eyeoftheocean

Is it true once you become a PR you DO NOTpay taxes for 1 year ?

PMM

Hi

Don't you wish.

eyeoftheocean

Yes LOL , However, A guy at work whos just become a PR from UK did tell me he's pretty certain of it He says CIC dont tell you this stuff , you have to search their site.

singingringingtree

I wonder if this is what eyeoftheocean has heard about? I know little about tax, but was sent this, written by Canadian Immigration Attorney David Cohen. Obviously realted to assets retained in UK. I thought I'd share in case some of our tax-experienced posters could expand?

Immigration Trust: A five year tax holiday for new Canadian immigrants

Canada’s Income Tax Act allows new immigrants to Canada to benefit from a five year ‘tax holiday’ upon their arrival, which is particularly beneficial to individuals moving to Canada who have a high net worth and retain assets outside of Canada.

Newcomers to Canada are normally subject to Canadian income taxes on their worldwide income upon their arrival. However, certain provisions in the Act allow for the creation of what is known as an “immigration trust.” This trust holds the newcomer’s foreign investment assets. If properly-structured, any foreign earned income and capital gains earned from the assets held in this trust are exempt from taxation.

It is possible for immigrants to set up an immigration trust and to transfer their foreign assets to that trust before arriving in Canada. As an example, take an individual who plans to reside in Canada and who owns property that generates rental income in his or her country of origin. This individual can then establish an offshore Immigration Trust and transfer the property to that trust. The income earned from the rental of this property will not be taxable by Canadian authorities for a period of sixty months, or five years, from the date the individual becomes a resident of Canada.

Because of this five-year tax holiday, it is possible for an immigrant to acquire Canadian citizenship in just three years, and then choose to become a non-resident for Canadian tax purposes. In this manner, it is possible for foreign earned income and capital gains to never at any point fall into the Canadian tax net.

source: from http://www.cicnews.com/2010/02/immig...nts-02764.html

JonboyE

Immigration trusts (and the similar Inbound Granny Trusts) certainly work. However, they have to be set up and administered properly. You will need a fund of several million dollars for the tax savings to exceed the legal fees.

JonboyE

No.

Alan2005

I'd say this means the rules are too complicated.

JonboyE

I am tempted to say they are not complicated enough. Like the non-domiciled rules in the UK, this is a mechanism for the super rich to enjoy the benefits of residence and/or citizenship without contributing their share of taxes.

Both governments seem to think there are good public policy reasons for this and I dare say there are. I can't say it seems right to me.

Interestingly (at least to me) there has been a recent case in the Tax Court of Canada (upheld by the Federal Court of Appeal). This seems to have changed the definition of a non-resident trust from one where "the majority of the trustees are non-resident" to one where the "active control" of the trust is outside Canada.

In future, hiring a bunch of high priced lawyers in the Cayman Islands as trustees may not do the job, unless you genuinely give up control of the money to the lawyers.

Alan2005

My view is that if its not illegal, it should not be so complicated as to exclude those who can't afford expensive lawyers and accountants. I guess they think that if they don't have rules that the rich can navigate around they won't get any of their cash rather than a little bit. Still it just means that the rest of us are paying disproportionately again... sigh.

dbd33

This doesn't make sense if the intent of the law is to benefit those who can afford expensive lawyers and accountants or, perhaps, to benefit those expensive lawyers. It seems improbable to me that a tax law would be framed to benefit the public at large, someone drives the creation of such laws and it certainly isn't the disinterested unwashed.

fledermaus

Depending on what time of year you move it can end up close to tax free. If you get a refund in the UK on PAYE and then when in Canada if you don't earn enough to pay tax you can get a refund.

Alan2005

I make no statement about the intent of the law; just the morality of it.

eyeoftheocean

OK , slightly confused by all of this




What about if you open your own buisness like in the UK , are you eligible for tax free then ?


This is an interesting topic , am learning with each post the law on tax free newbies.

Alan2005

Canada taxes income earned abroad. You aren't going to avoid paying tax that way.

mandymoochops

I know nothing about tax other than to say there isn't a loophole for the masses to get away without paying at least some tax in Canada.

If you earn money here you pay tax on it