kazchug

I dont get that at all. Your gratuity is authorised whilst you are still in the employment of the UK government. The delay in payement is because of administrational requirements only. In effect you have that money (commutation included) before you leave your UK employement. The same would surely apply to your wages whilst on terminal leave. Why would owning a property in UK make any diffrence? This whole "world wide incom" scenario is a nightmare. I am off to get specialist tax advice shortly (before I leave in March) and I will ask the gratuity question on your behalf.

dinger24

Kazchug
Thanks - Is it me or something but this just seems to be very confusing I have every intention of following you and getting specialist advice.
Thanks again and thanks to everyone else for their help

DAVIE_MAC

Yep Gratuity is tax free.

Also don't forget at 55 your pension jumps up to the full amount again regardless of what commutation you take on leaving.

Trying to find out 100% ref the tax situation mentioned.

OR Winston

Is this deff correct / written down somewhere

Thanks

smiges33

very helpful in here. would be interting t find out what happens

dinger24

I aint get the briefs for a couple of weeks yet but once I do I will ask questions galore! and then post on here

Winston Green

Hi All

You are correct that the gratutity is tax free if you are a UK resident for tax purposes. If you are living in Canada on the date that it is paid into your UK bank then it is classed as overseas income. I believe, and am no expert, that when you fill in your Canadian tax return it starts from the day you took up residency in Canada. Hence the house still in the UK means you are still resident for tax purposes in the UK.

As I say I am just a very interested party in this and this is my understanding of the situation. I will also seek specalist advice but I wondered if anybody on the site could correct or confirm this assumption.

I had hoped to go to live in Canada during my GRT/terminal leave but if my assumption is correct the tax bill would be massive.

winston

DAVIE_MAC

DITO....

kazchug

When I leave for BC I will keep my house in UK but I will have to declare income I make for the Canadian tax man (as well as my income from pension)...even though I arrive on a 3 year work permit. If owning a home in the UK makes me eligible only for UK tax purposes then I have a get out of jail free card across the whole tax spectrum. It cant work both ways. If in any doubt I would wait for for the gratuity to clear and jet off when it was firmly in my mit.

woz718

This has worried me now as we have 3 years remaining and have a strong chance of getting our last 2 years serving in Batus. Surely that would mean that we were classed as residing in Canada, especially if I or my wife manages to secure a job over there in my last 6 months!

We don't own a property in UK so how can you prove residence in UK - are bank accounts and voting rights sufficient? Think I need to take some expert advice on this one. I've worked damn hard for that money - don't want the tax man getting his hands on my gratuity!

Woz.

Winston Green

WOZ718

Whilst you are working for the army at Batus you are on the UK net not the Canadian. Hence you pay UK tax not Canadian, same as BAOR. If you get a Canadian job in your last six month or on your GRT/Terminal leave you are on the Canadian net and hence you are liable for Canadian tax. Also your army pay whilst in last six months or on GRT/terminal leave will be classed as overseas income and must also go on your Canadian tax return and is subject to both UK and Canadian Tax. Although you can claim back the uk element after two years in Canada.

As you will be resident is Canada for tax purposes when your gratuity is paid it will also be subject to Canadian tax if you take it as cash ( you can place it in RRSP or RPP as stated in link) I know it is a long link sorry!!

http://books.google.com/books?id=-FB8MjIfmGwC&pg=PT63&lpg=PT61&ots=xUpGiwKrfS&dq=a+a ny+amount+received+by+the+taxpayer+in+the+year+i+a +superannuation+or+pension+benefit+including&outpu t=html&sig=EfjV1aW5zVLRcdiFkX_hHwJlWbI

However you only get sixty days to do this. remember your gratuity is a resettlement grant + a commutation not a pension (We are having this debate on the thread Tax on bonuses to the moment). Your monthly immediate pension will also be subject to both countries tax unless it is paid into a Canadian bank the it is only subject to Canadian tax.

Sorry for bad news this has forced a couple of us to rethink our immigration Plans/timings

Winston

kazchug

When you commute you take a percentage of your pension up front. Thats what commutation is, so how then can it not be classed as pension? Secondly a re-settlement grant is not an income. It is a grant from the UK government (tax free) to facilitate and aide an ex serviceman in settling outside. If the UK government dont tax it then I dont understand how the Canadians can. Are all grants in Canada therefore taxable?? Final question can some one tell me how the Canadian tax man can find a pension if it stays in the UK and is taxed in the UK?

Winston Green

Nice Idea

You will have to fill in a tax return in Canada. Not declaring overseas income ie your pension, is tax evasion and carries a prision sentence. I did not spend 4 years getting a visa to spend my time in canada in a canadian prision before being deported back to UK. If you can find a reference that says a resettlement grant is not income we would all appreciate it but I haven't found one yet.
Remenber the canadian revenue tax the gratitay of its own servicemen so I can't see them giving us any special circumstance can you?
As for the comutation it is an outdated idea and is not even applicable in the UK tax system, we just get grandfather rights. which is why it is not included in the new military pension and you cannot comute any of your service pension after Apr 2006.



Regards

Winston

Winston Green

Kazchug

Tax on bonuses thread

This is a similar thread to this one also running and the lastest comments on the one above further explain the tax situation on the resettlement grant.

regards

Winston

kazchug

[QUOTE=Winston Green;5859439]Nice Idea

You will have to fill in a tax return in Canada. Not declaring overseas income ie your pension, is tax evasion and carries a prision sentence. I did not spend 4 years getting a visa to spend my time in canada in a canadian prision before being deported back to UK. If you can find a reference that says a resettlement grant is not income we would all appreciate it but I haven't found one yet.
Remenber the canadian revenue tax the gratitay of its own servicemen so I can't see them giving us any special circumstance can you?
As for the comutation it is an outdated idea and is not even applicable in the UK tax system, we just get grandfather rights. which is why it is not included in the new military pension and you cannot comute any of your service pension after Apr 2006.

Winston

Thanks, Im not questioning you. Im just sick to the back teeth of the hammering I take because im a good guy and pay up. It seems its universal. the honest, up front and decent people are persecuted whilst the low life get it all. No doubt you will experience this when you leave the forces. You are entitled to the square root of nothing even though you have paid in for years. As for the prosecution, there must be hundreds of ex service pats in Canada and I doubt very much that they declare all. I cant see anyone going to prison for the sake of a modest millitary pension after they have paid tax on it in the UK. As for been deported...yes and I praise the Canadian authoriies for that. Its a shame the UK government dont take a leaf out of the Canadian book.

Thanks for all your advice.

kazchug

I forgot, I left in 2001 and got the grandfather rights.....Im sure however that those still in the service before the changes came in (and didnt opt out)are still entitled the package as was when the signed on the dotted line. A friend of mine is still in after 30 years service, he definitely gets to commute.

Thanks again