Lamin

I hope my last post didn't come over as flippant etc, just that I am finding things a little frustrating and beginning to wonder if either Canada or my career were the right choice.

Thanks for the advice, support and interest, it is appreciated.

Winston Green

Have you checked the posibility of spending your last 6 months in the UK.it is becoming more difficult but is still possible especally if your boss is sympathetic.you could then spend you resettlement in Canada looking for a job whilst still offically in the UK.

JonboyE

At 1.6 that will be $36,800. You can split pension earnings between you and your spouse for tax purposes so it will be $18,400 each.

The amount of tax you will actually pay depends on your other earnings for the year, the province you live in, and how much of the year you were tax resident in Canada. You could be looking at a tax bill of between $2,000 and $4,000 on your half, your wife possibly around $5,500 (all very approximate numbers as I don't know the rest of your circumstances).

The tax you will need to pay will likely be around $10,000 in the above scenario. That is what you have to compare with the cost of moving back to the UK.

Your wife may be able to shelter some or all in her RRSP. If she has $18,400 in contribution room she could shelter it all there and pay no extra tax this year. Once you start work here you will accumulate RRSP room and then you can contribute your share of the lump sum and get back the tax you paid.

Granted that RRSPs are a way of deferring tax, not eliminating it, but with some planning you can substantially reduce the overall amount of tax you would otherwise pay.

There is an old saying about tax planning: never do anything just to avoid tax, do what you want to do and then find a way to minimize tax.

Lamin

Cheers for your help JonBoy. My figure might of been misleading as that is the figure I was told I would have to pay. My actually pension is actually just over double that.

Thanks once again.

shelley748

How will the authorities in Canada know unless you tell them? EG I still have my UK bank acct and I use my Dads address for my UK mail, so if I don't tell CRA how will they know?

Lamin

Winston- Hiya pal.

Your suggestion is certainly feasible as I actually have just over 4 years left to serve (if I want it) when I offically leave here.

My idea though was to put my papers in at tourex then spend the 5 months I have accured "tramping the streets" over here job hunting and resettling etc.

In theory I could get posted back, take up a UK address then go straight on holiday to Canada.

As long as I show no real connections etc and go back to the UK to demob and collect the money.

Annoying as you know, would love to get ahead of the game and swing it to my advantage.

Grateful for any other suggestions especially if you hear of any tips on your shop floor.

Lamin

Winston Green

I agree with your idea in principle, however what you are suggesting is tax evaision if the CRA did find out he could go to prison or have his PR revoked. It may not go that far but is it worth the chance. There is a tax treaty between the countries so they are duty bound to provide requested information on an individual if necessary.
Pays your money takes your chance!

Winston Green

lamin
Have canvased the floor here about a dozen people where in the same boat as you, myself included. Vast majority were able to negotiate a start date after pension was paid into UK bank. Company has a relocation package so it is not such a big deal here to stay in UK and burn resettlement and terminal leave before entering Canada.couple quoted the tax treaty to H&R block and did not pay anything not sure if this on pension or lump sum. Does not sound legal suspect it is a mistake by h&r block that people are just keeping quiet about.if you want more info pm me

Lamin

Cheers Winston, I will be in touch.

Thanks for asking about for me.

Lamin

MandyStock

My OH is in a similar situation. We received PR cards when we landed in August 2010. However, had to come back to UK to sell house & await OH finishing work. We are planning on arriving back into Canada next Summer after the payment of lump sum. We were under the impression that we wouldn't be classed as Tax Residents, as still living & working, paying tax in UK. However, we did open a bank account and put a couple of thousand dollars in the a/c to make it easier when we first came back. Worried now that having a bank a/c that just sits doing nothing, will make us tax residents. Does anyone know whether this is the case? We only arrived and got PR and SIN cards, own no property in Canada and have never worked there. Could anyone advise? Many thanks.

Winston Green

Don't worry the CRA has a few critera for being a tax resident. Opening a bank account does not automatically count you as tax residents. When you file your first tax return just state the day you arrived to stay in Canada. That will then become the date you become tax resident. If you are still in UK and that is where your primary residence is then that is basically the country you are tax resident in. Pm me if you want more info or answers to any OTher questions. I think I have just been chatting to your oh on be ns website.

MandyStock

Thank you so much for that information. A great weight off my mind!! I will probably take you up on your offer of PM. I have a head full of constant questions, and the fact that you are in NS is a huge bonus. Pretty good chance that you have been chatting to my OH (Tony) - we both try and gather information & then compare notes, at the end of the day. Thanks again. Mandy

mardyarse

ok I used to be "fedupwithwaiting" and you'll see from my previous threads we went through this in 2007. My hubby was a Squadron Leader in the RAF for 20 years. We got our PR in the May 07 and we were activating it July 07.

We had our flights, hotel, car hire, rental, goodbye parties done and were supposed to fly out 6th July. OH spoke (as much as you can) to the dept that does the final pay out pay roll. They assured him 100% we would be getting that money paid in on the 5th in which case after numerous letters, phone calls, and at the time I worked for one of the top International Tax Lawyers in the Country. We were told time and time again this money is a tax free lump sum as long as you are resident of the UK when you receive it. Obviously even if you are on a trans atlantic flight you are not a resident of the UK.

Needless to say the money didn't come in. So we sat in a hotel room in London with 8 suitcases around us and every day for a week my hubby checked his online bank to see the payment. Eventually on July 13th 07 he woke me at 11am to say the money had been paid in. We woke the kids, got dressed, he re booked the flights and we raced like hell to get to Heathrow for the 2.30pm flight! We made it and know now it was the best thing to do. It is not worth losing 40% of your hard earned lump sum to the Canadian Tax Man. Whatever you do I urge you to take heed and learn from us.

I haven't read through all the other posts but just had to send you this quickly before I ran out the door this morning. Best of luck with everything

mardyarse

Err because every tax return you ever signed in the UK will say you give you full authority for other countries to make further investigations on you. This will include checking your bank accounts, mail boxes, employers. This is tax evasion not tax planning...very bad idea. Any payments over $10,000 into your bank account are always reported to the tax man I believe so its never worth the risk.

mardyarse

Not a good idea because he will pay tax when he withdraws the money if he's earning that could be at the higher rate of 40% and you can only make withdrawals once its been in the account untouched for 3 years. His lump sum is tax free completely as long as he is resident in the UK at the time of receiving it.