Some tax information
 

I promised to post some information from a discussion with a Canadian tax adviser, prior to my relocating from the UK to Vancouver in the summer. I don't think the following is particular to BC, but it comes with the usual caveats. There's probably little here of news to those already in Canada, but it may be of help to those coming over soon, if they're "financial planning". Apologies for the long post:zzz:.
(1) As in the UK, there's an annual allowance before you start to pay income tax. In the year of arrival, the allowance isn't this full figure, just the pro-rata amount. (I'll be starting work on 1 August, so will get 5/12 of the annual amount).
(2) Travel season tickets are allowable for tax. I was a bit surprised :)(I'll be using the West Coast Express), but seemingly there is a desire to encourage the use of public transport over cars.
(3) There is a "first time home buyers' amount" (allowance) of $5,000. I had assumed we would not qualify (having had a home in the UK), but apparently it relates to your first home in Canada.
(4) When a pension from your employment in the UK starts to be paid, there is usually an option to take a lump sum which is free of tax. This is unfortunately taxed :thumbdown: in Canada, but at least you can "pension split" (i.e. for tax purposes allocate half of your pension to your other half, useful if they have a lower tax rate).
(5) If your other half has an unused personal allowance (see (1)), you can use this yourself.
(6) Employment insurance premiums, contributions to the Canada Pension Plan and an employer's pension scheme are all tax-allowable.
(7) Premiums paid for private health insurance are not allowable, unless your health costs are high (3% of your net income or $2,109).
(8) There don't seem to be any tax implications if you sell your UK house after becoming tax resident in Canada.

Re: Some tax information
 

I think (3) and (8) are both wrong.

First time buyer means just that. Not just first time in Canada.

If you sell your UK house after you come, you'll have to pay Capital Gains Tax on 50% of the difference between the selling price and the assessed value of the house on the day you became tax resident in Canada.

HTH.

Re: Some tax information
 

The tax adviser was PWC Toronto. I pushed them on the first time buyer point, but they seemed sure.

Re: Some tax information
 

Is there a time limit to the capital gains tax?, IE move to Canada do not sell UK house immediately but sell it in 10-20 years time

Re: Some tax information
 

If you realize a capital gain while a resident for tax purposes in Canada, you will have to declare your gain on your tax return and pay any applicable tax.

Why would you think you wouldn't?

Re: Some tax information
 

So if you lost money on the house would you still have to pay the tax?

Re: Some tax information
 

If you lost money you wouldn't have a Capital Gain would you ! Ergo no CG Tax.
Now, back to my rocket science project. :)

Re: Some tax information
 

The first time buyers tax credit
The $5,000 non-refundable HBTC amount applies to qualifying homes acquired after January 27, 2009, and provides up to $750 in federal tax relief.

Here is a link (on the Action plan Canada website) to a video that explains what it is, and whom is eligible.

Basically, the video says if you have have not owned a home for the last four years in Canada you are entitled to the credit. It makes no mention of not applying if you have owned an overseas home.

CRA link: Line 369 - Home buyers' amount

Source: CRA website: Selling Your Home
Do you have a capital gain?
If the property was your principal residence for every year you owned it, you do not have to report the sale on your return. However, if at any time during the period you owned the property it was not your principal residence, you may have to report all or part of the capital gain.

From that, I read that there may be no taxable capitol gain but from an immigration point of view the value of the property would need to be declared before/when you land or the whole amount will be liable to to tax if you bring it in at a later date and it was not previously declared.

I had a poke at this because some may apply to me so I have a personal interest... I'm sure our well known BE Forum knowledgeable person on such matters will correct me if I'm wrong :)

Re: Some tax information
 

I'm not an expert on tax or Canadian tax so I thought better to ask the question and get it clear in my head. I assumed there would not be a capital gain and therefore no tax, but thought it best to ask. Another quick question that maybe bordering rocket science but would you need to get a valuation when you moved to Canada to refer back to in the tax return you would make in the future when you sold it? or would the CRA calculate the difference between when you arrived and when the house was sold?

Re: Some tax information
 

This is the definition in the Income Tax Act:

“qualifying home” in respect of an individual, means a “qualifying home” as defined in subsection 146.01(1) that is acquired, whether jointly or otherwise, after January 27, 2009 if

(a) the home is acquired by the individual, or by the individual's spouse or common-law partner, and
(i) the individual intends to inhabit the home as a principal place of residence not later than one year after its acquisition,
(ii) the individual did not own, whether jointly or otherwise, a home that was occupied by the individual in the period
(A) that began at the beginning of the fourth preceding calendar year that ended before the acquisition, and
(B) that ended on the day before the acquisition, and
(iii) the individual's spouse or common-law partner did not, in the period referred to in subparagraph (ii), own, whether jointly or otherwise, a home
(A) that was inhabited by the individual during the marriage to or common-law partnership with the individual, or
(B) that was a share of the capital stock of a cooperative housing corporation that relates to a housing unit inhabited by the individual during the marriage to or common-law partnership with the individual; ...

146.01(1) defines a qualifying home as a home in Canada but there is no geographic restriction to paragraph (a)(ii). Therefore, I believe owning a home in the UK in the four preceeding years would disqualify you from claiming the first time home buyer's credit.

Re: Some tax information
 

It doesn't actually say that. It says the home you are buying must be in Canada bit it does not say that a previously owned home must be in Canada.

Re: Some tax information
 

It will certainly help. You calculate your capital gain and report it on your tax return. The CRA have the option to accept you calculation or ask you to support it. If they challenge your calculation, and you cannot produce sufficient evidence to show that you have calculated it correctly, then you invite the CRA to substitute a different amount that they consider more appropriate.

Re: Some tax information
 

just wanted to throw into the mix here because i recently asked the question of the tax office myself. regarding cap gains tax and inheritance - if you inherit a home which you never live in in the uk after being tax resident in canada you dont have to pay inheritance tax on it but you do have to pay cap gains if it increases in value from the day you acquire it to the day you dispose of it. unless its in the hands of a trustee - in which case you dont actually own the house and will receive the full value upon its sale. ( inheritance and cap gains may be payable in uk still)

Re: Some tax information
 

can't the lump sum on UK pensions be a QROPS transfer?

Re: Some tax information
 

Would an estate agent valuation be sufficient? or would a professional valuation be required?