canada, it always has to be paid by Paymaster 1864 (I think) in Crawley. You can either have it paid into a UK bank account and do the currency transfer yourself or have it exchanged by the Paymaster into Canadian Dollars and paid directly into a Canadian Bank each month. The Paymaster uses a commercial org to do that, so I was told the exchange rate is better than the tourist rate (but obviously will vary each month) and the cost is low (£5 ish I think per month, but I've left my notes at work and am on leave this week so can't check them.)

Tax - good point, little tricker. The double taxation treaty with Canada means that it will not be taxed twice (no 2 year wait heard of, not sure why that is mentioned, although more later). As the military pension is a "Government" pension, the general rule for the UK is that it is taxed in the source country ie UK. On your Canadian tax return you add in the amount you are paid after UK tax deducted (use the Canadian $ equivalent) then deduct the same amount further down the page, listing the UK/Canada Tax Treaty as the reason for the deduction. You should then not be taxed in Canada on that amount.

Do you get both UK and Canadian Personal Allowances? Here's the bit I'm crossing my fingers for. Having your pension taxed in the UK means you get the full UK personal allowance, then are taxed at the 10% and 22% tax rates (for this year anyway). I can then hopefully use my full Canadian personal allowance against my Canadian income, thus reducing my overall tax bill.

I believe from the FAR brief that it is possible to have your UK military pension paid gross (ie before UK income tax deduction) when you are non resident for tax purposes in the UK. You would then not be eligible to claim the UK Personal Allowance and would have to add the full amount to your Canadian income on your Canadian tax return, probably increasing the total amount of tax paid. It is possible that this cannot be done on your FIRST Canadian tax return, thus the point made about having to wait two years? During the first year you should pay UK income tax only. I also think that this comment on the 2 year wait may be getting confused with electronic income tax filing in Canada. I believe you cannot file your first tax return electronically. Not sure - can anyone else comment? I may be way off here, as I've not done this yet. It might also be to do with being non resident in the UK so the UK Government will not let you have your pension payed gross??

Hope that makes sense. Would love to hear from any UK ex military who are already doing this. Double personal allowance ... am I off with the little people??? - Tell us quietly as I don't want the system to change!!!

Arte et Marte
EX RN going to BC shortly and this has been driving me crazy. After much investigation It appears that my UK forces pension will be taxed at an additional 1% if I declare it. I will because when you leave UK you have to inform the UK taxman and the form concerned includes details of pensions. I have no doubt these details are passed between Countries because they are all after a fast buck! The real annoyance is that I have effectivley paid tax on accumulating the pension (24 years) in UK, It is sourced in the UK and in my case is staying in a UK bank account. I also believe that Canadian forces pensions are tax free. Watch this space because I believe that worthy of a challenge.
kazchug is offline  
Old Jan 13th 2008, 11:39 am
  #27  
 
Joined: Apr 2005
Posts: 9,606
Souvenir is an unknown quantity at this point
Default Re: Military pension question

Originally Posted by kazchug
I also believe that Canadian forces pensions are tax free. Watch this space because I believe that worthy of a challenge.
CF pensions are taxable income, as are end of service gratuities, unless you shove them into RRSPs.
Souvenir is offline  
Old Jan 13th 2008, 12:31 pm
  #28  
BE Forum Addict
 
DAVIE_MAC's Avatar
 
Joined: Jan 2007
Posts: 1,554
DAVIE_MAC is a glorious beacon of lightDAVIE_MAC is a glorious beacon of lightDAVIE_MAC is a glorious beacon of lightDAVIE_MAC is a glorious beacon of lightDAVIE_MAC is a glorious beacon of lightDAVIE_MAC is a glorious beacon of lightDAVIE_MAC is a glorious beacon of lightDAVIE_MAC is a glorious beacon of lightDAVIE_MAC is a glorious beacon of lightDAVIE_MAC is a glorious beacon of lightDAVIE_MAC is a glorious beacon of light
Default Re: Military pension question

Just a quick one

I will have full pension from July 08

I will be going over on a temp work permit on the PNP route and will not have Perm residency until approx 18 months...hopefuly

Any ideas as to how this will affect me as the word "Resident" has been banded about.

Cheers Dave
DAVIE_MAC is offline  
Old Jan 15th 2008, 8:35 am
  #29  
BE Enthusiast
 
Winston Green's Avatar
 
Joined: Dec 2007
Location: Living The Nova Scotia Dream
Posts: 348
Winston Green is just really niceWinston Green is just really niceWinston Green is just really niceWinston Green is just really niceWinston Green is just really niceWinston Green is just really niceWinston Green is just really niceWinston Green is just really niceWinston Green is just really niceWinston Green is just really niceWinston Green is just really nice
Question Re: Military pension question

Hi All

Very interesting info, I was wondering what to do about my Mil pension. Can anyone confirm that all this does not effect the inflation uplift at 55. Would hate to los that as I don't want to have to work till I die

Regards
Winston Green is offline  
Old Jan 15th 2008, 1:02 pm
  #30  
Magnificently Withering
 
Oakvillian's Avatar
 
Joined: Jan 2007
Location: Oakville, ON
Posts: 6,891
Oakvillian has a reputation beyond reputeOakvillian has a reputation beyond reputeOakvillian has a reputation beyond reputeOakvillian has a reputation beyond reputeOakvillian has a reputation beyond reputeOakvillian has a reputation beyond reputeOakvillian has a reputation beyond reputeOakvillian has a reputation beyond reputeOakvillian has a reputation beyond reputeOakvillian has a reputation beyond reputeOakvillian has a reputation beyond repute
Default Re: Military pension question

Originally Posted by DAVIE_MAC
Just a quick one

I will have full pension from July 08

I will be going over on a temp work permit on the PNP route and will not have Perm residency until approx 18 months...hopefuly

Any ideas as to how this will affect me as the word "Resident" has been banded about.

Cheers Dave
that's an easy one... residency for tax purposes has little or nothing to do with residence for immigration purposes. If your principal residence is in Canada, whether you're here on a WP, PR or as a citizen, then as far as Revenue Canada is concerned, you're resident for taxation purposes.
Oakvillian is offline  

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service -

Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.