Canadian Tax Q&A

[Davey]

http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nnrs-eng.html

As many people have said, you would probably get away with not claiming any income upon returning to Canada... but, it's pretty easy to just declare non-residency before you leave/come back. Once you're here, well, that' another story. I don't think you can make the declaration out of the country...?

Yes, you can actually do it over the phone now even if you're overseas. It's a very simple process. I simply gave them my Korean address, date I emigrated (i.e., left Canada), and when they asked me when I was gonna return, I simply said I wasn't sure.

[dbtm]

Just had a consultation with my brother in law who is a fully certified and practicing corporate accountant whose advice I totally trust.
He reminded me of two things:

1.) You can declare non-residency but Revenue Canada can retroactively declare your "non-residency" invalid. Got outstanding credit card debts or a bank account? Got a box of stuff at your parents house? Did you leave a pet behind? Do you have a cell phone plan on a 20$/month "inactive" plan? Did you send in grad school apps after being in Korea for 7 months? All of these things can be ground for RC to declare your status invalid.

The good news is that if they do decide declare you non-residency invalid, its not a criminal code offence, unless you were knowingly being deceptive. You will just have to pay the monies owed.

2.) The tax you pay in Korea is credited towards the money owed to Revenue Canada. So in effect, you are paying the Canadian tax rate on your Korea income. Most likely you are under the Canadian poverty line, so the amount extra you will have to pay is very low.

One more thing:
I'm not saying this towards people who are trying to declare Non-Residency, that is a legal and acceptable option open to you, but I am speaking to those who are going to not claim their income or lowball their income.

It is immoral not to pay your taxes to a country that has been so good to you, been so safe for you and given you so many opportunities in life. If you choose to cheat on your Canadian taxes over a few hundred dollars, you will have that hanging over your head for the rest of your life. 

[Davey]

Just had a consultation with my brother in law who is a fully certified and practicing corporate accountant whose advice I totally trust.
He reminded me of two things:

1.) You can declare non-residency but Revenue Canada can retroactively declare your "non-residency" invalid. Got outstanding credit card debts or a bank account? Got a box of stuff at your parents house? Did you leave a pet behind? Do you have a cell phone plan on a 20$/month "inactive" plan? Did you send in grad school apps after being in Korea for 7 months? All of these things can be ground for RC to declare your status invalid.

The good news is that if they do decide declare you non-residency invalid, its not a criminal code offence, unless you were knowingly being deceptive. You will just have to pay the monies owed.

Yes, the risk of declaring non-residency yourself has been stated before. As long as you don't have the "Big 3" (spouse, property, investments), you SHOULD be okay. However, to be COMPLETELY safe, you must submit the appropriate forms and wait for the CRA's analysis. 

PS Guys: It's no longer called Revenue Canada, but rather the Canada Revenue Agency (CRA).

[treesy]

I never recieved a summary statement from my school

Do you know what it is called in Korean?

Unless you declared "Non-Residency" with Revenue Canada before you moved away, you pay Canadian taxes on all income, domestic and foreign.  You could, however, not declare your income; however, that is risky business.  Good luck!

I never recieved
you're correct.

the probability of getting caught for not declaring your income is low, but there's always a chance of course. to minimize the risk, you should file your return for every year you were away from canada when you return to canada. or, if you file via netfile, you can simply file in Korea using the Internet.

if you file one year and not the previous, that's when the Canada Revenue Agency (CRA) will get suspicious, which you obviously don't want.

in the end, though, canadians are legally required to delcare what they earn overseas, unless you're a non-resident as bmsteacher noted.

[aloe]

I think you have to declare non-residency instead of just checking the box in your file when you do your taxes.  Those people calling in person might be acceptable.  I was adviced by my tesol instruction to file for non-residency since I didn't have the big 3 (spouse, major asset like a home or car, and investments).  I filled out the documents for non-residency and was rejected for reasons I am unsure of.  In the end I felt like it was too much to do and would rather not have to file for all my documents again when I return to Canada. I am just gonna pay the difference in tax rates, we make little enough here in taxable income that I think we won't be paying ridiculous amounts. 

Concerning pay stubs, you can get your admininstrative office to do it for you at the end of the year or whenever.  Get your co-teacher to translate what is what (income tax, pension, random foreigners fee) on the spread sheet before they print.  Have it signed for you because you want to use it as an official document at home.  You can ask for just one since we are contracted to get the same pay every month for a year. 

[Jaeesson Teacha]

Just remember that if you declare non-residency, you may lose some Canadian privileges when you return.  Most notably, if you are planning on attending University when you get back, you may ineligible for Government grants and scholarship (I know this is the case for Ontario, where you need to be a resident of the province for the last 12 months to be eligible).  Also, many of the Ontario scholarships and bursaries are determined by your OSAP eligibility.  So beware if you plan on attending Uni upon your return to Canada.

I personally made sure to have as many links to Canada (Car ownership, permanent address, investments (TFSA, RRSPs, Savings)) in order to keep my residency.  I will gladly pay the government my due on my Foreign income (salary) and pretend I never left the country.  BTW, if you are worried about paying taxes, you can offset it by buying RRSPs to the tune of 300$ return for every 1000$ you put in.  (It's too late to contribute to the 2011 tax season though - you have the first 60 days of the year to do that - but it's early enough to start thinking about next year!

Cheers,
J

[Davey]

Just remember that if you declare non-residency, you may lose some Canadian privileges when you return.  Most notably, if you are planning on attending University when you get back, you may ineligible for Government grants and scholarship (I know this is the case for Ontario, where you need to be a resident of the province for the last 12 months to be eligible).  Also, many of the Ontario scholarships and bursaries are determined by your OSAP eligibility.  So beware if you plan on attending Uni upon your return to Canada.

I personally made sure to have as many links to Canada (Car ownership, permanent address, investments (TFSA, RRSPs, Savings)) in order to keep my residency.  I will gladly pay the government my due on my Foreign income (salary) and pretend I never left the country.  BTW, if you are worried about paying taxes, you can offset it by buying RRSPs to the tune of 300$ return for every 1000$ you put in.  (It's too late to contribute to the 2011 tax season though - you have the first 60 days of the year to do that - but it's early enough to start thinking about next year!

Cheers,
J

You'll get tax relief from the CRA from the taxes you paid here since Canada and Korea have a double tax treaty agreement. You may ask your school or tax office for a record of how much taxes you've paid.

[ahgoodman]

I have gone through a lot of the responses about taxes. Now I have talked to my co-teacher and received my statements of income and I didn't pay any tax. There was no deduction for income tax. The only income tax I paid was in the month of February. Is that normal? So does that mean I will be paying a lot to CRA when I file my net income for the 4 months (Aug-Dec 2011?) I have only been here since August and planning to leave in August so I am just want to make sure I am doing the right thing. Any suggestions would be appreciated.
Thanks

[Davey]

I have gone through a lot of the responses about taxes. Now I have talked to my co-teacher and received my statements of income and I didn't pay any tax. There was no deduction for income tax. The only income tax I paid was in the month of February. Is that normal? So does that mean I will be paying a lot to CRA when I file my net income for the 4 months (Aug-Dec 2011?) I have only been here since August and planning to leave in August so I am just want to make sure I am doing the right thing. Any suggestions would be appreciated.
Thanks

As long as you paid taxes here (regardless whether you paid it monthly or all in one shot), you will receive tax relief from the CRA.

If you paid all your taxes all in one shot in Feburary, that must've been a huge amount. Mind if I ask how much?

[ahgoodman]

The thing is that it wasn't much at all, that is why I am going to be paying a lot. I paid like 64,000 won in Feb, that is it.

[Davey]

The thing is that it wasn't much at all, that is why I am going to be paying a lot. I paid like 64,000 won in Feb, that is it.

I'm quite sure you paid taxes monthly, then. Perhaps ask your the administration office for a breakdown of your paycheque and use Naver's dictionary (top-right field, "영어사전") to find out the meaning (knowing how to type in Korean obviously required).

[Johnzorz]

I was out of Canada for all of 2011 (minus Christmas) and I obviously didnt work at all in Canada during 2011. Is there anything that I need to let the government know? Or do I just do nothing at all?

[cornflakes]

Anothing thing to take into account is that if you are a non-resident you have to forfit your GST/HST credit which is available in some provinces. For me, that's over 600$ a year.

Sometimes, with deductions, it might be better to forget the non-residency thing, declare all income, and pocket the credit.

Hold on, I've been in Korea for almost 2 years now.....I did not file for non-residency so are you saying that I have been receiving my HST/GST cheques in Canada for the last 2 years now even though I'm not working or making any income from Canada?

I'm confused....I thought you only get GST/HST cheques if you have income....since I haven't been there for 2 years, are you saying I have about 3-6 HST/GST cheques stacked up for me back home waiting to get cashed in?? :O

[Davey]

Anothing thing to take into account is that if you are a non-resident you have to forfit your GST/HST credit which is available in some provinces. For me, that's over 600$ a year.

Sometimes, with deductions, it might be better to forget the non-residency thing, declare all income, and pocket the credit.

Hold on, I've been in Korea for almost 2 years now.....I did not file for non-residency so are you saying that I have been receiving my HST/GST cheques in Canada for the last 2 years now even though I'm not working or making any income from Canada?

I'm confused....I thought you only get GST/HST cheques if you have income....since I haven't been there for 2 years, are you saying I have about 3-6 HST/GST cheques stacked up for me back home waiting to get cashed in?? :O

You only get it if you file your income taxes, even if you report no income. So, no, you don't have a stack at home.

[cornflakes]

Anothing thing to take into account is that if you are a non-resident you have to forfit your GST/HST credit which is available in some provinces. For me, that's over 600$ a year.

Sometimes, with deductions, it might be better to forget the non-residency thing, declare all income, and pocket the credit.

Hold on, I've been in Korea for almost 2 years now.....I did not file for non-residency so are you saying that I have been receiving my HST/GST cheques in Canada for the last 2 years now even though I'm not working or making any income from Canada?

I'm confused....I thought you only get GST/HST cheques if you have income....since I haven't been there for 2 years, are you saying I have about 3-6 HST/GST cheques stacked up for me back home waiting to get cashed in?? :O

You only get it if you file your income taxes, even if you report no income. So, no, you don't have a stack at home.

But I have been filing my taxes backhom (my dad does it for me) even though i have no income to report back home...so aren't I still getting those HST/GST cheques?

[Davey]

Anothing thing to take into account is that if you are a non-resident you have to forfit your GST/HST credit which is available in some provinces. For me, that's over 600$ a year.

Sometimes, with deductions, it might be better to forget the non-residency thing, declare all income, and pocket the credit.

Hold on, I've been in Korea for almost 2 years now.....I did not file for non-residency so are you saying that I have been receiving my HST/GST cheques in Canada for the last 2 years now even though I'm not working or making any income from Canada?

I'm confused....I thought you only get GST/HST cheques if you have income....since I haven't been there for 2 years, are you saying I have about 3-6 HST/GST cheques stacked up for me back home waiting to get cashed in?? :O

You only get it if you file your income taxes, even if you report no income. So, no, you don't have a stack at home.

But I have been filing my taxes backhom (my dad does it for me) even though i have no income to report back home...so aren't I still getting those HST/GST cheques?

If he checked the HST/GST box, then, yes. Click here for details: http://www.cra-arc.gc.ca/E/pub/tg/rc4210/rc4210-11e.pdf

You do have income to report back home--your Korean income is subject to taxation.

[cornflakes]

Anothing thing to take into account is that if you are a non-resident you have to forfit your GST/HST credit which is available in some provinces. For me, that's over 600$ a year.

Sometimes, with deductions, it might be better to forget the non-residency thing, declare all income, and pocket the credit.

Hold on, I've been in Korea for almost 2 years now.....I did not file for non-residency so are you saying that I have been receiving my HST/GST cheques in Canada for the last 2 years now even though I'm not working or making any income from Canada?

I'm confused....I thought you only get GST/HST cheques if you have income....since I haven't been there for 2 years, are you saying I have about 3-6 HST/GST cheques stacked up for me back home waiting to get cashed in?? :O

You only get it if you file your income taxes, even if you report no income. So, no, you don't have a stack at home.

But I have been filing my taxes backhom (my dad does it for me) even though i have no income to report back home...so aren't I still getting those HST/GST cheques?

If he checked the HST/GST box, then, yes. Click here for details: http://www.cra-arc.gc.ca/E/pub/tg/rc4210/rc4210-11e.pdf

You do have income to report back home--your Korean income is subject to taxation.

Yes but I'll be doing that all at the end when I go back and since Canada and Korea have double taxation treaty, I'll only be paying the difference of taxes that I owe since I'm already paying korean taxes.

[Davey]

Anothing thing to take into account is that if you are a non-resident you have to forfit your GST/HST credit which is available in some provinces. For me, that's over 600$ a year.

Sometimes, with deductions, it might be better to forget the non-residency thing, declare all income, and pocket the credit.

Hold on, I've been in Korea for almost 2 years now.....I did not file for non-residency so are you saying that I have been receiving my HST/GST cheques in Canada for the last 2 years now even though I'm not working or making any income from Canada?

I'm confused....I thought you only get GST/HST cheques if you have income....since I haven't been there for 2 years, are you saying I have about 3-6 HST/GST cheques stacked up for me back home waiting to get cashed in?? :O

You only get it if you file your income taxes, even if you report no income. So, no, you don't have a stack at home.

But I have been filing my taxes backhom (my dad does it for me) even though i have no income to report back home...so aren't I still getting those HST/GST cheques?

If he checked the HST/GST box, then, yes. Click here for details: http://www.cra-arc.gc.ca/E/pub/tg/rc4210/rc4210-11e.pdf

You do have income to report back home--your Korean income is subject to taxation.

Yes but I'll be doing that all at the end when I go back and since Canada and Korea have double taxation treaty, I'll only be paying the difference of taxes that I owe since I'm already paying korean taxes.

Right, but because your dad is reporting that you have no income, you'll have to make adjustments to all your returns (which is a hassle).

[msryoo89]

Could anyone tell me what would happen if you dont file your income tax?
i recently graduated and moved back to korea in february and i forgot to file my income tax.
I will be starting working in may ...

[Freeto]

Could anyone tell me what would happen if you dont file your income tax?
i recently graduated and moved back to korea in february and i forgot to file my income tax.
I will be starting working in may ...

At the very least you'd open yourself up to a tax audit for the year you didn't file. If you owe money you will get charged interest on top of that.