Brazilian citizen, Landed Immigrant in Canada working

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--Boundary_(ID_UuMwD021J2KjVBYRJBjWBA)
Subject: Re: Brazilian citizen, Landed Immigrant in Canada working in B =
razil, Thailand, France Italy worries about Taxation in Canada
The start of this link is further down at the end of this message.
I don't understand. Canada's immigration said that everyday you spend =
out
of Canada it is not considered for the time of resident. More than 183 =
days
outside Canada meens that I am not resident. This was their explaining.
So, I presumed that as I am not resident I souldn't be paying the taxes.
I don't live in Canada, don't have car, don't have home, nothing, only a
bank account. The canadian company is paying me as a contract from =
Brazil
and not as a canadian employee or contract in Canada. So, why should I =
have
to pay the taxes to Canada?
But, if I have to pay, I will be paying taxes as a company or as a =
person/employee?
which taxation should I have to consider?
Thanks for your help. yes, I already have the PR card. I received it end
of last year.
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david ingram replies:
This is the third question / inquiry and I should be charging you.=20
You either got bad advice or misinterpreted what you heard or both. =20
Go away for 183 days and "LIVE" in a treaty country like Brazil for the =
more than 183 days and you would not owe Canada any income tax.  =
However, you did not stay in any  treaty country for long enough to =
escape Canadian Income Tax. Immigration people do not usually have any =
knowledge of income tax by the way=20
You should go to www.centa.com and read US/Canada Taxation Although this =
applies to Americans, Article IV of the Canada / Brazil tax treaty reads =
almost exactly that of the US / Canada treaty reproduced there.  There =
are cases there involving Dennis Le, Frederick Reid and David MacLean =
which will show you that tyou are taxable in Canada. =20
I am reproducing the Dennis Lee case here.  He was taxed even though =
they would no let him into Canada because he had applied and had no tax =
home and co-signed a bank loan for his wife.  I guarantee that if the =
CCRA looks at you, they will tax you and win.  If they have to "catch" =
you, the penalties and interest will not be worth it.  And they will =
catch you. You wioll have too much paperwork ocurring and can be caught =
through your immigration papers when they want copies of your tax =
returns or wheen they audit the Canadian company or because a fellow =
worker writes an anonymous letter to the CCRA.  Do it right.
OUT OF CANADA AND RESIDENT - IN CANADA AND NON-RESIDENT=20
It is possible to be physically "in Canada" and be treated as a =
Non-Resident and it is possible to be out of the country for seven =
years, or never have even lived in Canada, but wanted to, and be taxed =
as a Canadian resident as the following three cases show. In case you =
missed it, the reason for the different rulings is the "INTENT" of the =
parties involved.  Wolf Bergelt intended to leave Canada.  David MacLean =
was only working out of the country.  He still maintained a residence =
and could not ever become a resident of Saudi Arabia anyway. Dennis Lee =
"wanted" to live in Canada.=20
In 1986, Wolf Bergelt won non-resident status before Judge Collier of =
the Federal Court, even though he was only out of the country for four =
months and his family stayed behind to sell his house. He had given up =
his memberships, kept only one bank account and rented an apartment in =
California until his house in Canada was sold. Four months after his =
move, his company advised him that he was being transferred back to =
Canada. Judge Collier said his move was a permanent (although short) =
move and he was a non-resident for tax purposes for those four months.=20
In 1985, David MacLean lost his claim for non-residence status even =
though he was gone for seven years. He kept a house and investments in =
Canada and returned a couple of times a year to visit parents. He had =
even been to the Tax Office and received a letter on January 29, 1980 =
stating that his Canadian Employer could waive tax deductions because he =
was a non-resident. However, he did not advise his banks, etc. that he =
was a non-resident so that they would withhold tax, he did not rent his =
house out on a long term lease and he did not do any of the things that =
makes a person a "NON-RESIDENT". Judge Brule of the Tax court of Canada =
said that he thought Mr. MacLean had stumbled on the non-resident status =
by chance rather than by design. In other words, to become a =
non-resident of Canada, you must become a bone fide resident of another =
country.  As a rule, only a Muslim born in Saudi Arabia to Saudi Arabian =
parents can become a Saudi Arabian citizen.  The best that David MacLean =
can hope for is that he has a Saudi Arabian temporary work permit.=20
In other words, when a person leaves a place, they usually leave and =
establish a new identity where they are because the "new place" is where =
they live now. Trying to "look" like a non-resident is not the same as =
"BEING" a non-resident - think about it.=20
In 1989, Denis Lee won part but lost most of his claim for non-resident =
status. He was a British Subject who worked on offshore oil rigs. He =
maintained a room at his parents house in England and held a mortgage on =
his ex-wife's house in England. For the years 1981, 82 and 83 he did not =
pay income tax anywhere. in 1981 he married a Canadian and she bought a =
house in Canada in June of 1981. On September 13, 1981, he guaranteed =
her mortgage at the bank and swore an affidavit that he was "not" a =
non-resident of Canada. [As I have said in the capital gains section of =
this book, bank documents will get you every time.] During this time he =
had a Royal Bank account in Canada and the Caribbean but no Canadian =
driver's licences or club memberships, etc.=20
Judge Teskey said:=20
"The question of residency is one of fact and depends on the specific =
facts of each case. The following is a list of some of the indicia =
relevant in determining whether an individual is resident in Canada for =
Canadian income tax purposes. It should be noted that no one of any =
group of two or three items will in themselves establish that the =
individual is resident in Canada. However, a number of the following =
factors considered together could establish that the individual is a =
resident of Canada for Canadian income tax purposes":=20
     - past and present habits of life;=20
    =20
     - regularity and length of visits in the jurisdiction asserting =
residence;=20
    =20
     - ties within the jurisdiction;=20
    =20
     - ties elsewhere;=20
    =20
     - permanence or otherwise of purposes of stay;=20
    =20
     - ownership of a dwelling in Canada or rental of a dwelling on a =
long-term basis (for example, a lease of one or more years);=20
    =20
     - residence of spouse, children and other dependent family members =
in a dwelling maintained by the individual in Canada;=20
    =20
     - memberships with Canadian churches, or synagogues, recreational =
and social clubs, unions and professional organizations (left out =
mosques);=20
    =20
     - registration and maintenance of automobiles, boats and airplanes =
in Canada;=20
    =20
     - holding credit cards issued by Canadian financial institutions =
and other commercial entities including stores, car rental agencies, =
etc.;=20
    =20
     - local newspaper subscriptions sent to a Canadian address;=20
    =20
     - rental of Canadian safety deposit box or post office box;=20
    =20
     - subscriptions for life or general insurance including health =
insurance through a Canadian insurance company;=20
    =20
     - mailing address in Canada;=20
    =20
     - telephone listing in Canada;=20
    =20
     - stationery including business cards showing a Canadian address;=20
    =20
     - magazine and other periodical subscriptions sent to a Canadian =
address;=20
    =20
     - Canadian bank accounts other than a non-resident account;=20
    =20
     - active securities accounts with Canadian brokers;=20
    =20
     - Canadian drivers licence;=20
    =20
     - membership in a Canadian pension plan;=20
    =20
     - holding directorships of Canadian corporations;=20
    =20
     - membership in Canadian partnerships;=20
    =20
     - frequent visits to Canada for social or business purposes;=20
    =20
     - burial plot in Canada;=20
    =20
     - legal documentation indicating Canadian residence;=20
    =20
     - filing a Canadian income tax return as a Canadian resident;=20
    =20
     - ownership of a Canadian vacation property;=20
    =20
     - active involvement with business activities in Canada;=20
    =20
     - employment in Canada;=20
    =20
     - maintenance or storage in Canada of personal belongings including =
clothing, furniture, family pets, etc.;=20
    =20
     - obtaining landed immigrant status or appropriate work permits in =
Canada;=20
    =20
     - severing substantially all ties with former country of residence. =
    =20
"The Appellant claims that he did not want to be a resident of Canada =
during the years in question. Intention or free choice is an essential =
element in domicile, but is  entirely absent in residence."=20
Even though Dennis Lee was denied residency by immigration until 1985 =
(his passport was stamped and limited the number of days he could stay =
in the country) and he did not purchase a car until 1984, or get a =
drivers licence until 1985, Judge Teskey ruled that he was a =
non-resident until September 13, 1981 (the day he guaranteed the =
mortgage and signed the bank guarantee) and a resident thereafter.=20
My point is made. Residency for "TAX PURPOSES" has nothing to do with =
legal presence in the country claiming the tax. It is a question of =
fact. My thanks to Judge Teskey for an excellent list. The italics are =
mine and refer to the items which I usually see people trying to "hold =
on to" after they leave and are trying to become non-residents. No =
single item will make you a resident, but there is a point where the =
preponderance of "numbers" leap out and say, "He / She is a resident of =
Canada, no matter what he / she says." =20
The case above is not unusual in any way. It is a fairly typical =
situation in my office.=20
In 1990, John Hale was taxed as a resident on $25,000 of directors fees =
he had received from his Canadian Employer and on $125,000 he received =
for exercising a share stock option given to him when he had been a =
resident of Canada (the option, not the stock). Judge Rouleau of the =
Federal Court ruled that section 15(1) of the Great Britain / Canada Tax =
Convention did not protect the $125,000 as it was not "salaries, wages, =
and other remuneration". It was, however a benefit received by virtue of =
employment within the meaning of section 7(1)(b) of the act.=20
Even a car you do not own can make you a resident as the next sailor =
found out.=20
In 1988, FrederickReed was claimed by the Canadian Government as one of =
their own. He lived on board ship and shared an apartment with a friend =
in Bermuda but only occasionally. He also stayed with his parents in =
Canada when visiting his employer in Halifax. Judge Bonner of the Tax =
court ruled that he could not claim his place of employ or the ship as =
his residence and just because he did not have a fixed abode, did not =
make him a non-resident. He was also the beneficial owner of a car in =
Canada which even though of minor consequence, served to add to his =
Canadian Residency. He had in fact borrowed money from a credit union to =
buy the car, even though it was registered in his father's name. He had =
maintained his Canadian Driver's licence as well.=20
An interesting case in June, 1989 involved Deborah and James Provias who =
left Canada in October of 1984. They had sold a multiple unit building =
to James' father on September 21, 1984 but the statement of adjustments =
did not take place until December 1, 1984. They tried to write off =
rental losses and a terminal loss against other income as `departing =
Canadians'. Judge Christie of the Tax Court ruled that they had left =
before the sale and were not entitled to the terminal loss or another =
capital loss as these could only be applied against income earned in =
Canada from October 13, 1984 (the day they left) to November 30, 1984 =
(the day before the sale) and there was no income, only a rental loss.=20
But June, 1989 was a good month for Henry Hewitt. He had been a =
non-resident living in Libya for four years and received some back pay =
after returning to Canada. DNR tried to tax him on the money but Judge =
Mogan of the Tax Court came to the rescue. He ruled that although =
Canadians were usually taxable on money when received, that assumed that =
the money itself was taxable in Canada, which was not true in this case. =
In 1989, James Ferguson lost his claim for non-residency status but from =
the information, it didn't stand a chance anyway. He had been in Saudi =
Arabia on a series of one year contracts for four years. His wife =
remained employed in Canada, and he kept his house, car, driver's =
licence, union membership, and master plumber's licence. Judge Sarchuk =
ruled that he had always intended to return to Canada and was a =
resident.=20
A similar situation involved John and Johnnie M. Eubanks in the United =
States. He was working on an offshore oil rig in Nigeria with a Nigerian =
work permit and attempted to claim non-resident status for the purposes =
of exempting the foreign earned income exclusion. His wife was in the =
United States at all times and because he worked 28 days on and 28 days =
off, he returned to the U.S. for his rest periods using 4 days for =
travel and 24 days for rest with his family. He did not spend any 330 =
day period (out of a year) in Nigeria and only had a residency permit =
for the purposes of working in Nigeria. Judge Scott ruled he was a =
resident of the U.S. and taxed him some $20,000 with another $6,000 =
penalties and interest.=20
The Tax departments in Canada and the U.S. issue Interpretation =
Bulletins and Information Circulars and Guidance Pamphlets. These =
documents sometimes get people in trouble because the individual reads =
the good part and doesn't pay any attention to the exceptions. The =
following case ran contrary to a Guidance Pamphlet issued by the IRS.=20
On and Off-shore Oil rigs were involved with William and Margaret Mount =
and Jesse and Mary Wells. William and Jesse worked in the United Arab =
Emirates. However, they kept their homes and families in Louisiana and =
kept their driver's licences in Louisiana and voted in Louisiana. No =
evidence was shown that they had tried to settle in The United Arab =
Emirates. Judge Jacobs turned down claimed exclusions of approximately =
$75,000 each.=20
There isn't any question about what oil rig people talk about on oil =
rigs. It has to be "how to beat the tax man". Unfortunately, they all =
seem to think it is easy. Another such story follows.=20
In 1989, Clarence Ritchie found out that bona fide residence means just =
what it says. You cannot be a non-resident of the U.S. for tax purposes =
if you are not a bona fide resident of another country. He was working =
on the Mobil Oil Pipeline in Saudi Arabia and although when he left he =
was married with a couple of kids, by the time he returned permanently, =
he was a happily divorced man. Judge Scott ruled that though he did not =
have an abode in the United States, he had not established one in Saudi =
Arabia and therefore was not entitled to the foreign earned income =
exclusion which requires you to be away for 330 days out of 365. He had =
worked a 42 days on, 21 days off schedule and usually returned to the =
U.S. for his days off although he did spend time in Tunisia, England, =
Italy and Greece.=20
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>
>To: David Ingram at home - bus at [email protected]=20
>Sent: Sunday, November 23, 2003 5:54 AM
>Subject: Re: Fw: Taxation in Canada

>>>
>>QUESTION:
>>
>>Hi,
>>I am an IT consultant, have permanent resident in Canada and Brazilian
>>nationality. I left Canada in February/03 to start a project abroad. I
>still
>>outside Canada until today but thinking to move back in January/04 =
when
>the
>>project ends. My contract is with a canadian company but I am using my
>>Brazilian company to invoice them. I understood that as I am not =
living
>in
>>Canada since february/03 and invoicing from my Brazilian company, I
>>shouldn't pay the canadian taxation. Am I correct? I will be very glad
>with
>>your answer as soon as you can because I am planning to move back to =
Canada
>>on earliest January/04 and don't want to have problems.
>>
>>Tks,
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david ingram asks
What country are you living in?
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He replies:
>Since I left Canada, I'm working for a worldwide project, staying up to
>three months in each country (Brazil,Thailand,USA,France,Italy) and =
sometimes
>only one or two weeks. For billing, I'm billing the canadian company =
from
>my company in Brazil considering my base in Brazil, but I was the whole
>time flying from country to another one.
>
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>david ingram replies:
>
>Good news and bad news. =20
>
>The good news is that the year you have been gone should qualify for =
Canadian
>residence because you have been working for a Canadian company.
>
>The bad news is that you are definitely taxable in Canada as a =
resident.
>=20
>
>To escape Canadian tax, the least a Canadian resident has to do is  =
live
>somewhere else for more than 183 days of the year.. =20
>
>You have not lived somewhere else for more than 183 days.  An address =
in
>Brazil does not qualify.
>
>Glad to look after you returns.  It is too bad that you have paid =
through
>a Brazilian company because it has not made you non-taxable in Canada =
and
>will cost you more for services and proviong that you were Canadian for
immigration
>purposes.
>
>Have you received your PR card yet ?
>
>David Ingram's US/Canada Services
>US / Canada / Mexico tax and working Visa Specialists
>US / Canada Real Estate Specialists
>4466 Prospect Road
>North Vancouver,  BC, CANADA, V7N 3L7
>Res (604) 980-3578 Cell (604) 657-8451
>(604) 980-0321=20
>New email to [email protected]
>www.centa.com www.david-ingram.com
>
>Disclaimer:  This question has been answered without detailed =
information
>or consultation and is to be regarded only as general comment.   =
Nothing
>in this message is or should be construed as advice in any particular =
circumstances.
>No contract exists between the reader and the author and any and all =
non-contractual
>duties are expressly denied. All readers should obtain formal advice =
from
>a competent and appropriately qualified legal practitioner or tax =
specialist
>in connection with personal or business affairs such as at =
www.centa.com.
>If you forward this message, this disclaimer must be included."
>
>Be ALERT,  the world needs more "lerts"
>=20
>
>
>>***********************************************************************=
*****
>

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