TRC

Hi,

When I eventually get my sponsored by my spouse I'll be moving to Canada, but working from home for my current employer. I'm just wondering the best way to do this as I don't want to be taxed twice, any advice?

plasticcanuck

There's a tax treaty in effect to prevent double taxation.

Juggernaut1064

Curious about this, better to get taxed here or the UK ?

mikelincs

AFAIK you will be taxed where you are resident, so once you have made your home in Canada you will have to pay taxes in Canada, AFAIK you don't have a choice.

Engineer_abroad

From what I understand you will still be a UK citizen and still working for a UK company so your tax obligations will be in the UK, i.e. all your pay will be through Inland Revenue (unless your going self employed?). I don't think therefore you can get out of paying UK tax on your income.

If you have to file a tax return in Canada i.e. to gain certain benefits I am not sure if you will declare 0 because it was all earned in UK or declare the income but then claim foreign tax relief.

Aviator

You pay taxes where you are tax resident.

If tax is paid in the UK, then you can claim a foreign tax credit on your Canadian tax return. As income you put down what your world income was, claim for foreign tax paid, if Canada would have assessed more for the income, you have to pay the difference.

Determining your residency status

worklifebalance

Residency takes precedence over citizenship. I recently spoke to UK IR as I am now consulting to UK/Chinese companies from within Canada. It is a better mechanism to incorporate as many companies do not have procedures/processes in place for not paying UK taxes by an individual - other than you completing self-assessment and claiming it back or claiming it as credit on your Canadian Tax Return. My UK tax would be a lot more than Canada so I want to pay tax here - the additional I paid in UK is not refundable via a Canadian tax return.


Big push against tax avoidance in UK so no-one takes a risk. When I emigrated the banks all sent forms to get interest tax free on all my accounts so the IR's stance is quite clear that my income on money in UK is non-taxable.

Aviator

It makes no difference to accounts payable whether you are a corporation or a proprietorship (individual). The payer lists you as a vendor on AP, not as an employee in payroll. Very straightforward. Incorporation can be onerous and expensive and pointless unless you want liability limitations.

worklifebalance

UK Accounts payable could do that but tax laws and enforcements made in the last decade make the payee responsible for your tax even retrospectively should the law change or you were giving false info to avoid/evade tax. So if you said you were resident in Canada and were in fact resident in UK then the IR would demand the back taxes from the payee if you couldn't or wouldn't pay it or went missing. A lot of UK companies would not take that risk especially the larger corporates.

Aviator

It has always been that way as long as I can remember. Same in Canada. Employer is responsible not only for tax, but EI and CPP, both portions. It is a risk of doing business, same as giving credit and getting paid by customers.

Many b2b transactions are with sole operators and not corporations, especially small contractors.

TRC

OK, so currently I live in the UK and get paid into my English bank. When I move to Canada, do I need to get in touch with both Canadian and British Tax offices? Then my company pay into a Canadian bank? Or would it be easier for my company to send me a check then work as if im self employed?

Thanks,

Andy_Zena

Hi

Used to work for a UK employer but based and resident in Canada. Simply completed a P85 form (may have changed since I left) to extract myself from the UK tax system and confirm non-residence for tax purposes. Inland Revenue then issued me an NT (No Tax) code confirming I had no liability to pay tax in the UK. Note, you may want to voluntarily pay your NI contributions.

I was paid into my UK account by the UK parent compant, this can be problematic. Essentially on the pay date the Canadian company calculated my salary in Canadian fund. They then calculated tax, EI & CPP deductions and then advised the UK how much to withhold, depending on the exchange rate that day this could change the amount you end up with in the UK bank. The balance was deposited into the UK account.

At the end of the Canadian tax year the Canadian company issued the T4 for tax purposes and I filled Canadian tax returns as normal, no issues.

This was many years ago, in hindsight being paid into the Canadian account without the hassle would have been easier.

Thx

A