Bleech

Hi Padre,
I'm actually self employed, so I think my situation could be different to yours?
I've set up my own Canadian company and invoice my UK clients direct. I'm on an hourly rate in pounds, but invoice them in Candian $s depending on the rate that day.
I have a private pension as well, so can't really help you about that I'm afraid.
For the first few weeks of being here I carried on as if I was based in the UK, ie. UK bank, UK company etc, but was warned about the double tax payments, plus living here with kids in school etc I wanted to contribute to the Canadian system rather than put more money in Mr Blairs pockets.
Good luck

Calgal

Canada taxes on residency, not citizenship. Generally, if you reside in Canada for more than 183 days, then you become taxable on your world income.

However, there are tax treaties between Canada and many other Countries in order to prevent 'double taxation'. The UK is one such Country; and it's very unlikely that you would pay more tax. But, you ARE legally obligated to file the relevant returns (Federal and Provincial).

Another one to watch, is WHERE income is earned - generally speaking; in Canada and the US, returns should be filed with the authority where the income is earned, AND where you live.

If you earned it in the US, any tax due goes to the US. This is then written off against your Canadian taxes under the treaty.

When it comes to US tax - even if you are deemed exempt, there is still an obligation to file in order to demonstrate the exemption.

Hope that helps

hudd

What I noticed in Canada is that its a must to work for a company that provides Healthcare as you have to pay for a lot for you and you kids. It could save you $1000's in fees.

My view is that Canada if needed it will quickly raise taxes to cover thing such as old age pension. We lived in Ontario in a rural area and there was a seriously issue with the lack of doctors and other medical professional. Also huge waiting lists for treatment etc. The provincial govt introduced a Health Tax (2004) to cover the health care problems. It added $1800 to my family annual tax bill.

My wife and I watched a programme the other night about the NHS and costs. It was quite obvious to me that taxes are going to have to rise to meet peoples standards.

Canada has an aging population such as the UK, so could in time end up in similar situation as the UK as for govt pensions. Its a problem in most mature/developed countries.

Where in Ontario are you going to work?

I think you have the best option to live in Canada and be paid in pounds.


Enjoy your time in Canada

hudd

Souvenir

Residency is the key issue here. I've been in Canada for almost six years and for the last year have been an employee of a UK company. As far as they are concerned I am a regular full-time employee (contract, paid holiday, insurance, corporate Amex etc) and differ from the rest of the staff only in that I am in Canada. My salary is quoted in pounds and I receive it in dollars through electronic transfers made through Barclays to Scotiabank. The company pays all the fees for that. No tax or national insurance is taken off in the UK and there are no employer's NI contributions. I checked with the Inland Revenue and, although I still file a UK tax return, they are simply not interested in this income because I am not a UK resident.

My accountant here considers that because no tax or deductions are paid in the UK, and I work from home, the Canadian tax system considers me to be self-employed. This is a good thing because I can deduct lots of things (this computer, for example), although I wouldn't be able to claim the dole here.

As far as paying tax, CPP etc in Canada is concerned, this year I am paying quarterly installments to both the federal and provincial tax people, based on last year's income, and will make the necessary adjustments when I do my tax return at the end of the year.

Padre

I think we will live in the Barrie area as I will be working from home and don't really need to be near any particular client. With regards to healthcare will I not be covered by the OHCP?, I'm a bit confused on this one as to what's free and what I should be paying for through contributions. In short should I be paying my national insurance contributions in Canada.
Sorry to be such a fiscal numpty
Thanks again Hudd

iaink

OHIP does not cover dental or prescription drug expenses. Eye care is not covered, and neither are ambulance expenses, or theraputic services like massage, physio (outside of while in hospital), therapy, chiropractic, podiatary etc etc.

OHIP covers trips to the doctor and hospital expenses.

The recently added additional premium for OHIP is actually hidden in you provincial tax return, so you dont have to think about it. In your case I think that due to the reciprocal agreements its assumed you will have paid the necessary amount if applicable, and OHIP coverage will follow.

Your NI is basically CPP (pension plan) and EI (employement insurance), and AFAIK they are mandatory, and dont cover healthcare, which is a provincial matter. In addition to the CPP, you should probably be contributing regularly to a RRSP, a tax sheltered retirement savings plan, as state pension will only cover the basics.

Padre

I think you've just become my role model. In short then you are just receiving your gross salary, have told the Canadian taxman that you are self employed with I assume your UK employer being your one and only client. I've just asked Hudd the question about healthcare cover, is it the case that my Canadian NI contributions will cover this. I assume you won't know until the end of the year how detrimental/beneficial paying your taxes in here/there.
Thanks for this, it's a real help

Souvenir

Ye Gods!!! If you take me as a role model, you're in deep $hit.

Couple of things (OK, 3), from what you just posted.

OHIP cover is something you get as a resident of Ontario (eventually). It has nothing to do with tax.

The decision about where taxes are paid isn't yours. If you are resident in Canada, they will want their money.

Before I became permanent with the company, I freelanced for them for a couple of years. I looked at incorporating (ie becoming a company) but it was too much hassle. Plus, I don't think you can be a company if you have only one client. I'm prepared to be proved wrong on that. Anyway, I decided that self-employed was the way to go.

Mans

[QUOTE=Souvenir]

My accountant here considers that because no tax or deductions are paid in the UK, and I work from home, the Canadian tax system considers me to be self-employed. This is a good thing because I can deduct lots of things (this computer, for example), although I wouldn't be able to claim the dole here.

QUOTE]


I too earn monies gross in UK on a self employed bais. I have been warned that I cannot stay in the UK for more than 90 days per year averaged over 4 year periods to remain a non-resident in the uk.

However, I was advised that as my income is from uk....that`s where I have to pay tax on income derived from uk.....then submit a tax return in Canada on all worldwide income.I would then receive a tax credit for tax already paid in uk. I may get this double checked though after reading your post.

rgds
Mans

Mans

Thats correct. IR35 rule was introduced to stop this.....it was aimed at mainly IT contractors paying themselves a low salary and high dividends....but caught out many other proffessions/trades too.

rgds
Mans

Padre

[QUOTE=Mans] The thing is, because I'll be working as an 'Agent Of Service' for my UK employers in Canada, I will in effect be fronting the Canadian division of the company. Therefore doing work for both UK and Canadian clients which will be invoiced by my UK employers. With this situation I just thought that I could pay all my taxes in Canada. I'm thinking now however that it may work out easier if I'm just self employed, not sure how my employers would feel about that.

Souvenir

[QUOTE=Padre] I think you probably need to seek advice/a ruling from the Inland Revenue, Canada Revenue Agency and possibly an accountant.

If you are to be resident/domiciled in Canada, the Canadian tax people will want their money. It isn't your decision to make, nor your employer's. If your income is being taxed at source in the UK, and I doubt if it will be, the tax you pay in Canada will only be the difference between what you pay in the UK and what you would pay here if all your income was taxed in Canada (horrid sentence, sorry).

When I spoke with the Inland Revenue last year I was told that because I am not resident in the UK, I am not liable for tax in the UK, I don't pay NI contributions and neither does my employer. The contractual relationship I have with the company is as it would be if I were in the UK, except for the fact that I am paid gross and they don't have to pay employer's NI contributions (which they seem quite pleased about). My business cards carry the UK office details and I'm even on the company website. My relationship with the Canadian tax authorities is different (at least according to my accountant). They just see me as a self-employed person. I pay all my tax here. I pay into the Canada Pension Plan. I don't pay UI because I'm self-employed. My tax returns last year were accepted as filed.

I can only speak from the point of view of my own position. Yours may be different, which is why I suggest you seek/official/professional advice.

There is one other thing you might want to look out for. My contract includes provision for life insurance policies, income protection cover etc. The UK insurers managing the company's group policies are proving extremely reluctant to cover me because I'm not in the UK. My boss asked me to investigate getting cover here. The quotes I have had so far have been very very high because they are for one-off policies and not group policies. That's an issue that is yet to be resolved.

Padre

[QUOTE=Souvenir] Would it be prying of me to ask what kind of business you are in, it's just that with talk of insurances I know that it may prove important to our business. We are an architectural design practice specializing in stone buildings old and new. I only elaborate here because we manage to get away without any indemnity insurance here in the UK because we only design, not build or design the fixing systems. Sorry to go on a bit here, but you just don't know what people might have experience with.

Souvenir

[QUOTE=Padre] Industrial market research, mostly custom studies. Our product is information, either electronic or on paper. Clients/ business contacts rarely visit the UK office in person and never come to my home ofice in Canada, so we don't bother with indemnity insurance either.

Just out of interest, how do you design an old building?

Padre

[QUOTE=Souvenir] Thank's for that souvenir, the conservation side of the business might be designing part or an addition to an old building that would replicate how it was in yesteryear or something sympathetic to it.
Thank's again for the posts, this is all proving really useful.