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Hello David,
Your receptionist suggested I send you a brief E-mail regarding
my tax issue with the CRA. Just maybe you have a suggestion or
two.
Re: Canadian / New Zealand income tax assessments issue
First I am a ‘small fish” – my total assets amount to about
$350,000 in Canada and $180,000 in NZ. I do not own property or
land. I am semi-retired at 66; currently collecting CPP, OAS and
GIS totalling about $850/mo. I am eligible but not yet receiving
NZ Superannuation. I am a NZ citizen since 1982 and a Canadian
citizen from birth.
Since 1989 I have been paying full income taxes in NZ and Canada
separately. I have not declared the income in the other country.
This came about as follows:
a.. From 1973 to 1981 I lived in NZ and did not complete a
Canadian tax return after about 1981 - almost all my Canadian
non-RSP money I lost in the real-estate about 1981.
b.. From 1989 until 1991 I spent much time in Canada assisting
my dying mother and handling her estate. In 1991 my brother and
our estate lawyer completed two tax forms for me as a Canadian =
I paid taxes on my share of the estate: an estate return and a
personal return. Since then I have completed a Canadian return
whether or not I worked in Canada. I kept an investment portfolio
in Canada , mainly from my share of the estate.
c.. About 1996 I decided to return to live in Canada, and
re-establish myself as a real estate agent. For some years I
travelled back and forth regularly (working, and being with
friends in NZ; and settling in to BC again). From about 1992 to
2001 I had periodic work income in Canada .
d.. Rather than dealing with endless bureaucracy of changing
tax residencies back and forth over these years I kept my
Canadian & NZ incomes separate and paid full country taxes on
each. I felt it was fairer, and do not believe I benefited
financially doing this.
e.. With the beginning of my pensions in both countries I had
to clarify my residency. At the same time I was called for an
audit on the last two years of my planning business – I had
losses for two years. I closed my business in late 2001.
f.. I contacted the Voluntary Disclosure Program regarding my
dual residencies; but as I was also undergoing an audit was told
the VDP would not apply. I told the audit person I have had a NZ
income, from investments and from occasional work.
The CRA has now declared me a Canadian resident and wants to tax
me on my NZ income over the past 3 years. They have also
mentioned a fine for me avoiding my requirement to declare my
world income and paying taxes on it.
a.. I have not yet discussed this with the International
section of the IRD in NZ, but plan to.
David, in summary: I got into this by awkward family
circumstances, maintained the dual residency to avoid endless
bureaucracy, and paid my full tax assessment in each country
separately. I felt, in my circumstances, that this was fairest
for both Canada & NZ, and not an attempt in any way to avoid
taxes.
If you feel you could be of some assistance I would appreciate a
call or E-mail soon, outlining how you might assist, with an
estimate of costs. Maybe just a short meeting could arm me for
possible dealings with the CRA?
Thanks so much for reading this and considering what
advice/assistance you might render.
Sincerely,
====================================
david ingram replies
You have my sympathy but you are in trouble.
Article IV of the Canada / New Zealand Income Tax Treaty is quite
clear.
One country or the other has to have world income reported.
Canada has the dibs as they say and you will be looking at
reporting the NZ income on top of your Canadian Income and paying
more tax to Canada after deducting the foreign taxes paid to NZ
as a federal and provincial foreign tax credit.
I am very familiar with your problem and have even lectured on
Canada / NZ / Australian income tax in Auckland, Wellington, Bris
bane, Melbourne and Sydney back in 1981.
You will have to make peace and the best way to do that is with a
competent advisor at your side.
I would be glad to assist if you should decide to use may
services. I am not a lawyer, however, and you should likely hire
a lawyer (I can suggest) to represent you and hire me as the
income tax "in between".
This gives you lawyer/client privilege between you and me as well
as with your lawyer.
Be prepared to pay more tax and be prepared to plead (as you
already have) ignorance and good faith.
Believe me, you are not alone. I am likely correcting two dozen
US / Canada returns right now where the taxpayer has been doing
the same as you have and has only been lucky enough to get to us
first.
Be glad to see you when you get here. I will charge you $350 for
the consultation. I would prefer the week of April 17th to 24th
as we are in the middle of our busiest month of the year.
On the other hand, if you really need me sooner, just call
604-913-9133 and tell them. We may end up with a 9:00 PM
appointment but you will see from this email, I am answering it
at 9:16 and my last client just left.
david ingram
=======================
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