JonboyE

The loss from your rental property is allowable as long as there is a potential to make taxable income at some time in the future. For example, would it make a profit once the mortgage is paid off? If yes, then the loss is allowable.

You have to report both but if you have interest income of UKP1,000 and a rental loss of UKP1,000 they will effectively cancel each other out for Canadian tax purposes.

bazzz

I bloody hope so. Ta for that, pretty much what I hoped to hear.

petesdragon

so I will only pay tax on my military pension once ( ie UK side) or will I have to pay again in Canada? forgive my ignorance

JonboyE

Article 17 The Canada/UK tax treaty says

Pensions and Annuities

1. Pensions arising in a Contracting State (e.g. UK) and paid to a resident of the other Contracting State (e.g. Canada) who is the beneficial owner thereof shall be taxable only in that other State (e.g. Canada).

My italics.

You should request the UK government to pay the pension gross and you will pay tax on it to the Canadian Government. I imagine there is a form to make this request.

Also note that annuities from a UK source are taxable in the UK. However, a Canadian resident can offset UK taxes paid against any Canadian taxes owing on the same income.

pretz

You are taxed on your worldwide income. The reality is though if you deposited the money into the account in cash offshore and never repatriate the money back to Canada, never create a papertrail to or from a canadian account and used your UK passport to open the account giving a non canadian address it would be difficult to get caught.

The practicality becomes what can you do with the money? You can't buy a property with cash in any country worth living in, you can't buy anything but a used banger car in cash but then how would you register it without creating a trail? You couldn't pay for your kids university fees in cash wthout creating a suspicious papertrail.

It reminds me of a builder friend in england, always wanted cash. Then at 40yrs old he had no pension, couldn't make overpayments on his morgtage and pretty much pissed away the money on sporting gear, pubs, meals out and electronic goods. 20yrs in business and no assets, not clever. I tried to talk him into becoming a ltd company dozens of times. Pay no tax on the first £20,000 (£10,000 plus just under £5,000 allowence each for him and his wife) and only 19-20ish% tax on the company and draw it out in dividends then you can invest it and grow some assets.


You can spend so much time dodging the tax man you are better off getting a good accountant, maximising your writeoffs and investing it well. As the old saying goes real wealth comes from a "portfolio of investments", you need to pay the tax first to grow the investments.

Just my 2 cents

MB-Realtor

If your savings are generating more income per $ than your mortgage is costing you, then keep the savings, if not use the savings to pay down any other debt you may have, the ones carrying the highest interest first.

bazzz

Oh, I understand that, I just like the comfort of having a certain amount of cash available - partly because I know I'm going to need it to update my flat in the UK in the future. And I don't want to assume that my mortgage company is going to let me put any expenses on the mortgage.

Steve_P

You could arrange a line of credit using the equity that you have in your home as collateral.

bazzz

I don't think there is such a thing as a "line of credit" in the UK.

cneldred

if you have to pay tax on any appreciation in property value abroad, can you therefore offset in drop in asking price/final sale price against your tax return.

Chris

JonboyE

If you have a UK property rented to tenants, and this has declined in value since you became resident in Canada then you would have a capital loss when you sell it.

Half the capital loss is allowable BUT it can only be offset against other capital gains - not any other type of income. You can carry back any excess allowable capital loss to use against any taxable capital gains in the last three years, if there are none you can carry it forward indefinitely.

If the property is not rented (does not produce income that is taxable in Canada) it will likely be classified as personal use property. Capital gains on personal use property are taxable. Unfortunately, capital losses on personal use property are not allowable.

cneldred

oh bugger not rented out but cut the price...worth a try.

Thanks for that

Chris

garymc

Clear all this up for me please!

Going to Canada to work ( hopefully ) for six months on a permanent resident visa, only six months to start with due to other half not sure about the move.

Have house in Scotland UK that she will still stay in while I'm over in Canada.

Will I be required to pay tax on my property in Scotland?????

Working for a company in Scotland I dont fill out any tax returns, so is this different in Canada if you still work for a company?

Thanks

Gary

Judy in Calgary

In Canada you have to submit an income tax return even if you work for a company.

I don't know whether or not you'll be considered a Canadian resident for the purposes of taxation. Being a permanent resident from an immigration point of view and being a tax resident are two different things. If you OH doesn't join you in Canada, if you own a house in Scotland, and if you only rent accommodation in Canada, you may not be considered a tax resident of Canada.

I'm not an accountant, and I'm not qualified to give you professional advice on this. I'm only going by what has happened when we've moved from country to country and how various countries (including Canada) have defined residency for tax purposes.

Even if your wife was to join you in Canada and you became residents of Canada for tax purposes, the only taxes you would pay on your Scottish house would be:

• income that you generated from that house, e.g., if you rented the house and derived income in that way - JonboyE and others in this thread have addressed taxation of rental income
  
  
• tax on the capital gain if you sold your Scottish house after you'd moved to Canada - You need to get your house evaluated at the time of the move that establishes you as a tax resident of Canada. You have to be able to show documented evidence of this. You then would be taxed on the capital gain (if any) from the time that you became a tax resident of Canada to the time that you sold your Scottish house. The complication, in your case, is that I don't know at which point you will be deemed to have become a resident of Canada for tax purposes.

JonboyE

Assuming you will be renting for the six months you are in Canada then no. Technically, you designate your home in Scotland as your principle residence. In practice there would be no need to do anything.

However, a family unit can only have one principle residence so if you buy a home in Canada you will have to chose which one to designate.

You must file a tax return in Canada if you owe tax (and it is your responsibility to work out if you do). You do not have to file a return if you don't owe tax but it is a good idea otherwise you won't qualify for a refund or many other benefits.

There are some online tax preparation programs that make it very easy. Quicktaxweb is the one I use. I believe Ufile also have one. You cannot file your first tax return online but you can print it from these programs and mail it in.