Sent: Friday, June 13, 2003 10:05 PM
To: [email protected]
Subject: Question on Income tax for Income earned outside Canada
Sir,
My permanent residence in Canada has been approved. I
will be landing in Vancouver in the next couple of
months. However, I will most probably continue to
work in a foreign country for another several months.
My question is, will the income I earn while in a
foreign country be taxable in Canada.
I appreciate your help.
Regards.
--------------------------------------------------
david ingram replies:
What an interesting question, what you are describing is a situation where
you will undoubtedly be taxable in both countries on the same income.
The situation will be a little different if you are married and leaving your
wife and children in Canada while you are still working in the other country
and it will be treated differently if you are working in a Country with an
Income tax Treaty (such as the US, Spain, Mexico, New Zealand, Indonesia)
or are working in a no tax treaty country like Kuwait, Dubai, Saudi Arabia
or the Grand Cayman Islands.
I am guessing that you might be from the Phillipines.
If so, in another simnilar case, my client works for an Oil Company in
Libya. He pays a high income tax there and then claims credit for the tax
paid to Libya on his Canadian Tax return.
The Libyan tax is high enough that there is no tax difference to Canada.
The same is true for people working at places like the Kaltrin Coal Mine in
Indonesia.
However, if you were working in Saudi Arabia where there is no income tax,
you would owe significant tax to
Canada in the same situation as hasppened to David MacLean in the chapter
mentioned in the next paragraph..
You should read my US/Canadian tax chapter at
http://www.centa.com/U.S.Cdntaxation.htm
This situation is mostly aimed at US / Canadian Income taxation but Article
IV applies to any tax treaty country and there ae some sample tax cases
dealing with Saudi Arabia and Libya.
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