International Tax Advice Guide for Canadians Watch Video
Allan Madan, CPA, CA
I am an International Tax Accountant in Canada. I wrote this International Tax Guide for Canada Read More…
Disclaimer
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.
ABOUT THE AUTHOR
ALLAN MADAN
CPA, CA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
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I work and live in Japan. CRA has really screwed me by lying to me and saying I had to pay a tremendous amount of tax. When pushed and questioned they amde it clear this 10,000 is what I would have to pay. If I simply signed an NR-73 form (I believe) all would be well.
Foolish..I did…then they said ok oyu pay 1,200 of which was almost 300 in Arrears!!! But they took 8 months. I have been back and forth questioning this decision and yet NO ONE HAS SENT A LETTER CLEARLY STATING MY ACTUAL TAX “STATUS” CAN YOU HELP ME FILE AS A “DEEMED RESIDENT OF CANADA.
Victor
Hi Victor,
We can certainly help as we have assisted many individuals in similar case as you. I think the best way is for your to contact me directly so we can discuss your situation in more depth. Please give me a call at (905) 268-0150 or email me at amadan@madanca.com
Thank you,
– Allan
Hi
its my first year in Canada I was wondering when do I have to file my Canadian Income tax by?
Hi Sarah,
Welcome to Canada. Personal Tax must be filed for April 30, 2014 this coming year. We would be more than willing to assist you if you need preparation help or any additional questions.
If I work in Canada and the US do i have to pay both countries taxes
Yes but there should be a form of foreign tax credit to refund you for part of the tax paid to your permant country. If you are from the United States and work in Canada then you will pay both US and Canadian taxes. You will get a tax credit on your US return for the tax paid to Canada.
I’m thinking about setting up a new subsidiary of my corporation in Canada. I am doing some research on corporate tax rates. I was just wondering which province has the lowest corporate tax rate?
Hello James,
Here is a link to the Corporate Provincial tax rates for all Canadian provinces via CRA
Hi there Allan. I have an international tax question. I am leaving for a job in the United States. I have no clue when i will be returning to Canada. I currently have RRSP’s that makes up a substantial part of my retirement saving fund. I cannot afford to lose or withdraw the money I have saved via my RRSP. Which brings me to my question, when I leave Canada can I keep my RRSP? and if so what are the tax implications?
Thanks
Hi Trisha,
Please view this video for my answer to your question
http://www.youtube.com/watch?v=F1RM-T5-xcg
Regards
Allan
Hi Allan,
My question relates to international money transfers to Canada. My Uncle inherited money in Germany which he wishes to transfer to me in Canada. He is not a resident of Canada – neither a permanent resident or Canadian citizen. He will be transferring the money from Germany (where he inherited this) to my bank account here in Canada. He will be paying the necessary tax that needs to be paid to the government of Germany.
When I receive the money in Canada, will there be any Canadian tax implications? I have heard any amount over $100,000 is reported to the CRA.
Hi Mr. X,
Thanks for your question. International money transfers made to residents of Canada are not taxable in Canada, so long as the money received is a gift.
Your uncle should keep all documents relating to the source of the funds, should the Canada Revenue Agency ask to see them.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hello Allan,
I have a job opportunity in Asia this year. I’m wondering what the tax implications are for my house (which I intend to sell – the house went up in value since I bought it), and my RRSPs (If left in Canada).
If I sell my house and invest the house money in a Canadian savings account/RRSP or Mutual fund. What will be the tax I have to pay on this investment if I am a non-tax resident of Canada?
Do I have to pay capital gains tax on the profit I made on my house?
Thanks!
Hi Jack,
Thanks for contacting me. When you leave Canada and become a non resident for tax purposes, you are deemed to dispose of all of your assets (with certain exceptions) at their fair market value, thereby resulting in taxable capital gains. This is know as departure tax. Fortunately, your principal residence and RRSPs are not subject to departure tax.
If you sell your house prior to leaving Canada, and if your house was your principal residence for all of the years you owned it, then you will not be subject to capital gains tax on the sale. If you sell your house while you are a non resident, the buyer will be obligated to withhold 25% of the selling price in the form of withholding tax. To avoid this financial disaster, you should obtain a Clearance Certificate from the CRA, which will reduce the withholding tax to 25% of the taxable capital gain.
Contributing to your RRSPs to reduce the tax impact on the sale of your house, only makes sense if your house was not your principal residence for all of the years that you owned it.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
Hi Allan,
I am an international graduate student studying at the University of Toronto and this is my first year. Since I am a student and not working, I did not have a SIN. I was told to apply for an ITN which I did and have received it today by mail. The tax clinics that they had at university have closed. I do not know how to file my returns (fill the various forms). I would like some help in the regard as the deadline is approaching and I want to do it as soon as possible.
Thanks
Hi Shilpa,
You can contact me at amadan@madanca.com and I would be pleased to file your tax return for you.
Thanks,
Allan Madan, CPA, CA
Tel: 905-268-0150
H Allan,
I am a Canadian citizen that lives in United States. My daughter has dual citizenship with US and Canada.
She may plan to study in a Canadian University.
If she does, am I going to be considered to be a Canadian resident ? Do I have to pay Canadian tax if my daughter studies in Canadian University
Thanks
Andrew
I returned to Canada in September 2014, from Saudi. I have not returned to employment as yet. What will my tax status consist of?
Thank you for your kind assistance.
Hi Peachy,
Residence for Tax
As you mentioned that you have “returned” to Canada, please note that if you were a resident of Canada in an earlier year, and you are now a non-resident, you will be considered a Canadian resident for income tax purposes when you move back to Canada and re-establish significant residential ties.
The following CRA bulletin discusses residential ties in more depth:
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html
The most significant residential ties considered by the CRA are as follows:
• a home in Canada;
• a spouse or common-law partner in Canada; and
• dependants in Canada;
To the extent that you have established the above residential ties in Canada, you would be considered a Canadian resident for tax purposes. Your date of entry in Canada will be considered the date you became a resident of Canada for tax purposes. Please note that Canada does not currently have a tax treaty in place with Saudi Arabia, so the only guidance applicable in your case is with respect to Canadian legislation.
Review of the following CRA link, addressing tax issues for newcomers to Canada, may also be a useful starting point for you:
http://www.cra-arc.gc.ca/newcomers/
Filing a Tax Return
Should you be considered a Canadian resident for tax, you should file a return for fiscal 2014, even if you have no employment income to report. Filing a return in this case may be beneficial to you as you may be entitled to claim benefits, and CRA will determine whether you are eligible for the GST/HST credit and the Canada child tax benefit.
Please let us know if you have any further questions, and we would be happy to help!
Hello Allan,
I am from Britain and have Canadian citizenship and lived in Canada for 17 years. I left in 1992. I kept a Canadian non-resident Bank account but no other significant ties. I now plan to return. I have a substantial amount of funds from house sales in the UK over the years. These are presently in a UK off-shore bank in Guernsey. I assume these are not taxable in Canada., UK tax has been paid. How can I transfer them back to Canada ? Must I do this before I return or can I wait. I’ve been told I could be taxed on them if I wait until I return but to do so before hand would be very complicated. Also, as I’m returning after 20 years (only one or two holidays in the interim) are there any forms I would have to fill in immediately upon my return ?
Hi Lisa,
When you return to Canada, you will need to file a part-year resident return. You may also have to file form T1135, foreign income verification statement.
The capital you accumulated while you were a non resident of Canada, is not taxable to you when you bring it back to Canada. However, any income that you earn on your overseas savings while you are a resident of Canada, will be taxable to you.
When you return, please contact me so that I can help you with your Canadian tax filings.
Allan Madan, CPA, CA
Hi Allan,
I am a Canadian citizen and working on TN visa in US since July 2014. I have my family, house, RRSPs etc in Montreal, Canada. I have employment income in both Canada and US in the year 2014. I have filed my taxes in US(federal and CA state) as a non-resident by submitting 10140NR(the tax consultant in US files my taxes in US). I need to file my taxes in Canada and Quebec(being resident of Montreal, QC). I read on your forums that tax paid in US can be deducted as ‘Foreign tax credit’. But, I am not sure, how to do this. Also, I want to contribute to CPP if I am allowed to. Can you please help me in filing my Canadian Federal and provincial(Quebec) taxes? If you can let me know, how much it would cost, it would be great.
Thanks,
Regards/Mohan
Hello Allan,
I am a Canadian citizen & may have a potential employment opportunity in the UK. I understand there is a possibility of double taxation as I am a resident of Canada with ties – driver’s license, OHIP and I am joint on the mortgage & deed of the house w my parent.
1. If I am no longer on the deed but still on the mortgage – does this constitute residency?
2. If UK tax rate is 20% and Canada Federal tax rate is higher – that will result in a credit a for the UK amount plus a payment for the rest of the double tax amount to Canada?
3. If the UK tax rate is 40% and Canada Federal tax rate is equal or slightly higher – would this mean either a complete credit or a minimum payment?
Thank you so much!
GG
I left Canada to teach in Dubai for ten months. I was advised by my principal to hire an international tax consultant because I owned a house, and was given the firm she used. During initial consultation by email I understood I was to pay a withholding tax on my house, which was to be rented while I was gone, and the cost of preparation of tax documents was to be one thousand dollars, which I paid. Now I have received my tax documents to file and a bill for an additional 2,100.00. My question is, do I have any recourse and does over 3,000 seem reasonable to prepare tax documents? Thank you.
Hi Madan,
I am a Canadian citizen and presently work in Canada for a Canadian employer. There is a plan that will have me continue this job but I’ll be located in India for the next two years starting March 2016. My salary will continue to be paid in Canada in my Canadian bank account. I don’t own any property in Canada and don’t have family here. I don’t have significant ties here other than a bank account, credit card, drivers’ license and provincial health insurance card. I have done reading on the CRA webite and many other sites but couldn’t find my particular situation discussed. I am trying to find out what I need to do before I leave and also if I need to file tax returns in both countries. Your assistance would be appreciated. Thank you.
Shyam
Hi Alan (et al),
We are Canadian citizens moving to Spain in a few weeks. He own a home (mortgaged) in Toronto which we will be renting out while we are overseas. We are a family of five with three school aged kids. We are applying for a non-lucrative visa which will allow us to remain in Spain beyond 90 days without requiring sponsorship for EU employment status, which is very difficult. We are in the process of purchasing an apartment in Valencia with a value of €78,000. My wife and I are English language instructors with highly accredited (CELTA) certification. We have offers to teach online through American companies that provide ESL services for Chinese students. The positions pay in US dollars. We will also have surplus income, after expenses, from the afore mentioned rental property.
We are looking for guidance and help with our financial and taxation status. Based on the info on your site, we are definitely going to remain Canadian residents, but we would like advice to avoid any double-tax scenarios with the Spanish tax office. We both also have our NIEs in Spain, which are needed for pretty well every process we’ll encounter. We have Canadian bank account and will open a Spanish account soon too. We have retained a lawyer in Valencia to help with our real estate processes as well.
Thank you for any help,
Steve and Natasha
Hi Steve,
If you feel that you will remain factual residents of Canada, then you will be taxed in Canada on your worldwide income. You can claim a foreign tax credit on your Canadian tax return for part or all of the taxes paid in Spain or another country where you worked. To support the FTC claim, you should file a tax return in the country where you work & live.
Hi Allan, it’s great to see all the advice you’re giving.
My wife and I are Permanent Residents in Canada and have a property we rent out in the UK. We expect to pay UK Capital Gains Tax on it when we sell it but are concerned we will be stung for Canadian tax when we transfer the money over here.
Any advice on how to reduce Canadian tax on the transfer?
Many thanks
Paul
Hi Paul,
You can claim a foreign tax credit on your Canadian tax return for part or all of the UK capital gains taxes paid. You should file a tax return in the UK to support the foreign tax credit claimed in Canada. Note that if you acquired the UK property prior to becoming a tax resident of Canada, then the cost basis for Canadian tax purposes of the UK property is equal to the fair market value of the property on the date you became a tax resident of Canada.
I am American citizen and live and work in Canada as a permanent resident. I pay taxes in Canada and the USA. I am told if I make more than 100,000.00 yr I am going to be taxed even harder in the US. I am being told to become a citizen so I bypass the extra tax. I don’t want to become a Canadian citizen just to beat the tax man. Do I qualify for foreign tax credit or am I stuck getting a raise that puts me in a tax bracket that I have less take home a week from both countries.
Let me know.
hi John,
Becoming a citizen of Canada will not help you save tax. Since Canada’s tax rates are generally higher than the US, you likely won’t owe any tax in the US. You will claim a foreign tax credit on your US return for the Canadian taxes paid.
Hi Madan
My husband will be move to India to take up a new job there in May of this year. I plan to stay in Canada till mid next year before moving back to India. We plan to sell our principle residence next year before I move back to India
1) Would he be considered non-resident for Canadian Income tax purposes when he leaves Canada this year (less than 183 days this year in Canada) or would he be deemed resident till I stay in Canada?
– He is a Indian citizen and Canadian PR now
– He lived in India until 2007 before coming to Canada
– He doesnot own any house in India
2) In case he is considered non-resident from this May, would he have to pay taxes on capital gain when we sell our principle residence?
– Property is in both our names (first name is mine)
– All mortgage payments till date have been made by me.
Hi Binkavi,
Both of you will be considered as residents of Canada until you both move to India and sell / rent out your house in Canada. Your husband will be responsible for reporting his Indian income on his Canadian personal tax return up to the point in time that he becomes a non-resident of Canada. He can claim a foreign tax credit on his Canadian personal tax return to reduce / prevent double taxation.
Neither you nor your spouse will have to pay capital gains tax on the sale of your home so long as it was your principal residence for all of the years you owned it.
Thanks for the response above. I found this exception 1.23 in income tax folio S5-F1-C1:
” An exception to this will occur where the individual was resident in another country prior to entering Canada and is leaving to re-establish his or her residence in that country. In this case, the individual will generally become a non-resident on the date he or she leaves Canada, even if, for example, the individual’s spouse or common law partner remains temporarily behind in Canada to dispose of their dwelling place in Canada or so that their dependants may complete a school year already in progress”
Since my husband was a resident of India before coming to Canada would the above exception apply to him? He would visit Canada next year at the time of selling the house though.
Hi Binkavi,
Yes, the exception will apply.
Hello,
I am a Canadian citizen living abroad and have property holdings in Japan. I will return to Canada soon and am wondering what tax implications (if any) I need to be aware of, and how international property holdings are treated when filing.
Thank you!
Hi, Graeme. When you return to Canada, all of your foreign assets are deemed to be reacquired at their fair market value (FMV). As a result of this rule, the cost basis of these assets for Canadian tax purposes is equal to their fair market value upon your return. This is helpful to you, because you will not be taxed in Canada on any appreciation of your foreign assets that arose prior to your return to Canada.
In addition, if the total cost amount (as explained above) of your foreign assets is more than $100,000, then you have to report them on form T1135. Finally, any income or gains that you derive from your foreign assets while you are a resident of Canada is taxable in Canada.
Hi
I used to work in China and want to file for a tax adjustment. Can you please provide me with your email address and I will be able to explain the issue in detail.
Hi Amir, Please email the details of your case to me amadan@madanca.com
I am considering a move to UAE from canada, however I don’t own property and really only have bank accounts in Canada.
Is it absolutely necessary to close all bank accounts? I would like to keep them open as for the first little while abroad I may need to use credit cards, or line of credit to fund parts of the move.
I also have some (not much) owing on my line of credit so I would have to make payments from UAE to clear that debt.
My current situation is i’m single with no dependants and have less than the $25,000 in assets at home to declare when I emigrate from Canada, if i do so choose to make the move.
Advise?
Hi Daniel, it’s recommended that you eliminate all ties with Canada (other than your passport / citizenship) so that there’s no risk of you being classified as a Canadian tax resident. However, if you maintain only one credit card, one bank account, and a line of credit in Canada, it’s unlikely that you will be classified as a tax resident of Canada.
I would like some clarification.
I am from NZ, who arrived in Canada on a working holiday visa in mid August. Because I’ll be here less than 183 days in the Canada tax year – I’m considered a non resident. However, I read that if I earn less than 90% of my world income in Canada (I earned $6132 after tax in NZ before I came to Canada) I am ineligible for a refund in Canada, even though 25% of my income is being deducted each fortnight towards tax, CPP and EI, all of which I have no access to (And i’m only being paid $17/hr). Is this correct, or are there other refunds I may still be entitled to?
Hi Simone, you must file a non-resident personal tax return with the CRA because (a) you are a non-resident and (b) you worked in Canada during the year. You cannot claim most tax credits that regular Canadians can, because more than 90% of your worldwide income is NOT derived from Canada. This will increase your tax liability.
Hi Allan,
I am a Canadian Citizen working in the US on TN status . I already e-filed my US Tax returns and I am now looking to file my Canada Tax returns.
I worked till Aug 2017 in Canada and then moved to US Sept 2017. Also I dont want to end up paying thousands of dollars to CRA.
Can you please tell me what is your price for filing my taxes with CRA ?
Waiting for your reply,
Thanks,
Dominic S
Hi Dominic, the fee to file a departure return starts from $200 CAD + disbursements and taxes. To become a non-resident of Canada, you should not have a spouse, children or a house in Canada. Non-residents of Canada do not pay tax on income earned outside Canada.
What assets did you own as of your departure date? You may have to pay departure tax. Also, please complete this checklist and return it to me with your tax slips: http://madanca.com/personal-tax-return-t1-checklist-short/
Hi, Allan:
– Last tax filing year 2000 told by accountant as non-resident onward, (how to confirm? accountant retired not in business anymore), filing record lost due mailing error oversea.
– Worked oversea in HongKong/PRC-China till 2019 with some years no incomes.
– Year2009 onward, owned a condo through estate gift transfer
– At year of departure yr2000, held two Canadian bank accounts with one declared with Non-resident status, the other remain more or less dormant. Accounts still active till now via internet banking
— At year of departure year2000, held RRSP in three bank & one financial institution with no additional contributions except a few redemptions recently in two bank’s RRSP till now.
– At year of departure year2000, held life insurance policy with Sunlife with intermittent seasonal dividends over the years till now, some claimed and some unclaimed.
– Year 2008, gotten married in Hongkong with no kids till now. Tax domiciled Hongkong for the years working in Hongkong. Wife with me under PR card renewed two times since year 2009 and working in China without filing any tax returns yet.
Currently need advice on:
– Verification of tax status
– Considering selling Condo
– What is the best way to approach for minimum tax burden and implications for reconnection?
– How many years can CRA legally retroactively goes back on filing compliance?
– What are my exposures that you can identified?
Regards,
Mt. T
Hi Mr.T,
Thank you for your email and questions. I can certainly answer your questions during a 30-minute phone call for a fee of $110 + tax. To book an appointment with me, please contact my assistant Sade: sade@madanca.com
I am a 76-year-old single male Canadian resident in BC. I am expecting a one-time lump sum payment from the British govt for pensions not collected since I was 65. The amount is roughly 33,000 pounds, about $54,000 Canadian dollars and will be paid in 2019. My regular annual income is $52,000. I am establishing a British bank account to receive the payment in pounds for eventual conversion to dollars at a later date. Are there any strategies to lower my Canadian tax liability, such as depositing the funds into a commercial British pension fund and moving the money to Canada over two tax years rather than one?
Hi Bob,
The gross amount of the pension will be taxable to you in Canada when received. Depositing the funds into another account will not help defer tax. To defer tax, ask for the pension payments to be made over more than 1 tax year, if possible. Note that you can claim a foreign tax credit on your Canadian tax return for the UK taxes paid.
I am a canadian citizen
Want to buy real estate in Georgia (Russia)
About $100.000 or less
Whats happans about the tax?
Hi Sarah,
Report the rental income and expenses on form T776. Attach this form to your Canadian personal tax return. You will pay Canadian income tax on the net yearly profit generated by the rental property. Furthermore, if the property costs more than $100,000, complete form T1135 (foreign income verification statement). Finally, since there is no income tax in Georgia, you will not receive a foreign tax credit.
I look after my Canadian step-mom’s affairs and finances in the UK. She relocated back to Canada when my British father died 20 months ago. It is clear from your website that the modest inheritance left to her by my father does not attract tax in Canada -thank you. Can you comment on how the CRA would consider a transfer of 277,000 Canadian dollars to Canada from the UK property that she jointly owned and lived in with my father until his passing?
Hi,
I would be pleased to help you sort out your tax situation. Please provide the following information:
1. The date you left Canada and where you moved to
2. Did your wife and children move with you at the same time?
3. Do you have a home in Canada – either rented or owned?
4. What ties do you have to Canada?
5. What assets did you own as of the date you left and what were they worth at that time?
6. What is the last tax year for which you filed a tax return with the CRA?
My email address is amadan@madanca.com
Hello, are you familiar with tax between u.k. & Canada .
Living in Canada Canadian & British citizen.
Hi Ravinder,
Yes, I am. Please provide me with further details about your specific situation.