![Page 1: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/1.jpg)
EXPATRIATE TAX ISSUES FOR
CANADIANS IN DUBAI
FEBRUARY 2019
![Page 2: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/2.jpg)
is the Canadian independent member firm of the Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services including U.S. and Canadian personal tax, corporate tax and accounting and payroll services.
Toronto – Vancouver – London, UK
![Page 3: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/3.jpg)
What’s NEW/worth noting?
• General increase in targeting non-compliant individuals with foreign assets T-1135
• In 2016 CRA announced they were spending $450M over 5 years to target tax evaders. Starting with the Isle of Man & moving to other jurisdictions
• Whistleblower program
• Transfers of $10,000 or more to Canada CRA now gets copies
• Exit/entry initiative
![Page 4: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/4.jpg)
What’s else is NEW/worth noting?
• Foreign buyers tax in Vancouver & Toronto• BC Speculation and Vacancy Tax• Vancouver empty home tax• Changes to the principal residence exemption• Changes to the voluntary disclosure program• Tax “fairness” proposals for small business &
professionals.• CRA delays • Common Reporting Standards
![Page 5: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/5.jpg)
Common Canadian Issues
• Residency status –
Sever ties to Canada
• Principal residence –
Sell or rent
• Departure tax return – Special filings
• Voluntary disclosure program – Come clean
• Amending prior year returns – Correct errors
• Returning to Canada – foreign reporting issues
![Page 6: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/6.jpg)
Looking to 2019: Provincial & Territorial Tax Rates
• Top Combined Marginal Rate Comparison
• Salary & Interest Income:Province 2019 Rate 2015 Rate Increase
BC 47.70% 45.80% 1.90%
AB 48% 40.25% 7.75%
SK 48% 44% 4%
MB 50.40% 46.40% 4%
ON 53.53% 49.53% 4%
![Page 7: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/7.jpg)
Looking to 2019: Provincial & Territorial Tax Rates – cont’d
• Top Combined Marginal Rate Comparison
• Salary & Interest Income cont’d:
Province 2019 Rate 2015 Rate Increase
QC 53.31% 49.97% 3.34%
NB 58.75% 54.75% 4%
NS 54% 50% 4%
PEI 51.37% 47.37% 4%
NL 48.30% 43.30% 5%
![Page 8: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/8.jpg)
Canadian resident tax person versus being a non-resident of Canada per year:
8
$50K/yr Salary $10,000 as a
resident
$0 as a NR
$100K/yr Salary $27,000 as a
resident
$0 as a NR
$200K/yr Salary $73,000 as a
resident
$0 as a NR
![Page 9: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/9.jpg)
Canadian resident tax person versus being a non-resident of Canada: 3 years
9
$50K/yr Salary $30,000 as a
resident
$0 as a NR
$100K/yr Salary $81,000 as a
resident
$0 as a NR
$200K/yr Salary $219,000 as a
resident
$0 as a NR
![Page 10: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/10.jpg)
Common Primary and Secondary Ties
• Primary: Vacant Home, leaving dependent spouse in Canada
• Secondary: personal property left behind in Canada, maintaining Canadian bank accounts, Canadian credit cards, professional and/or club
memberships in Canadian organizations,
maintaining provincial health coverage,
Canadian drivers license
• NR73 filing
![Page 11: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/11.jpg)
Canada – UAE Tax Treaty
• Treaty “trumps” domestic tax law
• Possible to be a “deemed” non-resident of Canada even if you maintain ties
• Unfortunately, the Canada – UAE tax treaty only applies to Emiratis so it is important to be seen as a non-resident under domestic tax law.
![Page 12: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/12.jpg)
Canadian Departure Return
• Cease Canadian residency for “tax purposes” only
• Pro-rated personal credits, deemed dispositions
• Special forms need to be filed on the departure return that are not on normal returns – T-1161 List of properties
![Page 13: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/13.jpg)
Can You Own Canadian Property?
• Will not impact residency as long as it’s not available for personal use
• Cannot claim principal residence exemption as a non-resident
• If you rent it and/or sell it, there are important filings that need to be done such as request a clearance certificate and filing of tax returns…
![Page 14: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/14.jpg)
Canadian Rental Property
• NR4 filing required monthly – 25% Gross rental income non-resident tax withholding
• NR6 – 25% Net rental income non-resident tax withholding
• You need an agent in Canada
• sec. 216 tax return required for
Canadian non-residents
![Page 15: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/15.jpg)
Sale of Canadian Property
• Must file for a clearance certificate otherwise maximum penalty of $2,500 per tax payer
• Must file a non-resident Canadian return for the sale of the property
![Page 16: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/16.jpg)
Amending Prior Year Returns
• Possible to amend prior returns to get taxes back
• This happens often due to individuals receiving improper advice
• This is often accepted by CRA. However a NR73 is now being requested.
![Page 17: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/17.jpg)
Voluntary Disclosure Program
Requirements for new General Program (as of March 1):• Greater than 1 year past due• Never taken the voluntary disclosure before• Voluntary disclosure is complete• NEW:• Must pay estimated taxes owing• Can no longer apply under No-Names Basis• Must disclose accountant• Failure not intentional. Factors:
– Dollar Amount;– Number of Years of non-compliance;– Sophistication of taxpayer
Common for expatriates applies to:- T1161- T1135- Non reporting of offshore income
![Page 18: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/18.jpg)
Granny Trust Planning
• This planning works if you are going to receive a gift or inheritance from someone outside Canada
• If the gift or inheritance is put in to a trust it is possible to receive the income tax free
• The trust must be managed outside of Canada
• Planning and proper trust set up is important
![Page 19: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/19.jpg)
Year of Arrival Back in Canada - Tax Planning
• Need to file an arrival return to let CRA know you are back in Canada
• Taxed on worldwide income from the arrival date onwards – irrespective of where assets are
• Foreign reporting issues for assets owned overseas – T-1135 reporting
• Granny trust
• Incorporation
![Page 20: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/20.jpg)
What we do…
•Give Peace of Mind
![Page 21: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/21.jpg)
With our professional services
• Provide pre and post - departure counselling
• Prepare your Canadian arrival, departure and non-resident tax returns
• Prepare your non-resident rental returns while you are abroad (if applicable)
• Prepare you for your arrival back to Canada in the future and the arrival tax returns
![Page 22: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/22.jpg)
Q and Eh?
![Page 23: EXPATRIATE TAX ISSUES FOR CANADIANS IN DUBAI FEBRUARY … · Global Tax Network and we are a firm of Chartered Professional Accountants that specializes in a wide variety of tax services](https://reader036.vdocuments.us/reader036/viewer/2022081613/5fbd3421c5e8d823072e154d/html5/thumbnails/23.jpg)
Thank you!
Presented by: Wayne Bewick, CPA CA, CPA (Illinois)[email protected] x 101Please join our monthly newsletter Wandertrust for tax changes & articles@ www.Trowbridge.ca