Hey,
Help! Is there anyone who is from Canada and who has a house and a car at home? Are we qualified to be NON RESIDENT of CANADA? If we got the local residency in the foreign country and pay the local tax, do we still have to pay tax when we return to CANADA? This my first year teaching overseas. I have a house and a car and I want to keep them both! Do I have to cancell my DRIVER'S License and HEALTH CARD too?
THANKS A MILLIONS!
I'm leaving in 10 days, WHAT SHOULD I DO?
WesternOntario
TAX CANADA
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Jim
Canadian Non-residents
I am a legal non-resident of Canada and thus do not have to pay taxes back home, though I have been allowed to keep use of my driver's license. I also maintain a bank account in Canada. I believe that health care expires the moment you leave your home province even for another, never mind leaving the country. I was told my health care coverage would resume after living back in Canada for three months. That is also the case for moving from one province to another, I believe. I don't think owning a home allows you to maintain 'non-resident' status but I could be wrong there.
The Canadian government has info on this on its website.
Hope that helps!
The Canadian government has info on this on its website.
Hope that helps!
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Ray
Tax Canada
You must break all residential ties with Canada to qualify for non-resident status. However, this does not necessarily mean getting rid of your house. You can rent it out 'at arms length' (meaning through a rental managment co. with a legal lease contract). All this is explained on the government website...type in non-resident status. Good luck.
Non-Resident of Canada
Hi, we've been out of Canada coming up to ten years now and all that's been said so far is accurate. Here are a few more things:
Credit Rating: I just found out that we have no credit rating even though we paid off two houses and held numerous credit cards and lines of credit over the years. If you can lease your home at arms length and keep the mortgage payments etc. going then that helps a lot when you try to get another mortgage at a later date.
Investments: We're in China now and were able to set up a brokerage account with Scottrade in the U.S. - there is only a 10% withholding tax rather than 25% in Canada.
That's about it - enjoy life overseas.
Credit Rating: I just found out that we have no credit rating even though we paid off two houses and held numerous credit cards and lines of credit over the years. If you can lease your home at arms length and keep the mortgage payments etc. going then that helps a lot when you try to get another mortgage at a later date.
Investments: We're in China now and were able to set up a brokerage account with Scottrade in the U.S. - there is only a 10% withholding tax rather than 25% in Canada.
That's about it - enjoy life overseas.
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aberdeen18
- Posts: 3
- Joined: Tue Nov 21, 2006 6:07 pm
- Location: Canada
non-resident of Canada
This info. is really useful. I worked outside Canada at int'l schools for a couple years and just kept a Canadian mailing address, but didn't submit a tax return for the one year I was entirely out of the country. Never had any problem. This time I'm thinking of going away for a longer period. May I ask if you took Canada Revenue's suggestion and filed a "Determination of Residence Status" Form 74 before you left Canada? It sounds like this is optional, but if you have investment income from Canada, you will have to give some address on your tax form as to which province you were resident in... This part still puzzles me.
Thanks. Dan
Thanks. Dan
Residency status in Canada
It appears that you haven't established non-residency status in Canada so you are liable for all world income that you've earned while away. I have no idea how they would 'catch' you for your time away before that you didn't file but that is the tax law as I know it. We did complete the determination of residency form before leaving Canada and received non-resident status on first application. It wasn't hard. They will be looking to see that you have cut all 'significant' ties to Canada. If you own a house, you need to lease it at 'arms length' and file a annual tax return and you'll forfeit your healthcare so be sure your international school has a good plan before signing. I have maintained my membership with the BC College of Teachers, have kept my driver's license (but use my sister's address on the card), I have an account wtih CIBC (but you need to let them know you are a non-resident so that they can deduct the necessary withholding tax on interest), and I have an Aerogold credit card with CIBC.
We tried to buy some rental property in Waterloo, Ont. this summer but ran into significant hurdles to getting a mortgage. There is no record of a credit history for us - combine that with being China residents, they gave up trying to get us a loan. Investment through Cdn sources is taxed at 25%.
Hope that helps.
We tried to buy some rental property in Waterloo, Ont. this summer but ran into significant hurdles to getting a mortgage. There is no record of a credit history for us - combine that with being China residents, they gave up trying to get us a loan. Investment through Cdn sources is taxed at 25%.
Hope that helps.
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aberdeen18
- Posts: 3
- Joined: Tue Nov 21, 2006 6:07 pm
- Location: Canada
Thanks, you seem to know a lot about this. So, if you do file this determination of residency form, do you have to say that you have no intention of returning to Canada? (I've looked at the form, and my guess is that if you say you will be returning, they will say you're still a resident...have I got this wrong?)
I'm selling my house, and don't own a car, but it's good to hear I can keep my bank account open. Did your overseas school suggest that you have your pay deposited somewhere other than Canada? When I was in the Philippines (where just about anything goes) the school said they'd never heard of a Canadian wanting his money sent home, so I opened an overseas account. Then you have the problem of how to get it back into Canada without looking like you're doing something illegal. I have no wish to be illegal. I just don't want to pay taxes if I'm not living here.
What kind of income tax form do you file? I've heard of something called a "general return"; would that indicate that you have no province of residence?
And when you do return, government health care takes a few months to kick in? What if you have a plan through your employer? That would at least cover medications...
It's a bit unnerving to think you would be here with no health care, but maybe the overseas coverage would last a while...
Your experience with the credit rating sounds like a nightmare. You mean they simply erase all records of your good financial conduct once you cease to be a resident?
sorry to bug you with these questions... I swear I don't work for the gov't.
BTW, it's China I'm hoping to go to. A friend who was in Hong Kong for two years opened an account with HSBC. I should ask him what the advantage was.
Thanks again for your comments. They are really helpful.
I'm selling my house, and don't own a car, but it's good to hear I can keep my bank account open. Did your overseas school suggest that you have your pay deposited somewhere other than Canada? When I was in the Philippines (where just about anything goes) the school said they'd never heard of a Canadian wanting his money sent home, so I opened an overseas account. Then you have the problem of how to get it back into Canada without looking like you're doing something illegal. I have no wish to be illegal. I just don't want to pay taxes if I'm not living here.
What kind of income tax form do you file? I've heard of something called a "general return"; would that indicate that you have no province of residence?
And when you do return, government health care takes a few months to kick in? What if you have a plan through your employer? That would at least cover medications...
It's a bit unnerving to think you would be here with no health care, but maybe the overseas coverage would last a while...
Your experience with the credit rating sounds like a nightmare. You mean they simply erase all records of your good financial conduct once you cease to be a resident?
sorry to bug you with these questions... I swear I don't work for the gov't.
BTW, it's China I'm hoping to go to. A friend who was in Hong Kong for two years opened an account with HSBC. I should ask him what the advantage was.
Thanks again for your comments. They are really helpful.
more on Cdn tax of Cdns
1. Just say that you unsure when you'll return to Canada. As long as you plan to be out a couple of years then non-residency is not a problem. (If you want to pay the bucks, then a tax - accountant will file for you but they charge $150/hour and up).
2. You can have your money sent wherever you want. I have an account in B.C., an account with USBank in the states and one here in town. I just tell the business office where I want my pay to be wired each month.
3. When you plan to repatriate you will need to sell all of your offshore investments to avoid Canadian tax on world income from the date of purchase. Then you simply bring the money into Canada with you (you shouldn't have any problem with that (but as we've been out for so long, when we do decide to retire and return then I'll hire an accountant who works with expats and repatriate issues.) If you're only out a few years then no worries.
4. I haven't filed a general tax return since our last year in Canada. We did file while we had the house leased out but we have since sold that and now do not need to file at all.
5. Healthcare: When you do repatriate it will take a few months of living in one of the provinces to have healthcare kick in again. You will need to go to your healthcare provider that you're currently with and personally buy additional coverage to bridge the gap. Be sure you carefully look at this every time you move to a new international school as you do not want a gap in coverage to occur between the time your present coverage stops and your new school's coverage begins.
6. Credit rating: the main problem was that they only check back about six years and we've been out of the country for ten years. Were we back in Canada I think we may be able to pay for archived materials but trying to arrange things from here with no current Canadian address attached to our credit left us off their radar.
Good luck eh and no problem, we Canucks need to stick together
2. You can have your money sent wherever you want. I have an account in B.C., an account with USBank in the states and one here in town. I just tell the business office where I want my pay to be wired each month.
3. When you plan to repatriate you will need to sell all of your offshore investments to avoid Canadian tax on world income from the date of purchase. Then you simply bring the money into Canada with you (you shouldn't have any problem with that (but as we've been out for so long, when we do decide to retire and return then I'll hire an accountant who works with expats and repatriate issues.) If you're only out a few years then no worries.
4. I haven't filed a general tax return since our last year in Canada. We did file while we had the house leased out but we have since sold that and now do not need to file at all.
5. Healthcare: When you do repatriate it will take a few months of living in one of the provinces to have healthcare kick in again. You will need to go to your healthcare provider that you're currently with and personally buy additional coverage to bridge the gap. Be sure you carefully look at this every time you move to a new international school as you do not want a gap in coverage to occur between the time your present coverage stops and your new school's coverage begins.
6. Credit rating: the main problem was that they only check back about six years and we've been out of the country for ten years. Were we back in Canada I think we may be able to pay for archived materials but trying to arrange things from here with no current Canadian address attached to our credit left us off their radar.
Good luck eh and no problem, we Canucks need to stick together
Re: Non-Resident of Canada
Hi Dave,
You opened an account with Scottrade and you pay a 10 % withholding tax- what does that mean? Do you pay 10 per cent on profits after you sell? Are there other fees you have to pay as a Canadian?
Thanks Dave.
You opened an account with Scottrade and you pay a 10 % withholding tax- what does that mean? Do you pay 10 per cent on profits after you sell? Are there other fees you have to pay as a Canadian?
Thanks Dave.
Dave wrote:Hi, we've been out of Canada coming up to ten years now and all that's been said so far is accurate. Here are a few more things:
Credit Rating: I just found out that we have no credit rating even though we paid off two houses and held numerous credit cards and lines of credit over the years. If you can lease your home at arms length and keep the mortgage payments etc. going then that helps a lot when you try to get another mortgage at a later date.
Investments: We're in China now and were able to set up a brokerage account with Scottrade in the U.S. - there is only a 10% withholding tax rather than 25% in Canada.
That's about it - enjoy life overseas.
Withholding Tax
To Mothball: Interesting moniker!
The 10% withholding tax is applied to all interest or dividend payments. There are no capital gains taxes at all. Sometimes the withholding tax is more or there are some small extra fees for ADRs (Foreign Company Holdings - American Depository Receipts) or with REITS.
Hope that helps,
Dave
The 10% withholding tax is applied to all interest or dividend payments. There are no capital gains taxes at all. Sometimes the withholding tax is more or there are some small extra fees for ADRs (Foreign Company Holdings - American Depository Receipts) or with REITS.
Hope that helps,
Dave
Scottrade
As a resident of China, I was able to open an account with Scottrade from Shanghai. I did not have to be in China. I believe they are allowed to offer accounts to residents of China, Taiwan, and Hong Kong. If you go to their website, they should have the details www.scottrade.com.
I checked their web site and it was buried but yes, I can open an account over here with no tax-withholding except for dividends. Not bad.
Their main web page is not great though. I had to do a Google search to find their international information and I still can't find what exchanges they have access to. Can you trade on the TSE and Vancouver exchanges?
Did you look at any other brokerages beside Scotttrade? If you had not have mentioned the international part, I never would have found out about it, since they don't exactly advertise this fact. Do you know of any other brokerages that offer international accounts?
Their main web page is not great though. I had to do a Google search to find their international information and I still can't find what exchanges they have access to. Can you trade on the TSE and Vancouver exchanges?
Did you look at any other brokerages beside Scotttrade? If you had not have mentioned the international part, I never would have found out about it, since they don't exactly advertise this fact. Do you know of any other brokerages that offer international accounts?
Scottrade
Glad you found it. To date, they are not offering other than the usual basket of US based exchanges and the related ADRs (that's how I buy the Cdn stocks). There are other brokerage firms overseas _Internax in Luxemburg is connected to TD and offers all the Euro and London exchanges and in Hong Kong there's an online trader (can't remember the name at the moment. However, the reason I moved from Internax were the commissions. Trades worked out to be around $30 per so compared with $7 per, Scottrade is a good deal. I have no complaints with the service that Scottrade offers (however, they don't offer mutual funds through their international service so I use ETFs when I want something in that realm). Since finding Scottrade I've not really looked further but I do keep my eyes open when something catches my eye like the brokerage firm in Hong Kong. So, if you like doing your own thing, as I do, Scottrade is fine. [Their Scottrade Elite is a nice research platform too (for accounts over $25000)].