Income Taxes for Expats

We're definitely classified as non-resident Canadians for tax purposes. I take the medical deductions for both of us.

do you both get the basic exemption of roughly $11,000.?

Papers filed away for now. Will look when I get a chance.

Our tax account explains as a non-resident Canadian tax payer you still must file a detailed return each year.

If your income is above approx. $43K C$ you are better off electing to pay a flat 15% of income. Below $43K elect the detailed return.

SunFan

We are "non-residents" of Canada. The International Division of Revenue Canada told me we can claim medical expenses. They also indicated we do not have to file.
For 2014, we are definitely filing as we overpaid (personal reasons which are now all cleared up).
With the document RCA sent to indicate that yes, we are non-residents, it indicated the percentage we need to pay. For us, as very low earners, we owe 0%. In 2014, we had special circumstances but going further, no need to file.

If you dont file taxes then what do you claim your medical expenses against?

For 2014, we will be filing and adding medical expenses. Hubby paid $5,000 too much in taxes and I paid over $800 which I'm supposed to pay $0. Hubby received a payment from his former employer as a settlement so that was a particularly weird year income tax wise. We should have room for medical expenses for 2014.

2015 and further, we won't be filing as nothing to pay and no refund, so of course medical expenses will just stay in the filing cabinet ;) This is with current info.

Also if you are a very low earner then why declare non residency and pay 15% when you could just keep your residency, file taxes as normal and pay well below 15%. My wife and I only withdraw about 23,000 per year (11,500 each) from our RRSP,s which they hold back 10% taxes but we get most of that back at tax time.

But Revenue Canada said we owe 0% so nada based on our earnings, about 10k each. We pay nothing, owe nothing, no filing, easy (except for 2014).
We have nothing back in Canada except some junk at my Mom's house lol.

With such low earnings, why are you paying anything Bob?

Our experience with the Canada Revenue Agency (CRA) was, shall I say, less than positive over the past three years.

We used professional Tax Accountants to file for us.

First of all we had to deal with two CRA divisions who naturally did not communicate with each other.

Secondly the agents who processed our filings and handled inquiries were inexperienced and unfamiliar with the Tax Act (which by the way is the second largest set of legislation in Canada).

For over a year they insisted we hand over 25% of our income and in my case gave me pension tax credits I didn't apply for, then reversed their decision several months later and charged me interest on the unpaid pension tax amounts.

It was truly a Gong Show for over a year.

I found this very surprising. I would have thought Canada would love us old Expats. We pay taxes and cost the government virtually nothing in return. Hell they could finally balance the budget if they just got 80% of the tax payers to live abroad!

I take comfort in the two services I still receive from Canada for my tax dollars - Consular and Tax Services.

Ya gotta love it.

SunFan

I always ask for the "International Division" when I call Revenue Canada. Each time has been informative.
They even told me that if a Canadian expat files and it's not to their advantage, you will be noticed not to go forth with the filing. I have no idea how much truth there is to that is though. Any experience with this?

eagles100 wrote:But Revenue Canada said we owe 0% so nada based on our earnings, about 10k each. We pay nothing, owe nothing, no filing, easy (except for 2014).
We have nothing back in Canada except some junk at my Mom's house lol.

With such low earnings, why are you paying anything Bob?

Because it also depends on the reinvested earnings from some of our stock investments. As an example in 2013 our investments did quite well and even though the earnings get reinvested you still have to pay some taxes on some of them. In 2014 it was about break even so we just got a nice tax refund of that 10% they held back. I have an accountant who looks after all this stuff in Canada for us. I suppose it really depends on each persons situation as to whether to go non residency or not. It certainly wouldnt be right for us at this point in time.

eagles100 wrote:
2015 and further, we won't be filing as nothing to pay and no refund, so of course medical expenses will just stay in the filing cabinet ;)  This is with current info.

Unless I'm missing what our Tax Accountant is telling me, as a Canadian non-resident with income less than about $43,000 CDN your are better off filing a detailed return (217 or something like that) than taking the flat 15% withholding tax.

That way you can claim any medical/dental costs above 3% of earnings and pay less than 15%.

Why do they have to make income taxes so complex??? Unless it's to justify more civil servants and tax lawyers. No, never.

SunFan

Yes that sounds about right if you mean 43,000 combined for two people. Certainly not per person.

CanuckBob wrote:Yes that sounds about right if you mean 43,000 combined for two people. Certainly not per person.

Yup per person.

As I understand it as a person with a room temperature IQ and one who struggles with tax legislation.....

As a Non-resident

If you earned more than approx. $43K CDN you are better off electing to pay a flat 15% tax on all your earnings than elect to file a detailed return and take itemized deductions.

If you earned less than $43K CDN do the detailed return and you'll end up paying less than 15% net taxes.

Tax sharing between couples adds another layer of complexity of course.

I'm getting a headache. Where's my Tequila?

SunFan

This is interesting stuff. I have been doing some research and am a bit confused. Can someone confirm that if I were living in Mexico full time and only had Canadian RRSP income, I would only be required to pay federal tax but no provincial tax?

mapleleaf wrote:This is interesting stuff. I have been doing some research and am a bit confused. Can someone confirm that if I were living in Mexico full time and only had Canadian RRSP income, I would only be required to pay federal tax but no provincial tax?

Yes, but you have to fill out a form to Revenue Canada to become a "non-resident" of Canada which means you cannot own property in Canada, own vehicles there, etc. It also means you give up Medicare.

You give up provincial healthcare (or risk getting caught) anyways if you live here more than 6 or 7 months per year (depending on the province). I understand the provincial healthcare programs, as of this year, are cross referencing with Canadian immigration to catch the ones that think they are going to stay on their health plan.

Sunfan, I believe federal tax is 15% on the first $44,000 and provincial tax is from 5% to 10% (depending on the province) on that amount so over all tax rate would be 20% to 25% on anything over and above personal exemption (approx. $11,500 per person).

CanuckBob wrote:

Sunfan, I believe federal tax is 15% on the first $44,000 and provincial tax is from 5% to 10% (depending on the province) on that amount so over all tax rate would be 20% to 25% on anything over and above personal exemption (approx. $11,500 per person).

Our Canadian government adds insult to injury. If you look at the details on the non-resident tax form they take a "surtax" on top of the Federal tax payable. When one inquires at the CRA they admit this is actually a provincial tax payment added to what the Feds take. They just won't identify it that way on the tax form.

Bob. As a non-resident you pay either a flat 15 % withholding on pension, dividends and other income OR you file a detailed return and pay whatever number appears on the bottom line after deductions such as personal exemptions, medical/dental and for us old farts an old age deduction.

But lest I appear as an old curmudgeon I have no trouble paying tax for the democracy Canada has. I am a fiscal conservative but balanced with a healthy dose of social liberalism. And no that's not political its philosophy.

SunFan

Regarding B.C. medical, if you are out of province more than 6 months you are out of luck coverage wise (yes I know people fiddle). However, I have been informed that they have a one off, one year extension (thats 12 months in a row). Kinda nice for "bucket list" world travellers. You have to contact them beforehand for approval apparently. A friend used it for a year in S.America, but that was about 4 yrs. ago. Any experience anyone ?

Actually BC Medical allows a "one time" 24 months outside the country. That is what we did when we first moved down here. All you have to do is call and inform them. But be aware they only cover actual emergency procedures where there was no way possible you could have gotten on a plane and flown back to Canada.


http://www2.gov.bc.ca/gov/topic.page?id=F6C241B6EB6D4C67B3123A6844EDDB80

For those that choose to become "non resident" for Canadian tax purposes, do you then have to become "resident" for tax purposes elsewhere (eg Mexico)? In other words, must you be a resident for tax purposes somewhere?

Only if you earn income there.

SunFan