How to file income earned in HK for Canadian Taxes?

Closed Thread
Page 2 of 3 FirstFirst 1 2 3 LastLast
  1. #11

    Join Date
    Jun 2008
    Posts
    40

    Declare non-residency in Canada effective when you left.. I'm very sure you have enough ties in Hong Kong to prove your case (work, bank account, residence, ID, days in Hong Kong).

    If you choose to "remain" as a resident of Canada.. if they had actually checked.. you would probably be found a non-resident anyways.

    Resident in this case is a term used for taxes only. Medicare/citizenship have different definitions, and tax residency does not affect the others.. in fact.. chances are, you're not covered by provincial medicare already if they checked.

    Anyways.. in response to your other questions.. if you were to pay your canadian tax.. you would first file your HK taxes (As HK tax is payable based on what you made in HK).. then on the Canadian tax return, you would declare the same income, and claim a credit on the net HK tax you paid... then you would obviously have to top up your canadian taxes.. $$$$


  2. #12

    Join Date
    May 2008
    Location
    Hong Kong Island
    Posts
    149

    CRA website, go there now!

    Realize this thread is kind of old, and tax day in Canada has come and gone, but I can't believe how ignorant some people are, and it's costing you TONNES of money!

    The CRA website states very clear who is and isn't a resident, for TAX PURPOSES ONLY!

    If you leave Canada, you do not loose your citizenship, you NEVER loose your citizenship as long as you dont become one somewhere else.

    Health Care in Canada does nothing in HK, so why would you want to keep it? It take 3 months before you can renew it once you move back to most provinces. Driver's license etc. also do no good here, so why keep it?

    The only thing that might be useful is a bank account and credit card. Bank accounts in HK are easy to get, credit cards slightly harder, but considering you'll save a crap load of money on taxes, it would be insane to live here and keep residential ties to Canada unless you had to (house etc.)

    Also, if you live in Canada for any part of the year as a resident, you must pay taxes for part of the year you lived in Canada as a resident. The day you declare yourself non-resident is when you stop making income as a Canadian resident.


  3. #13

    Join Date
    Jan 2007
    Location
    Toronto, Canada
    Posts
    127

    Jon, you seem quite knowledgeable. Can I ask you a question please?

    Does HK consider our Cdn pension & OAS money as income and therefore will we be taxed? We plan to depoist straight into a Cdn bank as suggested by a gov't employee and then transfer the money to our HK bank account.

    Will we have to pay taxes on this money plus our RRSP money that is changed to RIFs in both countries? We expect to have to pay via our annual income tax in Canada but never thought about HK taxing us too. I thought the 16% tax was for "income" and didn't consider money moved into a HK bank account as "income". Maybe the interest is??

    Thnx,
    Betty

    Last edited by BettyInToronto; 05-06-2008 at 05:29 AM.

  4. #14

    Join Date
    May 2008
    Location
    Hong Kong Island
    Posts
    149

    If you're taxed on any income in Canada, it will most likely be taxed at a higher rate than in HK, so any money moved to a HK bank account would almost certainly be exempt from tax due to double taxation laws. (You cannot be taxed twice on the same money, at least not in Canada. If for some crazy reason they taxed you here, you could claim a deduction on your Canadian taxes anyway)

    Any interest you earn off that money after it is in a HK account would be subject to interest tax in HK only. (This HK tax can then be deducted from Cdn taxes if you claim it as income worldwide)

    Of course depending on your residency status, any money (hence any interest) earned outside of Canada is supposed to be claimed as world-wide income on your Cdn taxes.

    This is why it is best to find a way to declare yourself as a non-resident of Canada for taxes if you can.


  5. #15

    Join Date
    Jan 2007
    Location
    Toronto, Canada
    Posts
    127

    Thanks Jon

    We will be declaring non-residency as soon as we leave. Our permanent residence will be Hong Kong with nothing left here in Toronto except this one bank account.

    The gov't exployee told us we would have to file a yearly CDN income tax as the gov't knows they paid us over the non-filing amount in gov't pension & OAS. It doesn't matter if we transfer it immediate'y to our HK bank. It was paid to us here in Canada.

    I guess we'll wait and see what happens. It's still 5 years off but I do like to be prepared.


  6. #16

    Join Date
    Jan 2003
    Location
    Back in Toronto now - after 10 1/2 years in HK
    Posts
    945
    Quote Originally Posted by Jon.E.Kong:
    Any interest you earn off that money after it is in a HK account would be subject to interest tax in HK only. (This HK tax can then be deducted from Cdn taxes if you claim it as income worldwide)
    .
    Interest income in the hands of ordinary investors, depositors, etc. is not taxable in HK (unless you make an occupation or business out of generating it).
    Last edited by HKFella; 07-06-2008 at 01:38 AM.

  7. #17

    Join Date
    Mar 2006
    Posts
    4,043
    Quote Originally Posted by Jon.E.Kong:
    Realize this thread is kind of old, and tax day in Canada has come and gone, but I can't believe how ignorant some people are, and it's costing you TONNES of money!

    The CRA website states very clear who is and isn't a resident, for TAX PURPOSES ONLY!

    If you leave Canada, you do not loose your citizenship, you NEVER loose your citizenship as long as you dont become one somewhere else.

    Health Care in Canada does nothing in HK, so why would you want to keep it? It take 3 months before you can renew it once you move back to most provinces. Driver's license etc. also do no good here, so why keep it?

    The only thing that might be useful is a bank account and credit card. Bank accounts in HK are easy to get, credit cards slightly harder, but considering you'll save a crap load of money on taxes, it would be insane to live here and keep residential ties to Canada unless you had to (house etc.)

    Also, if you live in Canada for any part of the year as a resident, you must pay taxes for part of the year you lived in Canada as a resident. The day you declare yourself non-resident is when you stop making income as a Canadian resident.
    I posted this some time ago on another thread. I took the Canadian Chamber of Commerce seminar but must admit I didn't listen that carefully when it became clear that I would never qualify for non-residency as my wife and family are in our house. I won't edit my post but here it is from a good source.

    If you need an accountant go to the Canadian Chamber site and search accountancy and up pops a list of Canadian tax consultants.
    ------


    What was stated at a seminar on Canadian taxes in HK and clearly was how important it was to complete that part of the T1 top left to say you are leaving Canada. This tick off is a must for non-residency.

    Also clear from the discussion - never file the NR73 - the determination of residency form, just Google it or if you have complicated tax issues, seek professional tax advice.

    Your situation sounds not too complicated and my experience is that the Canadian tax people are okay to ask questions - don't file NR 73 though as you note yourself.

    To my surprise at a seminar on this issue, they stated that holding a provincial health care card was not a substantive issue in determining residency or non-residency. Not to my surprise is that residency/non-residency is not defined in the Canada Tax Act however there are a number of tests regarding "primary" and "secondary" ties.

    Any one primary tie can make you a resident for tax purposes.

    Primary Ties:

    Vacant house/spouse left in Canada/family members renting your place - the issue here of renting to a relative is that you have control and thus you are not a non-resident. One example given was a person renting out their home and giving the money to a daughter to rent another place thus avoiding a primary tie.

    Secondary Ties:

    Bank accounts in Canada, credit cards in Canada, memberships such as professional associations, golf clubs (this is a tricky one as some at the session own cabins in Canada and had memberships at local golf courses in Canada); PROVINCIAL HEALTH CARDS, Canadian Driver Licence.

    The Provincial health card is no good after 3 months in most provinces anyways, but is it a secondary test.

    If you own property in HK, it is a good thing in that it helps to establish non-residency but be careful if you rent out a house to a relative.

    The Tax folks in Canada look at your social, economic and property relationships and if they are severed or not with that home one of the biggies apparently.

    The common Canadian issues listed were:

    1. Residency.
    2. Departure returns - deemed dispositions; defer tax owing to final disposition; Converting of T1 to Departure return - non pension, RRSPs; stocks - tax on purchase price and price on day you left. You can windfall but not claim losses. If you return to Canada you take market value of portfolio only if have say HK stock or poperty.
    3. Informing Canadian payers of investment accounts as there is a 25% non-res withholding tax provision. You will then get an NR4 not regular forms. Gov't gets 25%. You can't take T- slips if non-resident.
    4. Principal Residence - dont rent to close relatives - issue is close control. If you have a lease agreement that looks better but not if it is your close family. You can exempt out but then your sale is subject to tax when you dispose of it.

    Can't answer any of the other questions as they didn't come up.

    I forget the whole host of issues in the year you decide to regain residency.
    Last edited by Football16; 07-06-2008 at 10:49 AM.

  8. #18

    Execuse my ignorance ... if there is no tax treaty agreement between HK and Canada, I don't understand why we have to file world-wide income tax even if I remain the residence of Canada.

    How will Canadian Government know how much I made in HKG?

    I am not encouraging people to be dishonest, just want to see if there is a flaw in this tax system.


  9. #19

    Join Date
    Oct 2006
    Posts
    4,905

    One good reason is that the CRA can freeze all your assets(lien on properties and empty freeze or empty your bank accounts) in Canada is they deem that you owe unpaid taxes. In this case, it's very much a case of guilty until proven innocent. If you have no significant Canadian assets then it's no big deal.


  10. #20

    how about driving licence?

    if you cancel that, when you go back, do u have to go through all the process again?

    I think so.

    hence, i do not think it is wise to cancel that. also, for car insurance purpose.

    i just find out an interest question that pops up:
    How can CAN know what do u do outside Canada, and how much you make there?