David, there is no longer any requirement to establish tax residence in
Canada upon Landing.
This individual, as long as he does not establish primary ties in Canada at
landing (ie. buy/rent a home or leave his spouse in Canada), he will not be
taxable unless and until such ties are made.
These "'round the flagpole" Landings used to require tax filing to keep the
PR (permanent residence) process viable. This is no longer the case.
AGN
----------------------------
david ingram replies
This is a reader's comments about our reader from the Philippines who was
working in Indonesia and moving to Canada.
I prejudged the question by guessing the Philippines and even working in
Indonesia which has a tax treaty with Canada and a higher tax rate then
Canada does when it comes to these situations. However, if he had been
working in a non-treaty country such as Saudi Arabia where there is no
income tax, the person could escape Canadian Tax reporting if he or she has
not established a tax home.
By the way, this same reader is the one who pointed out the US REV.PROC
2002-23 notice that I had missed.
That document which deals with US persons who possess Canadian RRSP accounts
has since been added by the 2003 notice 2003-25 which requires the filling
out of a Form 3520 when a US person removes money from his or her Canadian
RRSP.
That will be the subject of a large missive in the next few days
-----Original Message-----
From: [email protected]
[mailto:[email protected]]
Sent: Monday, June 16, 2003 02:23
To: CENTAPEDE
Subject: Question on Income tax for Income earned outside
Canada by new immigrant
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 Philippines.
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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