Purley1

I am hoping someone can settle a dispute!

If you emigrated to Canada years ago, but you are eligible to receive a state pension from the UK, can you open a bank account in the UK, give an address of a relative in the UK and therefore continue to receive the increases in state pension that you would not be eligible to receive if you were deemed to be a resident of Canada?

A friend came up with this theory, but it doesn't sound likely. Surely you would need some evidence of being a resident, such as in Canada, you have a health card number. Just lying about the fact that you have not lived in the UK for the past 20 years does not seem as if it would work to me!!

If you receive a State pension from the UK, is income tax automatically deducted in the UK and what you receive into your bank account is the net amount with the tax already deducted and then you have to add it to your tax return here and claim back the tax you paid in the UK? I saw something about that on here somewhere.

christmasoompa

Surely that would be fraud and illegal?

Purley1

Well, I would have thought it would be both and that the chances of getting away with it would be slim to none!

What about the second part of the question as to whether what you get has already had tax deducted in the UK?

Auld Yin

Doing what you contemplate would be committing a criminal offense. After you sign the application form stating the information provided is correct you'll spend considerable time looking over your shoulder.

Tax would not be deducted in UK and money received is reportable on your Canadian ITR. Not doing so would be another offense.

Simon Legree

And don't think for a second that the kind folks at Revenue Canada aren't aware of this scam. They know full well about UK State Pensions and from your immigration records that you will receive such a pension. Failure to report it as income in Canada, even if you never export the funds from the UK, will get their attention.

JonboyE

It would also be foolish to rely on Service Canada and the Deoartment for Work and Pensions not talking to each other.

Purley1

I was not contemplating that. A friend suggested it would be an option, to which I replied that it certainly did not sound like a legal option to me!!!

I take it that what you are saying is, if you are legally a resident of Canada, then even if you have a UK bank account and you have your UK State pension deposited into that account for use when you are on holiday in the UK, you are required to declare the money on your Canadian tax return and taxes are NOT deducted in the UK?

Years ago, the parents of an acquaintance moved from Regina to Calgary and every year the daughter renewed their Saskatchewan licence plates using her address! I wasn't particularly fond of these people so I didn't bother telling them that if they had an accident, it would take SGI about two seconds to figure out that they were residents of Alberta and not entitled to buy their plates in Saskatchewan, just because it was cheaper!!

not2old

I agree with the other posters.

I'll add a further comment.....

Lets suppose you get 100% UK state pension it would be approx $8000/yr Canadian dollars. Will it make that much of a difference to your taxable income?

Will it effect any GIS - of course it will. Use the GIS tables to calculate the difference

http://www.servicecanada.gc.ca/eng/s...ts/index.shtml

If you were to take long holidays in the UK you would get any new updated rate on your pension while there.

If you were to move back to the UK you will of course get indexed UK pension as would you indexed Canadian OAS & CPP.

Or, you could spend 183 continuous days a year in the UK (the snowbird way)

Purley1

I hasten to add that this was just a discussion over coffee at Tim Horton's!! None of the people involved in the discussion worked long enough in the UK to qualify to get the state pension in any event!!

not2old

Simple answer - don't go down that road

flipance

In truth, this question is about tax evasion. I know how I feel about it, when I pay all I am due to pay. In reality the question should not have been asked by an honest person. I am not suggesting the original poster was not honest, but perhaps they should have thought about the implications of the question a bit more before posting it.

JAJ

It's not tax evasion. It's social security fraud.

However, one of the ways this can catch up with someone is if or when HMRC comes looking for them to pay U.K. income tax based on their false declaration of living in the United Kingdom. Or their estate runs into probate problems because the false U.K. address make it difficult or impossible to establish non-domicile status and hence there can be Inheritance Tax complications.

not2old

Trying to learn as well as clarify something from this thread.

Surely its possible to do it legally right by having dual residency?

http://www.hmrc.gov.uk/manuals/intmanual/intm154020.htm

http://www.cra-arc.gc.ca/tx/nnrsdnts...sdncy-eng.html

Take a person over 65 was collecting both the UK state pension & Canadian old age security. That same person began over a period of several years spent 182 days a year in Canada and 182 days a year in the UK, filed yearly tax returns declaring world income in both countries, then surely there would be no tax evasion nor social security fraud?

JAJ

Good question. For a full answer one would need to peruse U.K. pensions law to understand what "resident" means in that context. It may not be the same as tax residence. But in general, if someone meets the requirements to be resident in the U.K. for social security purposes, being tax resident in another country would not necessarily be a problem.

However - usually, a person who is resident for social security purposes will also be U.K. tax resident, and most people would rather avoid that. And many people, if their estate exceeds the Inheritance Tax threshold, would certainly prefer not to be considered to have a domicile in a United Kingdom jurisdiction.

not2old

agree on you last point

I am no expert, the following is only my interpretation from what I have read on the governments website or information that I have received from the social security or tax departments in Canada & the UK

Addressing the OP's question & the comment made by flipance. Many of us older ex-pat pension age retirees hopefully with some small amount of money that qualified for both UK state pension as well as an old age pension from Canada (OZ, NZ or SA)) decide that 'wouldn't it be nice to spend periods living in both countries'

I can only imagine if folks are rich enough they can maintain residence by having two owned properties (one in each country - something as simple as a cottage or a chalet for example) or live with one of their children in one country or one of each in both countries or maintain only one owned or rented home in one of the countries ... many other possibilities or combinations of that. It just takes a bit of imagination or whats best for each individual.

Canada allows persons to maintain residence in more than one country as long as certain things tie them to Canada that deem them resident (link above) and that they continue file & report world income.

Depending on which province folks live while in Canada they get to maintain provincial health coverage by being in the country 183 days per year, otherwise loss of health care.

Additional qualifying social security payments (if folks meet the criteria) such a GIS or allowance will paid while out of the country for 6 consecutive months.

On the UK side, maintaining residence & declaring & filing world income & tax returns a person would get to keep any indexed pension, winter fuel allowance, free travel pass, NHS, and in some cases Attendance allowance will continue depending on how long they are out of the country & where they have gone to. All legal above board - just let DWP, HMRC & Inland Revenue know what they are doing & when they do it.

Of course on UK domicile & inheritance tax, there is the possibility of moving to another EEA country (Malta or Ireland are ones that come to mind) after being back in the UK 183 days

At the end of the day if folks can stand the hassle, travel & put up with rocking back & forth & feel its worth doing - then why not, it can give you the best of both worlds.