Tax Worry !

Old Jul 1st 2012, 3:03 am
  #1  
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Default Tax Worry !

I’m a Brit resident and Citizen working as a freelancer in the offshore industry, normally working 6-8 months outside UK on board a variety of survey vessels.

I have a son in NL Canada, whom I visit several times a year at 3-6 week durations. I own a house in NL, have a car registered in my name and Canadian bank account.I managed to open the Canadian bank account and register a vehicle in my name in 2005, after applying for a one year work permit to start a business in NL with the intention of becoming a resident but the business failed, I gave up the visa and returned to my offshore career in 2006.

On a visit to NL recently I had a visit by a tax inspector, who informed me they would like to assess me for Canadian tax since I purchased the property in 2002.
My status on entry to Canada is visitor, immigration have informed me that my stay must never be more than six months, which works for me as I work long rotations offshore.I Divide my time off between my home in UK and visiting my son in Canada.
Does the Canadian tax authorities have the right/jurisdiction to question me regarding my world income as my status in Canada is Visitor?

Any information would be appreciated.

Thanks
Mick
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Old Jul 1st 2012, 3:25 am
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Default Re: Tax Worry !

I am no tax expert but it is all to do with establishing residency ties in Canada.

The following is taken from the CRA website:

Under Canada's tax system, your liability for income tax in Canada is based on your status as a resident or non-resident of Canada. Your residence status must be established before your tax liability to Canada can be determined.

A determination of residence status can only be made after all the factors have been considered. Your circumstances have to be reviewed in their entirety to get an accurate picture of your residence status.

The residential ties you have or establish in Canada are a major factor in determining residence status. Residential ties to Canada can include:

a home in Canada;
a spouse or common-law partner (see the definition in the General Income Tax and Benefit Guide) or dependants in Canada;
personal property in Canada, such as a car or furniture;
social ties in Canada; and
economic ties in Canada.

Other ties that may be relevant include:

a Canadian driver's licence;
Canadian bank accounts or credit cards; and
health insurance with a Canadian province or territory.
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Old Jul 1st 2012, 3:25 am
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Default Re: Tax Worry !

Yes, they have the right. From the sound of things you have taken many actions that tend to suggest you may be tax-resident in Canada so you may have a battle on your hands.

Fortunately there is a tax treaty between the UK and Canada which means that you cannot be tax-resident in both countries at once. The important bit of the treaty is article 4:

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests);

(b) if the Contracting State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;

(c) if he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national;


You said you have a home available to you in NL. Do you have a home available for your use in the UK? If so, to which country are your personal and economic relations closer? You have a son in NL but do you have other family in the UK? Do you belong to any social clubs or professional associations? Which bank account do you use to pay for day to day expenses such as membership fees, life insurance premiums and so on. Do you have a UK driver's license. Did you file tax returns in the UK? Can you get something from HMRC that confirms you are tax-resident in the UK? This is the sort of evidence that you will need to assemble to prove you are tax-resident in the UK and not Canada.
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Old Jul 1st 2012, 8:37 am
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Default Re: Tax Worry !

Thanks for the quick replies, appreciated!

All of my remaining family are in the UK ,Parents/siblings, cousins.

In UK I also have my house which i use, car, UK Driving license, banking/loans, mortgage, gym membership, motorcycle club member, life/house insurance, on the electoral role etc.

Initially, looks like article 4 / 2 , a,b & c are in my favor,i'll start the process an contact HMRC, gather relevant info to give to the Canadian tax authority.

Many thanks for this information !
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Old Jul 2nd 2012, 6:53 am
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Default Re: Tax Worry !

I had a similar question about working in the uk(offshore)and living in canada, JonboyE gave me some helpfully information and I contacted the canadian tax authorities.

Once I was passed to the correct department the woman was very knowledgable and helpful. If you pay tax in the uk, you can claim credit for this, and use your p60 as evidence.

That was in relation to income tax.
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Old Jul 2nd 2012, 12:46 pm
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Default Re: Tax Worry !

Originally Posted by JonboyE
You said you have a home available to you in NL. Do you have a home available for your use in the UK? If so, to which country are your personal and economic relations closer? You have a son in NL but do you have other family in the UK? Do you belong to any social clubs or professional associations? Which bank account do you use to pay for day to day expenses such as membership fees, life insurance premiums and so on. Do you have a UK driver's license. Did you file tax returns in the UK? Can you get something from HMRC that confirms you are tax-resident in the UK? This is the sort of evidence that you will need to assemble to prove you are tax-resident in the UK and not Canada.
Would the fact of (not) possessing Canadian citizenship/permanent residence in these circumstances be relevant to determining non-residence in Canada?
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Old Jul 2nd 2012, 4:41 pm
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Default Re: Tax Worry !

Originally Posted by JAJ
Would the fact of (not) possessing Canadian citizenship/permanent residence in these circumstances be relevant to determining non-residence in Canada?

Not really. According to the tax treaty it could be a tie breaker if all other factors were equal.

If you ask the CRA for a determination of residency they do ask your citizenship. However, I find they focus on evidence of residential ties.
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