I'm currently in the process of doing our first tax return since arrivind in BC, my wife got severance from British Airways last year and her payment was non taxable, but I have been informed that we may have to pay tax to the Canadian revenue!!!! Can anyone shed any light on this matter please.

Just when you think thats us arrived and our first year is out of the way nothing else to worry about, this pops up and bite you in the rear end.

if this happened before you came to live permanently in BC then you can ignore it. Only declare income subsequent to arriving here (this isn't the same as getting PR, it's the date you came to live)

Thanks Allan but we arrived in August 08 and she was payed out in January 09, something tells me we'll need to be paying the tax which does seem unfair as it was and still should be non-taxable

Oh sorry did I just mention tax and fair in the same sentance?

If it was paid into a uk bank account, I wouldn't worry about declaring it. Even if it was paid into a canadian account unless they send you a tax form, don't worry about it. The chances of CRA auditing you are slim, unless you have an outrageous tax return.

Take this advice at your peril.

There are laws here as to whether severance pay is taxable. Burying your head in the sand and hoping CRA won't find out is fraught with danger. I would imagine that tax evasion is a one way ticket toward deportation.

LOL, let me guess, you are not an accountant or a lawyer are you!

What you are proposing is illegal. If the money was earned after they became resident, then they have to declare it.

Im not a lawyer or accountant either, perhaps there is some way legit way to tax shelter the money? If its a lot of money involved, then its probably worth paying for professional tax advice.

My understanding is that if you received the severance whilst living in the UK, as a UK tax resident UK rules apply. If you were a Canadian tax resident when you received the payment liklihood is yes it will form part of your world income. There are different categories on the return for different types of income. You would be well advised to consult a tax accountant, it could save you a bundle. If you take the advice above about not saying anything, what they don't know etc. then this will very likley come back to bite you in the future. CRA can audit you as far back as they like if they suspect fraud, there is no time limit. Not reporting income to CRA can be very very costly, monetarily and to your liberty if serious enough.

or maybe somewhere more painful

Shouldn't there be a rule against posts that incite or counsel people to commit illegal acts?

When you chose to live in another country you also chose to abide by its laws. Would you think it acceptable for immigrants to Britain to decline to pay tax on their income in the UK because they wouldn't have to pay tax in their country of origin?

I thought there was, but I couldnt see it when I looked. Something about links to illegal activites though? Maybe I misread it....

Seems we have made it pretty clear between us that that would be illegal anyway

Why should it be non taxable? It always was taxable in Canada to Canadian residents, nothing has recently changed.

With the advent of the Internet, information is more freely available to would be immigrants than ever before.

[QUOTE=The Aviator;8393892]Why should it be non taxable? It always was taxable in Canada to Canadian residents, nothing has recently changed.


At the time of receiving the severance the conditions were that the payment was non-taxable unless she took up employment within 12 months of the payment, to which she hasn't, so that's why I'm asking the origonal question, as I'm obviously unsure how things stand in Canada, that's why I think it's non-taxable.

Thank you all for your replys, I'm still not 100% of what is to come, but I have evry intention of declairing the payment as trying to hide money isn't an option that I'd consider, I just wanted a bit of info before I call CRA as to be honest I'm bricking they're answer

First of all I'm not talking about Immigrants in the UK who decline to pay tax on their income, I'm asking a question to see if anyone has been in the same situation as myself so that when I call the CRA later this week I'm prepared for the bombshell if there is one, the fact is that one moment we had a one off non-taxable payment over a year ago, and boom! now we're looking at having to shell out money we don't have anymore.

And second thing is at no point in my 2 posts did I ever mention not declaring or declining anything, also I'm well aware that you have to abide by the laws that govern any country where you live or visit, do you think I arrived here in a time machine from pre-historic times

[QUOTE=Mooredog;8394934] When did she stop working for BA, was it after your move to Canada in August 08 or was it before your move but physical payment of severance was delayed until Jan 09?

If she lost her job prior to your move I would imagine theres a argument that she earned the severance before you became tax resident in Canada. You need to get professional advise though, or phone the CRAs international tax line and ask them...