i’m sure this has been covered before and if so, apologies for repeating the question, but here it is: i’ve been in taiwan since september of last year and just got my ARC today (july 14)…how does the taxation work? how is my school supposed to charge for taxes? (as they love screwing me over, i want to be prepared and have a basic understanding of the tax system, just in case) and also, what’s the rate i’ll be taxed at? again, sorry if this has been covered already, but i’m pretty useless when it comes to taxes.
oh, one more question…my wife and i were talking about the taxes last night and she told me one of her co-workers is dating a guy from canada and that even though he’s working in taiwan, the canadian gov’t still taxes him on the money he makes here…now, to my understanding, the gov’t in canada can only tax you if you have a source of income in canada…is that right, or can they tax me for the money i make here?
It depends whether you get/got non-resident tax status. Getting it depends on a number of primary and secondary factors being present or not present.
Primary include a spouse in Canada, a home, and such. Secondary include driver’s license, investments, bank accounts, loans, credit cards. The presence of a primary factor means you will likely be paying. One or two secondary factors and you should be okay - it is really a case-by-case approach though and you’ll find little concrete guidance.
One thing to note is that I checked before I left in 2000 and was told that not canceling your health card would likely be a secondary factor but using it or renewing it after your departure date from Canada would likely bump you up to a resident for tax purposes. That was unofficial advice but makes sense.
There are lots of other factors as well including frequency and length of vacations/stays back in Canada.
If you have investments in Canada then you should spend the money to hire an accountant there and make sure these do not affect your tax status.
I think that this topic has been covered here before. There is/was also a lot of general info on the government’s website (cannot remember the new name of Revenue Canada).
The government can come after you for back taxes for the time that you were in Taiwan if they decide that you have been a resident for tax purposes. While Taiwan and Canada do not have a tax disclosure or double taxation treaty, Canada can and will (could before anyways) impute an income if you cannot prove your income to their satisfaction.
Some Canadians here file and pay taxes in Canada (as residents). If you are going to be staying for an extended period and saving money then this is a very bad idea. A non-resident will not have to pay taxes on savings brought back. A resident may face lots of questions if they return with a lump sum out of proportion to their declared income. Same goes if you file as a student for tax purposes and then return with any savings or if you have been sending money home.
You should also file/have filed as a non-resident in your last tax year in Canada from your departure date to the end of the year so that you start the paper trail early.
You will also still be flagged on the computer in Canada, for the first full year out of Canada, as needing to file a return for that year. You should send a letter to Revenue Canada for that tax year notifying them that you will not be filing for that year as you were not resident in Canada and that you do not intend to return (to live) for the foreseeable future.
The thing to remember is that the odds are most of this will not catch up with you until after you return to Canada, take up residency, and file your first tax return or two. And no one is going to give you a clear and concrete answer until that time. The less ties the better.
mom and pop’s accountant said two years was the soft rule on residency back when i left. i’ve been here 7, and probably a few more, so i’m thinking that i don’t have much to worry about.
i know a few people who are paying taxes back home to quicken the process for their taiwanese brides to get canadian citizenship ?? not sure about how this works either, but that might be what’s going on as per your firends …
The general rule is that you must have the intention of being out of the country for two years - whether you are is not as important as what your intention was as reflected by the govt’s assessment of those wacky primary and secondary factors.
My understanding is that it really does not matter how long you are out in practice if the govt decides that you have maintained enough factors to qualify as a resident. You can be out five or ten years but if you have enough factors then you will be on the hook for tax. When I spoke to Revenue Canada in 2000 they indicated that if you traveled back on a regular basis (ie., once a year) and used your provincial health coverage when home and that if you also had “ties to home” - an indication to maintain residency such as bank accounts, investments or the like then you would likely qualify as a resident for tax purposes. (Well any use of your health coverage could reset your date of departure to the date that you left Canada following its last use.) Nothing official but I cancelled my provincial health coverage on their and my accountant’s advice.
You will only get an official and clear answer when you file and that answer will be based on your circumstances. This is generally the problem - no one will give you a clear answer and what one person tells you one year may not be the same as what someone tells you the next. And that said, the longer you are out and the fewer ties that you retain then the better the chance of getting non-resident status if your first return back gets flagged for review.
My undertanding on the citizenship requirment is that it is based on actual residency (physical) and not tax residency. Feel free to correct me if I am wrong. I am not sure how that works in practice with marriage overseas to a non-Canadian though I am sure physical residency is the determinative factor.
damafen speaks wisely. These were my findings as well after a lot of questions and research into tax laws for non-residents. This was a while back, but there used to be a form called a “declaration of non-residency” offered by Rev-Can which simply states that you do not reside, nor do you intend to reside in Canada anytime in the foreseable future.