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Military Pensions

Military Pensions

Old Feb 26th 2007, 12:28 pm
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Default Re: Military Pensions

Been here 9 years now and Mech is right. You will need to declare the pension in Canada as foriegn pension income yearly. The UK Canada tax treaty requires you to pay tax in the country of residence. The process for getting the tax back is easy but takes a little time. First contact the UK military pensions office in Crawley - Paymaster General. I did all this on email and they were very helpfull. You will get a form from them that you need to get signed at your local tax office in Canada to prove you are a Canadian tax payer. Send it back to UK and you will get all your UK paid tax back from the time of landing. I get mine paid direct to my Canadian bank, normally comes in around the 26 of each month. You have 2 choices of handling the tax bill in April, put it all into an RRSP or get extra tax taken from your pay to cover it. To calculate the exchange rate, a yearly average is fine for the tax forms. The PG did say they would check up on me at regular intervals to repeat the form thing but it's been 7 years and not a peep - hope this helps
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Old Feb 26th 2007, 2:38 pm
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Default Re: Military Pensions

Originally Posted by brit_in_fizroy View Post
Been here 9 years now and Mech is right. You will need to declare the pension in Canada as foriegn pension income yearly. The UK Canada tax treaty requires you to pay tax in the country of residence. The process for getting the tax back is easy but takes a little time. First contact the UK military pensions office in Crawley - Paymaster General. I did all this on email and they were very helpfull. You will get a form from them that you need to get signed at your local tax office in Canada to prove you are a Canadian tax payer. Send it back to UK and you will get all your UK paid tax back from the time of landing. I get mine paid direct to my Canadian bank, normally comes in around the 26 of each month. You have 2 choices of handling the tax bill in April, put it all into an RRSP or get extra tax taken from your pay to cover it. To calculate the exchange rate, a yearly average is fine for the tax forms. The PG did say they would check up on me at regular intervals to repeat the form thing but it's been 7 years and not a peep - hope this helps
Excellent info Mate.

Thank you very much a great help.

Cheers Dave
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Old Feb 26th 2007, 3:48 pm
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Default Re: Military Pensions

Cheers Davie
PM Sent
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Old Feb 26th 2007, 7:03 pm
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Default Re: Military Pensions

hi there , I have a bit longer to go until my '22' , but to save paying tax in canada could you not have your pension paid into your uk bank account and just access it from canada, would that be considerd an income by the canadian tax man?
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Old Feb 26th 2007, 7:26 pm
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Default Re: Military Pensions

Originally Posted by chinook View Post
I didnt find the embassy that helpful however I cant complain as my Visa took about 3 months in all, going out as a spouse married to a Newfie!!!!!
Thanks Davie - I have PM'd you re the presentation.

And Hi Chinook - nice to see another Newfie going back - even if it is to Halifax. We need to get some balance back to the east coast My DH did 23 years with the RAF - we are hoping to move back to St John's this summer.

TG
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Old Feb 27th 2007, 4:53 am
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Default Re: Military Pensions

Originally Posted by petesdragon View Post
hi there , I have a bit longer to go until my '22' , but to save paying tax in canada could you not have your pension paid into your uk bank account and just access it from canada, would that be considerd an income by the canadian tax man?
As I stated earlier this is what I do and I have to declare it as income.
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Old Feb 27th 2007, 12:52 pm
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Default Re: Military Pensions

Originally Posted by petesdragon View Post
hi there , I have a bit longer to go until my '22' , but to save paying tax in canada could you not have your pension paid into your uk bank account and just access it from canada, would that be considerd an income by the canadian tax man?
It's the death and taxes thing I'm afraid. You cannot get it tax free in UK without the form from the CRA and the tax treaty between UK and Canada states you have to pay revenue in the country of residence. Tax evasion got Capone. If you commute your max before coming, that would be tax exempt as it is paid in UK as a form of a loan which you pay back from your pension reduction until 55 - this was the way when I got out - then you are only declaring part of it. This is the only thing I can think of that can reduce it. Another thought - Once settled and earning, you could put it all in a RRSP, this would kill the taxes until you retire.
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Old Feb 27th 2007, 1:18 pm
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Default Re: Military Pensions

Originally Posted by brit_in_fizroy View Post
It's the death and taxes thing I'm afraid. You cannot get it tax free in UK without the form from the CRA and the tax treaty between UK and Canada states you have to pay revenue in the country of residence. Tax evasion got Capone. If you commute your max before coming, that would be tax exempt as it is paid in UK as a form of a loan which you pay back from your pension reduction until 55 - this was the way when I got out - then you are only declaring part of it. This is the only thing I can think of that can reduce it. Another thought - Once settled and earning, you could put it all in a RRSP, this would kill the taxes until you retire.
There is a limit to how much you can put into a RRSP each year. It's based on how much you earn and it isn't huge. I also believe that there is an absolute ceiling each year of about C$18k.

I have though of something that may be worth looking into. When members of the CF retire they receive a lump sum gratuity. If they just take the cash, it's counted as taxable income. However, a deal has been struck with the taxman that allows the gratuity to be put into an RRSP; all of it. I believe it can also be transferred into a spouse's RRSP, if there are unused allowances. That's quite useful if the spouse is a high-earner.

I don't know if a similar system exists in the UK.
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Old Feb 28th 2007, 4:11 pm
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Default Re: Military Pensions

Originally Posted by Souvenir View Post
There is a limit to how much you can put into a RRSP each year. It's based on how much you earn and it isn't huge. I also believe that there is an absolute ceiling each year of about C$18k.

I have though of something that may be worth looking into. When members of the CF retire they receive a lump sum gratuity. If they just take the cash, it's counted as taxable income. However, a deal has been struck with the taxman that allows the gratuity to be put into an RRSP; all of it. I believe it can also be transferred into a spouse's RRSP, if there are unused allowances. That's quite useful if the spouse is a high-earner.

I don't know if a similar system exists in the UK.
Help,

RRSP

Whats that then.

I also thought of the bigger gratuity and smaller monthly payment.
What happens if you do this and stick your monthly payment into a tax free off shore account....or is that too easy and must be a way round it to get ya.

Cheers
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Old Jan 26th 2008, 6:56 pm
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Default Re: Military Pensions

handy info here. cheers guys
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Old Jan 26th 2008, 7:28 pm
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Default Re: Military Pensions

Very helpful boys and girls thanks very much. However I am sure I will muck it up to begin with.
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Old Nov 3rd 2008, 5:06 pm
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Default Re: Military Pensions

Originally Posted by chinook View Post
Received my Visa and so will now be moving over next April after my 22 years is up with the military. I will be in receipt of an immediate monthly pension at the age of 40. I obviously have to pay tax on this, any advice on whats best for me declare it in the UK or Canada.

Appreciate any advice on the subject
You have no choice where you declare this income. You must declare any and all income to the CRA from the day you land in Canada. There is a good relationship between the UK and Canadian tax people and they will catch you. However, you cannot be double taxed by both countries and will be able to reclaim any tax paid to the UK tax man.

On you T1 Canadian Tax Return you have to declare all World Wide income.

Adrian
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Old Nov 3rd 2008, 5:27 pm
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Default Re: Military Pensions

Originally Posted by Ad 12345 View Post
You have no choice where you declare this income. You must declare any and all income to the CRA from the day you land in Canada. There is a good relationship between the UK and Canadian tax people and they will catch you. However, you cannot be double taxed by both countries and will be able to reclaim any tax paid to the UK tax man.

On you T1 Canadian Tax Return you have to declare all World Wide income.

Adrian
Agreed with all of this. If you are resident in Canada you should be able to get the pension paid without deduction of UK tax, but you must still declare it here - and will end up paying the same amount of tax in total.
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Old Nov 3rd 2008, 10:01 pm
  #29  
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Default Re: Military Pensions

Originally Posted by petesdragon View Post
hi there , I have a bit longer to go until my '22' , but to save paying tax in canada could you not have your pension paid into your uk bank account and just access it from canada, would that be considerd an income by the canadian tax man?
Yes it would be considered as income by the Canadian tax man (under World Wide Income). You can however still have the Pension paid into a UK account and access it. Or you can request it is paid into a Canadian account. The first allows you to pick the time when to convert the money (key in current times) but you pay more, the second means you are liable to the fickleness of the rate of the day, but generally get a better rate and lower charges than the tourist/money exchange company charges.
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Old Nov 4th 2008, 2:11 am
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Default Re: Military Pensions

Originally Posted by Mech View Post
I have been in Canada for 2 years. I am in receipt of a military pension which is paid into a UK account. At present I pay tax in the UK and also in Canada as it is viewed as income by Revenue Canada. Revenue Canada has a tax agreement with the UK and they have informed me that after I have submitted 2 annual Canadian tax returns I can apply to Inland Revenue UK for refund of any tax paid against the pension and then only pay the Canadian Taxes. Hope this helps.
Why are you waiting for two years. There is no need. All you do is download the form P85 from the UK revenue telling them you have left or about to leave. Once you send this in they send another form to you that you submit to the Canadian revenue. It basically tell each reveunue where you are and where should be paying tax. Our was all sorted out in 7 months. We only pay tax in Canada. Rob
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