Canadians paying tax

[matt buxton]

Alright I have searched and searched to no avail.

I am a Canadian living in BC who has been offered a position working out of Dubai.

Before settling on the contract I have been trying to find out what the tax situation is here in CANADA.

I cannot find anything, so I thought that someone on the forums might be able to help.

What happens when you work overseas, I am assuming that you have to pay tax somewhere , or somehow just not to sure how?

any help would be appreciated.

Thank you

[shocker69]

try this; http://www.cra-arc.gc.ca/tax/individuals/topics/income-tax/return/completing/deductions/lines409-485/426-e.html

you can try and hide it, but if you deposit to a canadian bank you are liable for tax being a canadian citizen. if the company takes some tax off then you may claim the foreign tax credit and only pay the difference. the above link only applies to canadian companies and the stipulated rules, ie working for GEO out of St. John’s would get you the tax credit.

clear as mud? get a good accountant who specializes in offshore dealings, is it OI out of Dubai? just wondering as I am probably heaing to west africa very soon,

hope this helps a bit

shocker

[TheBaron]

Subseaaddicted,
Recommended:
http://www.compasstax.ca
http://www.canadianexpatriatetax.com/
http://www.continentaltax.com/
http://www.expat.ca/
There are over 7,000 Canadian expats in Dubai, and a good starting point for useful links can be found at:
http://www.cbc-dubai.com/club.html
Of particular interest to me…and possibly you, is:
http://www.dubaimightycamels.com/
The bottom line is that unless you sell your assets(especially your house and car, close your bank accounts, cancel your B.C. drivers licence, cancel your RC Legion membership!) you will have to declare every penny you earn to the taxman. Basically, you will carry on paying tax as you do now-without reaping the benefits of your tax dollar!

[Andy Shiers]

Sounds like a good place to be , Baz 😀

[rovbionic]

subseaddicted
The Baron is right……unless you fold up all your assets in BC you are liable.
I have worked out of BC for years and file tax as a self employed.

Your accountant should be able to get you down to 20% tax at bleast…max out on RRSP’s is the basic deduction….run your out of country time as a business…be .disipline and you can drop down to 15% tax.

Enjoy
rovbionic

[Wade Berglund]

Hello

I just found out from my brother who worked offshore in the late 1980’s as a helicopter technician. If you are employed by a Canadian Company and doing more than 6 months work in a foreign country, you cannot work in Canada during that time… then you are eligible for the overseas tax credit. As far as I know this will give you an 80% tax rebate. This is still valid, I have done the research and have talked to an accountant about this.
You just have to work 6 months away from Canada in either agriculture, oil and gas, resource survey, mining or any other direct employment in resource exploration or exploitation.
You do not have to sell your canadian assets or be listed as an "out of Canada resident".
The tax form that you will get from the Canadian company will be an T626 form.
Also if you are working on a foreign registered (flagged) vessel you will not have CPP or EI premiums deducted, you could at the end of the taxation year then decide to pay into CPP.

I hope this helps

Cheers

I just realized that another member has already commented about the overseas tax credit.

[Subhuman]

There is another option that works, if you are agency or an employee of an out of Country Company. Start your own Corporation and become an employee of it. You invoice or have your pay sent to the Corporation account. This allows you to be taxed at a much lower rate, and if you have a really good accountant you will pay almost no tax.

[TheBaron]

I will qualify my previous statement by providing a link ‘straight from the horse’s mouth’. Should anyone wish to take advice from sources other than the government, then good luck to them. Tax accountants can be quite a creative bunch of fellows, but please remember that legally they are in no way liable for any advice they offer you. (I wish my job had a cop-out clause like that!)
http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/it221r3-consolid-e.pdf

[Subhuman]

Barron!
Nothing wrong with being a federal corporation. Following the rules of the corporation is not a crime. No black magic, just follow the rules and get an accountant that knows the rules, and you will break no laws and have no surprises. I have no intention of doing anything that is illegal and have too much to lose. I pay my self a small salary and the money left in the corporation is put in to legal tax shelters so I have something to live on when I can no longer work off shore.
😀

[TheBaron]

Subhuman, I’m not disagreeing with you on the corporation front; I’m a director of 3, in three different countries. 😉 I’m a permanent resident living in B.C., and take much pride in legally paying less tax than my better half; who only works part-time!
What people should be aware of is that Canada has some very stringent tax rules for people working overseas, and without an adequate corporate structure behind you, you’d be better off working at home.
The thread started with Subseaaddicted requesting info about the tax situation of working in Dubai. To take advantage of the 0% income tax rate in the UAE, he would have to achieve ‘Non-Resident Status’ in Canada, which involves severing all ties with Canada to the complete satisfaction of the CCRA. This, btw, goes as far as proving you do not have a common-law spouse remaining in Canada!!! And yes, all your club memberships must be canceled, as well as a myriad of other petty devices. I’m pretty sure that Subseaaddicted does not want to take these draconian measures, especially for the kind of wages OI offer. If I were in his shoes I’d look at filing honest tax returns and have an accountant go to work on it to reduce his liability to 10-20%pa.
For a giggle, have a look at these ‘ties’ that could make your life difficult before the CCRA might consider you Non-Resident. Remember, these come after the major ‘ties’, like house, automobiles, spouse, kiddies etc.:
(a) personal property in Canada (such as furniture, clothing,
automobiles and recreational vehicles),
(b) social ties with Canada (such as memberships in
Canadian recreational and religious organizations),
(c) economic ties with Canada (such as employment with a
Canadian employer and active involvement in a
Canadian business, and Canadian bank accounts,
retirement savings plans, credit cards, and securities
accounts),
(d) landed immigrant status or appropriate work permits in
Canada,
(e) hospitalization and medical insurance coverage from a
province or territory of Canada,
(f) a driver’s license from a province or territory of
Canada,
(g) a vehicle registered in a province or territory of Canada,
(h) a seasonal dwelling place in Canada or a leased
dwelling place referred to in ¶ 6,
(i) a Canadian passport, and
(j) memberships in Canadian unions or professional
organizations.
[Source:IT-221R3 (Consolidated)]

[matt buxton]

Thanks for the info Baron……As you mentioned i am not looking to get the coveted 0% tax, but looking to reduce it as much as possible.

I have done enough research to know that claiming non-resident status in Canada is next to impossible. And as far as OI paying peanuts…..well that is true but they pay alot better then any subsea companies out of Vancouver 😉

As well everyone has to start somewhere, so i might as well start with a company that is willing to give me a substantual amount of training before even setting foot offshore. I am not going to argue that the training is good or bad, but i feel that some is better then none.

Well I will be booking an appointment with a accountant in the near future and we will see what they can do for me.

thanks for the help everyone

[Subhuman]

Thanks Barron that is a lot of info. Wish I new that stuff 15 years ago would have saved me hundreds of thousands; I paid in tax over the years. It is very difficult to get good advice and find accountants that have previous experience in tax laws, for gents such as are selves. H&R Block is not the way to go. 🙄 Over the years I have meet many Canadians in the same boat. Most of us put are trust in are accountants and hope for the best.

Subseaaddicated if you are with Oceaneering see if you can work out of the Canadian office! I believe they have someone looking after their people, which are working out of country. Maybe some of the OI guys that are reading this, could PM you with the details. And who to contact in St Johns.

[TheBaron]

Subhuman, you are right about finding good specialist accountants; they are as rare as rocking-horse poo! The biggest problem is that the government by default rely on having dynamic policies, which scares the mainstream franchised accountants off. Consequently, there are very few who are up-to-date with taxation issues for workers abroad. Have a look at my original thread and try a couple of the links. Once you are happy that accountant firm ‘X’ can help you out, DO NOT let them hand your case over to a junior accountant! This is standard practice with the firms, and is not in your best interest.
To get the very best out of your prospective accountant, you MUST consult them BEFORE you embark! This alone will help them to help you with maximum effect!
I’ll email Compass Tax and see if I can invite one of the accountants to join this thread. I hate giving out advice in important issues like this, as my taxation strategy is personalised to my own needs, and may not be suitable for others.
Post script:
H&R Block is a franchised firm that sticks to standard taxation as a rule. If they have a specialised department for offshore/overseas workers; I’m not aware of it.

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