Tax Implications for Living Overseas

[Master Ed]

Hi!

Long time lurker. I'm consistently impressed by the breadth of knowledge on CP and require some advice.

I've recently been offered a job in Bermuda. I plan on making this a temporary move for one year. I'm wondering if anyone has any advice regarding becoming a non-resident of Canada during the year that I'm away so that my Bermuda income is not subject to Canadian income tax. My contract in Bermuda would run from September 2016-August 2017.

I own a home and basically my life is in Calgary. However, I've found a tenant to take on a 12 month lease while I'm away. Any advice on my car, possessions, bank accounts, RRSPs, insurance, etc.?

Any thoughts on how the CRA sees a temporary move on the impact of my residency?

Thanks in advance!

[Dan02]

Owning a house in Canada pretty much guarantees the CRA is going to see you as a Canadian resident regardless plus you've got the rental income to declare. I have no idea what tax treaties Canada was with Bermuda.

[Simon96Taco]

Originally Posted by Dan02

Owning a house in Canada pretty much guarantees the CRA is going to see you as a Canadian resident regardless

Not true.

plus you've got the rental income to declare. I have no idea what tax treaties Canada was with Bermuda.

Yes, you'd have to treat the rental income as Canadian income and it would be taxed accordingly.

I suggest speaking to an accountant who specializes in expats. I'd be more concerned about the fact that you know you are only gone for a year and plan to return afterwards.

Source: not an accountant but formerly an expat.

[driveway]

My experience was that my overseas income was subject to Canadian taxes until I declared myself a non-resident. But I didn't really look all that hard for a solution or talk to any accountants.

However, the local taxes taken off my income were factored in by Canada and I ended up paying virtually no tax.

My parents on the other hand who were expats for 8 years but maintained Canadian residency had all kinds of tax things they had to deal with.

Edit: congratulations on your job! Welcome to the expat life. Words of wisdom: be prepared to want to do it for more than a year, be as social as you can, and hire a maid.

[MoneyGuy]

My daughter has a friend who moved to Bermuda years ago. Message me if you'd like an introduction.

[squiggs96]

Originally Posted by Simon96Taco

Not true.

Actually, it's very true. CRA will look to see if you have any ties to Canada when determining your residency. The first thing they'll look at is of you sold your house or not. Next they'll look at bank accounts, RRSPs, vehicles, cell phones, rental contracts, etc. If you don't sell your primary residence, there is a high likelihood you are returning to Canada, which would make you a resident for tax purposes in the eyes of CRA.

Source: I'm a CA with many years of tax experience.

My advice is to talk directly with a qualified accountant that deals with this routinely. Spend a couple hundred dollars in planning now to save yourself potentially thousands later on. This isn't like going to YouTube and figuring out how to install cabinets and doing it yourself.

[Northendzone]

Meh, go with the majority opinion here. Print the thread and file it along with your taxes - the CRA will surely understand if we are wrong.......or you could talk with a professional and get real advice

[Simon96Taco]

Originally Posted by squiggs96

Actually, it's very true. CRA will look to see if you have any ties to Canada when determining your residency. The first thing they'll look at is of you sold your house or not. Next they'll look at bank accounts, RRSPs, vehicles, cell phones, rental contracts, etc. If you don't sell your primary residence, there is a high likelihood you are returning to Canada, which would make you a resident for tax purposes in the eyes of CRA.

Source: I'm a CA with many years of tax experience.

My advice is to talk directly with a qualified accountant that deals with this routinely. Spend a couple hundred dollars in planning now to save yourself potentially thousands later on. This isn't like going to YouTube and figuring out how to install cabinets and doing it yourself.

He stated that owning a house "guarantees" that you'll be determined a resident, which is not the case. I worked with numerous people overseas who did not sell their homes, some of whom owned several homes in Canada. They were non-residents. You could own investment property in Canada and never come back here again.

You are right about how the CRA looks at many things to determine your residency, though....and owning a home is certainly one of the main ones, but it's not a guarantee. Cutting as many ties is key. Like you said, spend some money on an accountant now and get it all figured out.....it's complicated!

[lucky1]

You can absolutely own property in Canada, but it has to be shown at 'arms length' - as in unavailable for your personal use... A signed lease is proof of this... Other things you would have to do/show..
Proof of residency in another country
Cancel your Alberta health care
Cancel all insurance on vehicles
Discontinue RRSP contributions - you can continue to hold them, but not contribute
Spouse has to go with you
All bank accts/credit cards are listed as 'non-resident' with the bank (easy process)
Hold non residency status for a min of 6 months
It's an easy process, ensure you have an acct who is familiar with the process when you file ur first tax return as a non resident because CRA will ask for the above proof.
If Bermuda has income tax, most times it's easier to pay your 'local' tax, and defray the Canadian taxes with this amount (most countries have a double taxation treaty with Canada)
Any questions, let me know

[Master Ed]

Thanks for all the advice so far. Clearly there are differing opinions and as I suspected it's not as simple as I was hoping for. An accountant with experience in international taxes seems important.

Anyone have a recommendation of someone they've used?

[Flames in 07]

Originally Posted by squiggs96

Actually, it's very true. CRA will look to see if you have any ties to Canada when determining your residency. The first thing they'll look at is of you sold your house or not. Next they'll look at bank accounts, RRSPs, vehicles, cell phones, rental contracts, etc. If you don't sell your primary residence, there is a high likelihood you are returning to Canada, which would make you a resident for tax purposes in the eyes of CRA.

Source: I'm a CA with many years of tax experience.

My advice is to talk directly with a qualified accountant that deals with this routinely. Spend a couple hundred dollars in planning now to save yourself potentially thousands later on. This isn't like going to YouTube and figuring out how to install cabinets and doing it yourself.

This CA is wrong in the first paragraph and correct in the last. Each situation is different and you should consult an accountant who specializes in Expats. On the surface it sounds like an uphill battle though, and with the little you posted let's just say you certainly have some exposure to CRA. But taxes for expats can be insanely complex and I'd go talk to, ideally multiple experts. Ultimately you won't get a thumbs up or down. You get advice on the criteria that will be used. Best you can do is shape yourself to look a certain way by you won't know how you are truly treated until after your assessment.

[Dan02]

Originally Posted by Simon96Taco

He stated that owning a house "guarantees" that you'll be determined a resident, which is not the case. I worked with numerous people overseas who did not sell their homes, some of whom owned several homes in Canada. They were non-residents. You could own investment property in Canada and never come back here again.

My comments were particular to his situation where he's leaving for a year yet maintaining his ties to Canada.

[mrkajz44]

See if the company you are going to work for has a department for something like that. They can sometime lend a hand internally, and help take the onus off of you. This is likely only true with larger multi-national companies, but I really have no idea if that applies to you or not.

And remember, every tax question has the same answer: "It depends"

[Locke]

I can help you, PM me. But I'll be honest, this sounds like a nightmare. You want non-residency for one specific 12 month period that doesnt correspond to a calendar year and then you fully intend to come back.

With constraints like that its unlikely that you'll pass the non-residency requirements but thats the extent to which I'll comment without further information.

[ma-skis.com]

My personal experience pretty much came to the fact that Canada had an agreement with Sweden regarding taxes, so as long as I paid swedish taxes I was fine. Rental income had to be declared, which I didn't account for when I chose my rental price...

It was still a huge pain to sort out by myself. Even with the help of an accountant, translating swedish documents and accounting for all amounts properly was a big headache. Still worth it though.

Be smart, talk to a tax guy before hand. Had to retroactively fix everything, that was a huge pain in the butt.