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Canadian Resident or Non resident


cedros

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I'm trying to decide if I should become a non resident of Canada for the Canadian Revenue Agency considerations. Can anyone tell me what the implications are for either? I find their website a bit confusing.

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My husband is a non-resident and has been for a long time. He has no property, no healthcare, no provincial driver's license. He pays 15% tax on 3 Canadian pensions and none on his US SS. He does not file income tax as per law. 

best

Sonia

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Sonia nailed it (as usual).

I have been an official non resident of Canada since 1997. A flat 15% is taken off pensions at source and those send you an official notification as to how much has been sent in on your behalf. If you have an investment broker then they do the same thing based on "interest earned". You don't need to file a return but I'm keeping all official receipts forever.

IF you do have investments in Canada at the moment then you will have to do a "deemed disposition" and pay any capital gains owing. After that, you are free of paying capital gains unless you choose to return to full time residence in Canada and then the clock starts ticking again.

You do have to give up your health care but, should you decide to return, you have to let them know officially and, after a three month wait period, your health care will be reinstated (and then you can wait some more for appointments, for tests, for treatment).

I do have a Canadian Bank Account but it is registered as a non resident account and the address is here. I do have an atm card for that account and I do have a visa card for the same bank.

Did I miss anything that you wanted to know?

 

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Yes. If you have a portfolio with stocks in it, then they are "deemed" to be of a certain value on the day that your non residency is granted. So the difference between what you bought them for and what they are "deemed" to be is a capital gain (or loss) and if you end up paying (or not) all the capital gains owed then and there. It's a "pretend" sale of the stock.

This is really only advantageous if you have heirs because they can inherit the portfolio CLEAN and then, if they are residents of Canada, the capital gains clock starts ticking again.

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The CRA website says that the usual tax rate for nonresidents is 25% but some are saying above they are taxed 15%. I wonder why the difference.

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Sonia; If a Canadian’s income is above 45,000 or so there may be no need to submit a tax return on a yearly basis. US social security may be taxable in Canada depending on the status of the recipient. What was good 10 or 15 years ago may not be applicable today. Canada now requires reporting  WORLDWIDE INCOME.

Ferret: Canada’s taxation laws have changed over the last 19 years. Have you had an assessment recently? If not I would you suggest you sit down with someone who is current with the Canadian non- resident tax laws and discuss your situation with them. You may be surprised. Don’t rely of the CRA. They want as much money as they can get. Legally or “not”. Also interest has not been taxable to non-residents since 2008.

Cedros: Talk to your tax preparer.

I was a professional tax preparer in Canada for 20 years and have been doing non-resident and resident tax returns in Mexico since 2010.  There have been changes in the last 20 years!

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On 4/28/2016 at 0:43 PM, ericurmudgeon said:

I believe you also lose your voting rights. 

Taxation without Representation was the cause of the Boston Tea Party. Things may change! But it needs a voice.

The current laws do not look closely enough at  retirees with continuing Canadian sourced pension and other income.

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Not all Canadian tax treaties are the same. Example CPP and OAS if resident of US no tax to Canada. If resident of Mexico 15% tax withheld. Some of Canada's tax treaties are simpler and refer to no double taxation to both countries. I believe this is true with Mexico. 

One minus is no healthcare as a non-redident.

A positive as noted, no tax on interest.

We are not aware of the 45000 limit requiring filing as my husband exceeds that amount from Canadian pensions all known to the Canadian government. He has been a non-resident for 20 years.

On a related issue if a Canadian worked in the US for say 6 years and many years in Canada they may receive US Social Security. Same with an American working in Canada for not many years. There are reciprocity agreements.

Canadian voting rights were not tied to non-resident status but rather number of years out of the country thanks to a Conservative government. This ruling will likely be undone with current Federal government.

saludos

Sonia

 

 

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I believe that we are concerned only with Canadian Taxation as it refers to non-residents of Canada living in Mexixo. Tax treaties are based on residence not on citizenship and what the US/Canada treaty stipulates has no relevance in Mexico.

Canadian non-residents have 2 options regarding tax. One is to contribute 15% of all earnings as tax. The other is to file a special tax return that has deductions similar to those if you were a Canadian Resident. The point at which the total tax paid coincides using both methods is between 40 and 50 thousand dollars of income depending on the deductions available to use including spousal transfers, donations and medical expenses.  Anyone in that range needs to have their taxability reviewed from time to time. 45.000 is a rough guide.

Canadian voting rights are indeed tied to non-residency. Canadian employees of the State department, (Embassy and Consulate employees) and members of the Armed Forces and any other Government  employees out of Canada maintain their voting rights while registered non-residents lose their voting rights after 5 years.

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From elections Canada early last fall 2015: I would be removed from the International Register of Electors if I had been living abroad for five or more consecutive years. I would be exempt if I could state when I intend to repatriate and if I had been working for the Canadian government, a Canadian company or an international organization in which Canada is involved, or living with someone who is.

The ruling, a 2-1 split decision, overturned enfranchisement of long-term expats, when the judge argued that banning expats from voting is unconstitutional. Canadian expats have been enfranchised since 1993, and the five-year limit was not enforced until 2007.

No mention of non-resident for tax purposes and their voting right. It is time based and this thread is about non-resident pros and cons. 

 

saludos

Sonia

 

 

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On 4/28/2016 at 9:33 AM, cedros said:

I'm trying to decide if I should become a non resident of Canada for the Canadian Revenue Agency considerations. Can anyone tell me what the implications are for either? I find their website a bit confusing.

As you can see above the OP asked about non-residence for tax purposes..

No matter what the elections act says, what actually happens is very different. If a Canadian (and there are many of these) keeps his/her main address as Canada then he/she will be registered to vote even though they have been outside Canada for 5 or more years. Registering as a non resident for tax purposes is the only way for the Elections act to really know that a person is a non-resident for election purposes.

I deal with non residency questions on a daily basis and am quite aware of current practices

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Cedros, imho, you will be best served by hiring a "great" tax attorney.  If you have contacts in Canada fond out what firms are making tax case law and succeeding with court cases against fevenue canada.   As you know, everyone comes with a different set of baggage so what you want to know cant be counted on in this forum.  If you want my opinion search out the law firm of Felesky and Flynn.  It may cost 600 bucks for an hours consult but well worth it.   At least that was their cost 12 years ago.   Also check out the book 'Take Your Money and Run' by Alex D.  It's not up to date but worth the read.

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The decision to allow voting by non-resident Canadians was made in the Ontario Court of Appeals and later overturned by the Ontario Supreme Court, it is now going to the Supreme Court of Canada according to the attached article by CBC dated April 14, 2016

http://www.cp24.com/news/supreme-court-to-hear-appeal-on-voting-rights-for-non-resident-canadians-1.2858918

 

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The difference between 15% & 25% relies on where the monies are. If you leave your money in Canada, you will pay 15% with-holding tax as it moves into your hands. If you elect to remove all your monies from Canada then the with-holding tax will be 25%.

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