UK Pay at Home or CA
 

If you had the choice to be payed in the UK or Canada what would be the best option - ie the least tax to be payed?

I will be living in CA for 12 months and may have the option for my wages to be paid in the UK or in CA? Trying to determine the most profitable option bearing in mind I will be paying the highest tax band in the UK

Any Help is greatly Appreciated

Re: UK Pay at Home or CA
 

all residents of canada pay tax on income, regardless of how/where that income is earned.

Re: UK Pay at Home or CA
 

so does that mean if i am paid in the UK then I will get taxed twice? What are the CA Income tax rates like compared to the UK?

Re: UK Pay at Home or CA
 

haven't kept up on UK tax laws, I'm afraid. Why would you be taxed in the UK if you were living and working in Canada?

tax rates in canada are based on net income earned. if you are on salary this is very straightforward and tax will be deducted by your employer. If you are self-employed you may be able to have more tax deductions to lower your net income (eg office at home expenses etc).

you clearly need an accountant to optimize the latter route since you probably don't want to learn all about it for just one year's worth of income.

Re: UK Pay at Home or CA
 

You need to understand that the amount of tax you pay depends on which province or territory you live in. There are both federal and provincial taxes. Start here: http://www.cra-arc.gc.ca/tax/individ...axrates-e.html
As has been pointed out if you earn income from the UK but are a resident of Canada you still have to pay tax on that income. However if you have paid UK tax you won't pay Canadian tax as there is a tax treaty between Uk and Canada.

Re: UK Pay at Home or CA
 

We have a reciprocal tax aggreement with UK so you only pay tax once! You can either pay in UKor CA whichever you choose! I suppose its how much you earn and what the tax is in each for that tax band.

Re: UK Pay at Home or CA
 

No, you don't have any choice about it.

It is a question of tax residency, and it can get very complicated. Without knowing the OP's circumstances I can't even begin to make a guess about where he will be considered tax resident.

The effect of the Canada-UK tax treaty is that you are only taxed once on each stream of income. You will effectively pay the higher rate of the two countries.

Re: UK Pay at Home or CA
 

No expert, but I don't think that's quite right either. You pay the rate determined by your residency for tax purposes. If the amount deducted at source in the other jurisdiction is higher, you'll get a rebate.

I think. :)

Re: UK Pay at Home or CA
 

Any foreign Tax credits are claimed through CRA from the Inland Revenue.

http://www.cra-arc.gc.ca/E/pub/tp/it...it270r3-e.html

Re: UK Pay at Home or CA
 

You are right for corporations, where you directly offset foreign tax paid against Canadian tax owing. The calculation is more complex for individuals. The Income Tax Act gives a few different ways of calculating the foreign tax credit for individuals and says the credit will be the lowest amount of all the calculations. Two of the calculations are the actual foreign tax paid, or the amount of the Canadian tax that would have been payable if the income had been earned in Canada.

So, if the UK tax on a stream of income was $300, but the Canadian tax that would have been payable if the income was earned in Canada was $200, then you only get credit for $200. If the if the UK tax on a stream of income was $100, but the Canadian due is $200, then you only get credit for $100.

The tax treaty exists to eliminate double taxation, not to reduce the effective rates of taxation.