INTERNATIONAL EXECUTIVE SERVICES. Canada. Taxation of International Executives TAX

Size: px
Start display at page:

Download "INTERNATIONAL EXECUTIVE SERVICES. Canada. Taxation of International Executives TAX"

Transcription

1 INTERNATIONAL EXECUTIVE SERVICES Canada Taxation of International Executives TAX

2 : Taxation of International Executives Overview and Introduction 3 Income Tax 4 Tax Returns and Compliance 4 Tax Rates 5 Residence Rules 8 Termination of Residence 9 Economic Employer Approach 11 Types of Taxable Compensation 12 Tax-Exempt Income 13 Expatriate Concessions 16 Salary Earned from Working Abroad 17 Taxation of Investment Income and Capital Gains 17 Additional Capital Gains Tax (CGT) Issues and Exceptions 20 General Deductions from Income 22 Tax Reimbursement Methods 24 Calculation of Estimates/Prepayments/Withholding 24 Relief for Foreign Taxes 25 General Tax Credits 26 Sample Tax Calculation 27 Special Considerations for Short-Term Assignments 29 Residency Rules 29 Payroll Considerations 29 Taxable Income 30 Additional Considerations 31 Other Taxes and Levies 32 Social Security Tax 32 Gift, Wealth, Estate, and/or Inheritance Tax 33 Real Estate Tax 34 Sales/VAT Tax 34 Unemployment Tax 34

3 Other Taxes 35 KPMG in Canada 36 Taxation of International Executives 2

4 Overview and Introduction Both federal and provincial governments levy income tax. In all provinces but Québec, the individuals file a single tax return with the federal government who collects both federal and provincial taxes. Québec collects its own tax using a separate tax return. The compliance is based on a self-assessment system. Income of individuals, corporations, and trusts is subject to tax. Partnerships are not taxed directly; partners are instead taxed on their share of partnership income. Residents are subject to Canadian income tax on their worldwide income. If any of the income is attributable to compensation for services performed outside Canada and is subject to foreign tax, relief from double taxation is available. Non-residents are subject to Canadian income tax on compensation attributable to services performed in Canada, as well as on gains from the disposal of taxable Canadian property. Income earned in Canada from property and certain other sources such as interest, dividends, rents, and royalties is subject to withholding at the source. The official currency of Canada is Canadian Dollar (CAD). For information on practical matters that employers and employees should consider with respect to an international assignment, please refer to the companion publication titled Planning Your International Transfer, if available. For the purposes of this publication, the host country refers to the country where the expatriate is going on assignment. The home country refers to the country where the expatriate lives when he/she is not on assignment. Taxation of International Executives 3

5 Income Tax 1 Tax Returns and Compliance When are tax returns due? That is, what is the tax return due date? 30 April. What is the tax year-end? 31 December. What are the compliance requirements for tax returns in Canada? The Canadian tax system is a self-assessment system. Individuals are required to determine their own liability for income taxes and file the required returns for any taxation year in which taxes are payable. Individuals each file their own tax returns; spouses do not file jointly. The taxation year for an individual is the calendar year. Individual returns are due on 30 April of the following year and there are no provisions for extension of this deadline. However, late filing penalties and interest are based only on unpaid taxes. Employers are required to withhold taxes with respect to all amounts characterized as employment income. Residents Individuals resident in Canada are subject to Canadian income tax on their worldwide income and subject to a potential credit or deduction for foreign taxes paid on income derived from foreign sources. There are no specific Canadian tax rules for determining whether an individual is resident in Canada. Each case is decided on its own merits. By commencing longterm or permanent employment, acquiring a dwelling place, moving one s family into the country, and establishing residential and social ties (such as acquiring bank accounts, club memberships, or a driver s license), an individual may establish 1 All information contained in this document is summarized by KPMG LLP, the Canadian member firm of KPMG International, based on Canadian Income Tax Act 2004; the Employers Guide to Payroll Deductions ; the Employers' Guide - Payroll Deductions - Basic Information ; Carswell The Practitioner s Income Tax Act 2004, 25th Edition; municipal tax acts; Citizenship and Immigration Canada Web site at Canada Pension Plan Act; Employment Insurance Act; Various provincial tax acts; and Taxation of International Executives 4

6 residence in Canada at a specified point in time. Residence is also established by virtue of the taxpayer s intent to remain in Canada. Where residence is established by reference to particular events, individuals are taxed as resident for one part of the year and as non-residents for that part of the year that precedes residence. An individual may also be considered a deemed resident taxpayer if he/she is present in Canada for more than 183 days. As a deemed resident, the individual is subject to tax on his/her worldwide income. Tax relief may be available if the individual is also a resident of another country in which Canada has a tax treaty. Non-Residents Non-resident individuals employed in Canada, carrying on business in Canada or who have disposed of taxable Canadian property are also subject to regular Canadian income taxes. Income earned in Canada from property and certain other sources such as dividends, rents, and royalties is subject to withholding at the source. Tax Rates What are the current income tax rates for residents and non-residents in Canada? Residents Federal Tax Federal tax is calculated by applying a progressive tax rate schedule to taxable income. The tax rates are the same for residents and non-residents. Income tax table for 2009 Total tax on Tax rate on Taxable income bracket income income in below bracket bracket From To CAD CAD CAD Percent 0 38, ,833 77,664 5, , ,264 14, ,265 Over 27, Taxation of International Executives 5

7 Provincial Income Taxes The provinces (except Québec) must use the taxable income calculated for federal tax purposes, but they can then apply their own tax rates and tax brackets to that income figure. They also set their own non-refundable tax credits and maintain any low-rate tax reductions and other provincial credits currently in place. The Canada Revenue Agency administers both federal and provincial taxes (except Québec), thus taxpayers calculate their federal and provincial taxes on one return. Provincial tax will be computed in essentially the same way as federal tax, but applying the applicable province s tax brackets, rates, and credits to taxable income. Taxation of International Executives 6

8 British Columbia 12.29% 82,015-99,588 Alberta Saskatchewan Bracket % 0-35, % 0-40,113 Manitoba 10.8% 0-31,000 Ontario 6.05% 0-36,848 Québec 16.0% 0-38,385 New Brunswick 10.12% 0-35,707 Nova Scotia 8.79% 0-29,590 Prince Edward Island Newfoundland and Labrador Yukon Territory 9.8% 0-31, % 0-31, % 0-38,832 Nunavut 4.0% 0-38,832 Northwest Territories 5.9% 0-36,885 Tax Rates (as a percent of Taxable Income) Bracket 2 7.7% 35,717-71,433 Bracket % 71,434-82,014 Bracket 4 10% (flat rate on all income) 13.0% 15.0% 40, , ,610 over 12.75% 31,001-67, % 36,849-73, % 38,386-76, % 35,708-71,415 14,95% 29,591-59, % 31,985-63, % 31,062-62, % 38,833-77, % 38,833-77, % 36,886-73, % 67,001 over 11.16% 73,699 over 24.0% 76,771 over 16.8% 71, ,105 16,67% 59,181-93, % 63,970 over 15.5% 62,122 over 11.44% 77, , % 77, , % 73, , % 116,106 over 17.5% 93,001 over 12.76% 126,265 over 11.5% 126,265 over 14.05% 119,937 over Bracket % 99,589 over % Provincial Surtax Threshold 4,257 5, , , ,000

9 Non-Residents On income not allocable (by regulation) to a province, an additional tax of 48 percent of the federal rate is applicable (in lieu of provincial tax). Non-residents have the same federal tax and provincial tax rates as residents. Residence Rules For the purposes of taxation, how is an individual defined as a resident of Canada? Residency is determined on the facts of each case. The following considerations are taken into account. The nature of the stay in Canada The length of the stay Whether or not the individual is accompanied by his/her family The individual s center of economic interests The individual s intentions Whether or not the individual is registered in a municipal register to vote The place where bank accounts are held The place where the person s assets are located The terms of employment Entitlement to subsidized healthcare The tax courts look to whether there are durable ties of a personal nature with Canada. The term durable need not mean permanent; the closeness of the tie is more important. Ties of a personal nature exclude purely business considerations; personal circumstances, such as the maintenance of an abode, are more determinative. Residence abroad does not in itself exclude the possibility of being considered resident in Canada. However, dual residence resulting in double taxation may be resolved under the terms of a particular tax treaty. Canadian civil servants living abroad are deemed resident in Canada. Married couples file tax returns as separate individuals. Taxation of International Executives 8

10 Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can t come back to the host country for more than 10 days after their assignment is over and they repatriate. No. What if the assignee enters the country before their assignment begins? An assignee that enters the country before their assignment may be considered to have established residential ties on the earlier date and thus pay taxes on worldwide income commencing from that day for the calendar year. The assignee should be aware that early entrance into Canada may cause his/her presence in the country to total 183 days or more during the calendar year. As a result, the assignee may be deemed to be a resident of Canada and pay taxes on worldwide income for the entire calendar year unless qualifying for tax treaty relief. Alternately, if an assignee enters the country before the assignment begins he/she may be subject to Canadian tax on any Canadian-sourced income as a non-resident for the period prior to establishing Canadian residency. Termination of Residence Are there any tax compliance requirements when leaving Canada? Generally, on entering Canada the individual must pass through the customs office and show a valid work permit or employment authorization and passport. Departure Tax Individuals are deemed to dispose of all property on ceasing Canadian residency. Exceptions include Canadian real property, certain property used in a business in Canada, and certain pensions and stock options, which remain subject to Canadian tax unless relieved by a tax treaty. The departure tax can be deferred until the asset is actually disposed of by posting security acceptable to the Minister of Revenue with respect to any tax so deferred. The intention is that taxpayers should be taxed on all gains that accrue during their period of residence. However, provisions exist to exempt short-term residents from the application of these rules in relation to property that was held throughout the Taxation of International Executives 9

11 period of residence. A short-term resident is an individual who has been resident in Canada for less than 60 months. If an individual qualifies for this exemption, they will only have a deemed disposition with respect to property (except gifts or inheritances) acquired while resident in Canada. Certain information returns also need to be filed with the departure year return. The information return essentially requires a listing of assets held by an emigrant of Canada on the date that he/she ceased Canadian residency. What if the assignee comes back for a trip after residency has terminated? An assignee that returns to Canada for a trip after residency has terminated may extend their residency termination date and subject income earned after the assignment to Canadian taxation. Furthermore, the assignee may be deemed to be a resident for the entire calendar year and pay taxes on worldwide income if he/she sojourned (that is temporarily present) in Canada for a total of 183 days or more in any calendar year unless subject to tax treaty exemption. Communication between Immigration and Taxation Authorities Do the immigration authorities in Canada provide information to the local taxation authorities regarding when a person enters or leaves Canada? No. Filing Requirements 2 Will an assignee have a filing requirement in the host country after they leave the country and repatriate? Generally, an assignee is considered a non-resident of Canada for tax purposes if he/she is repatriated to his/her home country and residential ties with Canada are severed. For the part of the tax year that he/she is a resident of Canada for tax purposes, income from all sources, both inside and outside Canada, should be reported on the Canadian tax return. After leaving Canada, the assignee will be treated as a non-resident. Non-residents are only subject to Canadian tax on income 2 Taxation of International Executives 10

12 received from Canadian sources. Thus items such as bonuses or other compensation related to the Canadian assignment may still be taxable in Canada subsequent to departure from Canada. After departure from Canada, Canadian income received by a non-resident is subject to Part XIII tax (25 percent withholding tax on passive income) or Part I tax (normal tax rates upon employment or other taxable income). If the income received is: subject to Part XIII tax, a Canadian tax return need not be filed, except when Canadian rental income, timber royalties, or certain Canadian pension income is received, the individual can elect to file a Canadian tax return for the Part XIII tax deducted; and subject to Part I tax where a tax return may have to be filed. An assignee must file a Canadian tax return if: tax is owed; or a refund is to be claimed because too much tax was paid in the tax year. The due date of the tax return is 30 April. Economic Employer Approach 3 Do the taxation authorities in Canada adopt the economic employer approach to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Canada considering the adoption of this interpretation of economic employer in the future? Yes. The taxation authorities in Canada adopt the economic employer approach. 3 Certain tax authorities adopt an economic employer approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country employer but the employee's salary and costs are recharged to the host entity, then the host country tax authority will treat the host entity as being the economic employer and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied and the employee would be subject to tax in the host country. Taxation of International Executives 11

13 De minimus Number of Days 4 Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days? Not a number of days although there are certain treaties that permit maximum income thresholds (such as CAD 10,000 maximum earned under the Canada- U.S. tax treaty). Types of Taxable Compensation What categories are subject to income tax in general situations? Resident taxpayers are subject to income tax on their worldwide income; nonresidents are subject to tax only on income derived from certain specific sources in Canada as follows. Income from carrying on a business in Canada (generally if carried on through a permanent establishment in Canada). Income from office or employment in Canada (including director s fees). Net income from real estate located in Canada. Royalty and other income from Canadian resource property. Dividends from securities issued by a company resident in Canada. Capital gains from the disposition of taxable Canadian property. Examples of taxable Canadian property include but are not limited to: o o o real estate in Canada; capital property used in carrying on a business in Canada; a substantial interest in a private corporation resident in Canada; and 4 For example, an employee can be physically present in the country for up to 60 days before the tax authorities will apply the economic employer approach. Taxation of International Executives 12

14 o Canadian resource property. Employment income is taxable when received or when the individual is entitled to receive it, if earlier. Employment income is subject to tax to the extent it was earned during a period of Canada residence or in the case of income earned while non-resident, to the extent it was earned in respect of duties performed in Canada. Tax-Exempt Income Are there any areas of income that are exempt from taxation in Canada? If so, please provide a general definition of these areas. Certain Employer Provided Housing Allowances (Employer s Contribution to Rent) If an employer provides an employee with a housing allowance, board and lodging, low-rent or rent-free housing, the employee has a taxable benefit. Employerprovided household furnishings are taxable to the extent that the individual would otherwise have been out-of-pocket. An exemption exists if the taxpayer qualifies for the special work site provisions. To qualify for this special provision, the following requirements must be met. The individual is required to work at a special work site on a temporary basis (generally not more than two years). The individual s principal place of residence (his/her original home) must be available for his/her use throughout the period and not rented out. The home must be too far from the special work site for daily commuting. The individual is required to be away from his/her ordinary residence, or at the special work site, for at least 36 hours. If these requirements are met, this provision also covers transportation costs to travel between the work location and the place of principal residence. This exemption may also be available if the individual is required to work at a remote location (that is logging camp, mine, and so on). It is recommended that the taxpayer consult their adviser regarding their particular facts and circumstances to determine if they qualify. Taxation of International Executives 13

15 Certain Employer Provided Housing Allowances (Cost of Utilities) The cost of utilities paid for employees is considered a taxable benefit. An exemption exists if the taxpayer qualifies for the special work site provisions. Please refer to discussion in Certain Employer Provided Housing Allowances (Employer s Contribution to Rent) for more details. It is recommended that the taxpayer consult their adviser regarding their particular facts and circumstances to determine if they qualify. Living Away From Home Allowance (LAFHA) The Living Away From Home Allowance (LAFHA) is considered a taxable benefit. An exemption exists if the taxpayer qualifies for the special work site provisions. Please refer to discussion in Certain Employer Provided Housing Allowances (Employer s Contribution to Rent) for more details. It is recommended that the taxpayer consult their adviser regarding their particular facts and circumstances to determine if they qualify. Certain Employer Provided Tax Reimbursements The following are the usual methods of recognizing tax reimbursements paid by the employer. Current-year gross-up. Current-year reimbursement. One-year rollover. A gross-up is not required in the year of departure but may be advisable in order to avoid having to complete and file an income tax return in the year after departure. Certain Employer Provided Relocation Reimbursements The reimbursement of actual relocation expenses is generally not taxable. However, if a non-accountable allowance is provided instead, any amount in excess of CAD 650 is a taxable benefit. Eligible moving expenses may offset this taxable allowance. However, eligible moving expenses are deductible only for moves within Canada. Taxation of International Executives 14

16 Home Leave Home leave is considered a taxable benefit. An exemption exists if the taxpayer qualifies for the special work site provisions. Please refer to discussion in Certain Employer Provided Housing Allowances (Employer s Contribution to Rent) for more details. It is recommended that the taxpayer consult their adviser regarding their particular facts and circumstances to determine if they qualify. Under the special work site exemption, the employer-provided transportation or allowance must relate to transportation between the individual s principal place of residence and the work site. Accordingly, any transportation assistance relating to travel between the work site and a location other than the individual s principal place of residence (that is a vacation in-lieu of going home) will not be excluded from taxable income. Certain Employer Provided Education Costs Education provided to the individual that is mainly for the benefit of the employer is not taxable to the individual. A taxable benefit arises when the education is mainly for the individual s benefit. Certain Bonus Payments A bonus (in respect of non-canadian employment), if paid before the individual becomes taxable in Canada, or after he/she ceases to be taxable in Canada is not taxable in Canada. Certain Interest Subsidies If the employer provides a low-interest or interest-free loan to an individual, the individual is considered to have received a benefit from employment. The benefit is determined based on Canada Revenue Agency s (CRA) current prescribed interest rate less any interest actually paid by the individual. The prescribed rates are set quarterly. The imputed interest that is included in income as a taxable benefit is deemed to be interest paid by the individual. As a result, if such interest would otherwise have been deductible, it can be deducted. Special rules exist with respect to low-interest or interest-free home relocation loans. The employee is considered to have received a loan or incurred a debt when Taxation of International Executives 15

17 the funds are advanced or the relevant documents are produced and he/she becomes legally obligated to repay the loan or discharge the debt. The employee is entitled to claim an offsetting deduction against the amount of benefit included in his/her income from the low interest loan for home relocation. There are certain conditions that must be met for such loans that are made by the employer to be considered as employee home relocation loans. This is an area in which it is very important to seek specific advice. 5 Certain Auto Allowances If the employer provides a car for the individual, rather than paying a cash allowance or reimbursement, the value of the benefit is calculated using a predetermined formula and may differ depending on whether the car is purchased or leased by the company. The benefit is based on a two-fold calculation entailing a stand-by charge and an operating cost benefit. The stand-by charge may be reduced if the individual uses the car 50 percent or more for business and drives less than 1,667 kilometers per month for personal use. The operating cost benefit may also be reduced if the individual uses the car at least 50 percent of the time for business use. Health Insurance Contributions to private health plans (such as medical or dental plans) are not considered to be taxable benefits. However, contributions to a provincial medical care insurance plan are considered a taxable benefit to the individual. Expatriate Concessions Are there any concessions made for expatriates in Canada? Immigration Trust Canada has a special tax regime for new immigrants, commonly referred to as the immigration trust. If an individual has significant non-canadian investments, it may be worthwhile to set up a foreign trust before establishing Canadian residency. A foreign trust can be exempt from Canadian tax for up to 60 months after an 5 Taxation of International Executives 16

18 individual becomes resident in Canada. Thus, if the country of former residence has a lower tax rate than Canada on investment income, this strategy may be advantageous. Any tax strategies in this area warrant extensive planning. Bump in Cost Basis Prior to establishing residency in Canada, an individual is deemed to have disposed of all of his/her assets (other than taxable Canadian property) and to have reacquired the same assets at fair market value. Thus, if an individual has highly appreciated assets and establishes residency in Canada prior to selling the asset and if the gain is not subject to tax in the former country of residence, an individual may not be subject to taxation on a portion of capital gains. Any tax strategies in this area warrant extensive planning. Special Work Site Exemption See also section titled Tax-Exempt Income section with respect to special work site provision. Salary Earned from Working Abroad Is salary earned from working abroad taxed in Canada? If so, how? The salary of a Canadian resident is taxable in Canada regardless of where that salary is earned or received, and the allocation of income to foreign business trips is beneficial only insofar as it can be used to alleviate double taxation through the foreign tax credit mechanism. The relevant foreign tax must have been paid to the country where the services were provided. See also section titled Tax-Exempt Income section with respect to special work site provision. Taxation of Investment Income and Capital Gains Are investment income and capital gains taxed in Canada? If so, how? Dividends, Interest, and Rental Income Dividends and interest income are generally taxable in Canada as the income is received. In addition, for investments that do not pay interest on an annual basis, an annual interest accrual may need to be determined and included in taxable income. Taxation of International Executives 17

19 Dividends from taxable Canadian corporations are taxed at a reduced rate through a gross-up and tax credit mechanism, which in principle takes into account income taxes paid at the corporate level. In the case of income from foreign securities, taxes withheld in another jurisdiction are creditable against Canadian taxes otherwise payable, based on tax treaty rates where applicable, and calculated on a country-by-country basis. If an individual moving to Canada has significant non- Canadian investments, it may be worthwhile to set up an immigration trust before entering Canada. An immigration trust can be exempt from Canadian tax for up to 60 months after the individual becomes a Canadian resident. Furthermore, gains on assets transferred to the trust may escape Canadian taxation for the 60-month period. This is a useful strategy where the income would also no longer be taxed in the home country, or where the home country tax rate is lower than the Canadian rate. KPMG in Canada is available to assist in determining whether an immigration trust is appropriate. Upon the disposition of capital property, the difference between the cost base of the asset and the proceeds of sale are subject to income tax. Only one-half of the net capital gain is subject to taxation. Canadian residents owning qualified Canadian farm property and/or small business corporation shares may qualify for a CAD 750,000 capital gain exemption during their lifetime. Donations of certain appreciated capital property result in no capital gains being subject to tax and a donation credit being available to the donor. Accrued capital gains can also create an income tax liability at death. An individual is deemed to dispose of all of their assets at the date of death triggering any unrealized capital gains or losses. Capital gains are generally measured from the original cost of the particular property. However, on immigration to Canada, most property owned by the individual is deemed to be reacquired at its fair market value as of the date of immigration. This helps ensure that Canada only taxes the capital gain that accrues while the individual is resident in Canada. Gains from Employee Stock Option Exercises Stock option income is taxable in Canada if the individual was a resident when the options were exercised. Stock option income may also be taxable in Canada if the Taxation of International Executives 18

20 options were granted while the individual was a resident of or working in Canada (even if exercised after departure from Canada). A foreign tax credit may be available if the stock option income was subject to tax in another jurisdiction. A 50 percent stock option deduction may be available if the following criteria are met. The shares are qualifying shares (generally common shares). The exercise price is not less than fair market value at the time the options were granted. The employee deals with the employer at arm s length. Foreign Exchange Gains and Losses When non-canadian property is sold, the gain for Canadian tax purposes must be calculated using the foreign currency equivalent of the cost as of the date the property was purchased. As a result, a foreign exchange gain or loss may arise that is independent of the actual gain or loss on the property. The tax treatment of the foreign currency gain/loss usually follows the character of the asset generating the loss. Principal Residence Gains and Losses Capital gains arising on the disposition of a principal residence are not subject to tax with respect to the years owned while a Canadian resident. A principal residence can be located in another country. A family (husband and wife) is limited to designating only one home as a principal residence per tax year. Capital Losses Capital losses can be used to reduce capital gains incurred during the year to a balance of zero. A net capital loss occurs when capital losses exceed capital gains during the year. Generally, net capital losses can be applied against taxable capital gains of the three preceding years and to taxable capital gains of future years to reduce the tax liability of those years. Taxation of International Executives 19

21 Personal Use Items When a taxpayer disposes of personal-use property that has an adjusted cost base or proceeds of disposition of more than CAD 1,000, capital gains or losses may be recognized. Capital gains must be reported from such dispositions. However, deductions are usually not available for capital losses unless the items disposed of belong to a restrictive class of assets known as listed personal property. Gifts There is no gift tax in Canada. However, income tax may arise since the assets gifted are treated as being disposed of at fair market value. There are certain exceptions for gifts to a spouse. Also, rules pertaining to income splitting must be considered. In certain circumstances, if the item gifted is an income-producing asset or is used to purchase an income-producing asset, the income may be attributed back to the taxpayer. This is generally the case for gifts to the spouse and minor children and low-interest loans to non-arm s length persons. Additional Capital Gains Tax (CGT) Issues and Exceptions Are there additional capital gains tax (CGT) issues in Canada? If so, please discuss? Foreign Property Reporting Canadian residents are required to file the following information returns, if they: own specified foreign property, the total cost of which exceeds CAD 100,000 (Form T1135); transfer or loan any amount, directly or indirectly, to a trust or to a controlled foreign affiliate of the trust (Form T1142); or receive distributions from, or who are indebted to, foreign trusts in which they are beneficially interested (Form T1141). The deadline for filing the information return is the individual or entity s normal filing deadline. Failure to timely file the information could result in the assessment of penalties. Taxation of International Executives 20

22 Foreign Investment Entities Recent legislation in respect of foreign investment entities and non-resident trusts apply to Canadian individuals, corporations, trusts, and partnerships and came into effect for taxation years that begin in Only individuals who have been resident in Canada for less than five years and certain non-profit entities are exempt from these rules. The rules for foreign investment entities (FIEs) are designed to accelerate a Canadian tax liability in the hands of taxpayers owning an interest in a holding which meets the definition of a FIE. A FIE can be any non-resident corporation or trust, or any other entity that is formed and governed outside of Canada, such as an association, fund, organization, joint venture, or syndicate. Interests that potentially could be affected by these new rules include, among others, investments in foreign mutual funds, public and private corporations, call options, and certain convertible securities. If the individuals hold an interest in a FIE, the individuals will be required to include an imputed income inclusion in the calculation of the taxable income starting in The rules for non-resident trusts expand to the taxation of income earned by these trusts. If an offshore trust has a Canadian resident contributor, or a Canadian beneficiary and a contributor with nexus to Canada, the trust will be deemed to be a resident of Canada and will be subject to tax in Canada on its worldwide income and capital gains. At the same time, all Canadian-resident contributors and beneficiaries will be liable jointly for the tax liability of the trust. Are there capital gains tax exceptions in Canada? If so, please discuss? Pre-CGT Assets Capital gains were not taxed prior to 1 January Therefore, to eliminate any capital gains that accrued before 1972, transitional rules apply when a taxpayer disposes of a capital property acquired before The transitional rules allow the taxpayer to reduce the proceeds of disposition when a taxpayer calculates the capital gain on the disposition of a property. Taxation of International Executives 21

23 Deemed Disposal and Acquisition Where a taxpayer ceases to be resident in Canada at any particular time, the taxpayer is deemed to have disposed of certain capital properties owned immediately while he/she was still a resident in Canada for proceeds equal to fair market value. The taxpayer is also deemed to have reacquired the property immediately after ceasing to be resident in Canada at a cost of the same amount. Ownership is to be interpreted in the broadest sense, in accordance with Canadian judicial interpretation, no matter where the property is located. However, for valuation purposes the fair market value in the country or area of location of the property will usually govern. A taxpayer who becomes a resident of Canada is deemed to have acquired at the time of becoming a resident each property owned at a cost equal to fair market value at that time. A CAD 750,000 capital gains deduction may be claimed against capital gains arising from: dispositions of qualified small business corporation shares; dispositions of qualified farm property; a reserve brought into income in 2006, from either of the above; and dispositions after 1 May 2006, of qualified fishing property. However, a taxpayer must be a resident of Canada for tax purposes throughout the entire taxation year to be eligible to claim the capital gains exemption. If a taxpayer was only a resident for part of the taxation year in question, then he/she will also be considered to be a resident if he/she was considered a resident throughout the year precedent and subsequent to the year in question. 6 General Deductions from Income What are the general deductions from income allowed in Canada? Deductions permitted depend on amounts actually expended and substantiation of the expenditure is generally required. 6 Taxation of International Executives 22

24 Allowable deductions include the following. Union and professional dues. Non-reimbursed travel costs and other expenses of commissioned salespersons. Non-reimbursed travel costs and other expenses incurred where the individual is required to carry out the duties of employment away from the employer s place of business. Home office expenses where the space is used exclusively on a regular and continuous basis for the purpose of meeting customers or if the work space is where the individual principally performs the duties of his/her employment and only to the extent of business income in the year and in following years. Retirement savings plans that are funded by an individual rather than an employer are known as Registered Retirement Savings Plans (RRSPs). RRSP contributions that qualify under the Canadian Income Tax Act are deductible for any given year if they are contributed in that year or within 60 days after the end of that year. Generally, the annual deduction for contributions to an RRSP is limited to the lesser of the following. o Eighteen percent of the individual s prior year s earned income (as defined). o The RRSP limit for the year (CAD 20,000 for 2008, CAD 21,000 for 2009, and CAD 22,000 for 2010) 7 ; the limit is reduced by certain pension adjustments to reflect the employer and individual funding of the pension. This poses a problem for new residents of Canada earning substantial Canadian-sourced income in the year of arrival, as they are unable to contribute to an RRSP in the first year in order to reduce their taxable income. However, contributions can be made following departure from Canada for deductibility in the final reporting year. This is beneficial if there is substantial income to report in the year of departure. 7 These RRSP limits are determined by Finance Canada: see Taxation of International Executives 23

25 The deduction limit may be higher if the individual has unused contribution room carried forward from previous years. Childcare expenses are deductible, subject to certain limitations, if they were incurred to allow the taxpayer and spouse (if any) to work, carry on business, attend school full-time or part-time, or to carry on grant-funded research. Interest, carrying charges, and investment counsel fees related to the earning of investment income. Non-reimbursed moving expenses from a qualifying relocation. Child support payments paid under a pre-1 May 1997 written agreement or court order may be deductible. Alimony payments made pursuant to a court order or written agreement may be deductible. Tax Reimbursement Methods What are the tax reimbursement methods generally used by employers in Canada? The following are the usual methods of recognizing tax reimbursements paid by the employer. Current-year gross-up. Current-year reimbursement. One-year rollover. A gross-up is not required in the year of departure but may be advisable in order to avoid having to complete and file an income tax return in the year after departure. Calculation of Estimates/Prepayments/Withholding How are estimates/prepayments/withholding of tax handled in Canada? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on. The withholding tax constitutes a payment towards an individual s tax liability and thus parallels the rates in the (progressive) individual income tax schedules. The Taxation of International Executives 24

26 Canadian Revenue Agency (CRA) provides tax-withholding tables to calculate the amount of withholdings required on various types of payments (such as periodic and lump-sum). When are estimates/prepayments/withholding of tax due in Canada? For example, monthly, annually, both, and so on. With regards to the installment payments that an individual may need to make, there are three possible ways to calculate the amount. The first method is to have the total installments, paid in four equal payments, equal to the taxes owing for the year on sources of income not subject to withholdings (that is equal to the balance due amount at the end of the year). The second method is for quarterly installments to equal the tax owing (after source withholdings) on the previous year s tax return. The third method is to have the March and June installments equal to the total tax owing (after source withholdings) for the second prior year. The September and December installments then have to make up the difference so that the total installments paid for the year equal the amount determined in method two. The CRA will generally send installment reminder notices indicating the installments due under method three. Relief for Foreign Taxes Is there any Relief for Foreign Taxes in Canada? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on? The Canadian Income Tax Act provides two mechanisms for the relief of double taxation: foreign tax credits and, in certain circumstances, a deduction from income for income taxes paid in a foreign jurisdiction. Additionally, Canada has negotiated international tax treaties with many countries to prevent double taxation. Foreign tax credits are calculated by country, with separate computations for business and non-business income taxes paid. The allowable foreign tax credit cannot exceed the tax that would otherwise be payable on that category of income. Taxation of International Executives 25

27 Foreign tax credits on property income (other than real property) cannot exceed 15 percent of income from the foreign property. Unused non-business foreign credits cannot be carried over to other years but can be claimed as a deduction. (The Canada/U.S. tax treaty provides relief against U.S. tax for the non-creditable foreign tax on property income.) Any unused business foreign tax credits may be carried back three years and forward ten years. General Tax Credits What are the general tax credits that may be claimed in Canada? Please list below. There is a list of non-refundable tax credits that might be claimed on Canadian income tax return. This list includes, but is not limited to: basic personal amount; spouse or common-law partner amount; amount for an eligible dependant or child under 18; Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) contributions; employment insurance premium; public transit amount; Canada employment amount; disability amount; tuition, education, and textbook amounts; amounts transferred from a spouse or common-law partner; donations and gifts; and eligible medical expenses. Taxation of International Executives 26

28 Sample Tax Calculation 8 This calculation assumes a married taxpayer resident in Alberta, Canada with two children whose three-year assignment begins 1 January 2009 and ends 31 December The taxpayer s base salary is USD 100,000 and the calculation covers three years USD USD USD Salary 100, , ,000 Bonus 20,000 20,000 20,000 Cost-of-living allowance 10,000 10,000 10,000 Housing allowance 12,000 12,000 12,000 Company car 6,000 6,000 6,000 Moving expense reimbursement 20, ,000 Home leave 0 5,000 0 Education allowance 3,000 3,000 3,000 Interest income from non-local sources 6,000 6,000 6,000 Exchange rate used for calculation: USD 1.00 = CAD Other Assumptions All earned income is attributable to local sources. Bonuses are paid at the end of each tax year, and accrue evenly throughout the year. Foreign taxes paid on Interest income is at 10 percent. The company car is used for business and private purposes and originally cost USD 50,000. The employee is deemed resident throughout the assignment. Tax treaties and totalization agreements are ignored for the purpose of this calculation. Spouse has no income. Moving reimbursements are of the nature that is considered non-taxable in Canada. 8 Sample calculation generated by KPMG LLP, a Canada limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. Taxation of International Executives 27

29 Use 2009 taxes and credits rates for sample tax calculations for tax years 2009, 2010, and Calculation of Taxable Income Year-ended Days in Canada during year CAD CAD CAD Earned income subject to income tax Salary 100, , ,000 Bonus 20,000 20,000 20,000 Cost-of-living allowance 10,000 10,000 10,000 Net housing allowance 12,000 12,000 12,000 Company car 6,000 6,000 6,000 Moving expense reimbursement Home leave 0 5,000 0 Education allowance 3,000 3,000 3,000 Total earned income 151, , ,000 Investment income 6,000 6,000 6,000 Total income 157, , ,000 Deductions Total taxable income 157, , ,000 Calculation of Tax Liability CAD CAD CAD Taxable income as above 157, , ,000 Canada tax (federal and provincial) 51,617 53,567 51,617 thereon Less: Non-refundable tax credits 7,866 7,866 7,866 (that is dependent spouse, and so on.) 9 Foreign tax credits Total Canada tax 43,151 45,101 43,151 9 Federal non-refundable credits are calculated at 15 percent *10 percent maximum amount for non-business foreign tax credit Taxation of International Executives 28

30 Special Considerations for Short-Term Assignments 11 Residency Rules Are there special residency considerations for short-term assignments? An individual will be considered as a deemed resident of Canada for tax purposes, if: the stay in Canada is for 183 days or more (the 183-day rule) in the tax year; he/she has residential ties with Canada; and he/she is not considered a resident of another country under the terms of a tax treaty between Canada and that country. 12 If an individual is considered a resident of a country with which Canada has a tax treaty, he/she may be considered a deemed non-resident for taxation purposes. Payroll Considerations 13 Are there special payroll considerations for short-term assignments? Whether the individual is considered a resident or non-resident for tax purposes in Canada, payroll withholdings are to be conducted according to the regular withholding requirements for regular employees. When completing the TD1 form for determining payroll withholdings, non-residents need to declare their status. If less than 90 percent of the non-resident s worldwide income will be included when determining taxable income earned in Canada, he/she is not entitled to certain tax credits allowed for residents. 11 For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than one year Taxation of International Executives 29

31 Taxable Income What income will be taxed during short-term assignments? If the individual on a short-term assignment is considered a deemed resident for taxation purposes, the individual: should file a Canadian income tax return for that tax year; must report worldwide income (income from all sources, both inside and outside Canada) for the entire tax year; can claim all deductions and non-refundable tax credits that apply to him/her; and is subject to federal tax and provincial or territorial tax. Otherwise, if the individual is considered to be a non-resident for taxation purposes, then only income earned from Canadian sources will be subject to Canadian taxes. An employee who works at a special work site may have certain benefits that can be excluded from his/her income. These benefits include: reasonable allowances for, or the value of, free board and lodging provided by the employer at the special work site; and reasonable allowances for, or a reimbursement of, transportation expenses received for transportation to and from the employee s principal place of residence, which must be a self-contained domestic establishment and may be outside Canada. Certain conditions must be met to qualify for excluding benefits based on the special work site rules. These conditions include the following. The individual is required to work at a special work site on a temporary basis (generally not more than two years). The individual s principal place of residence (his/her original home) must be available for his/her use throughout the period and not rented out. Taxation of International Executives 30

32 The home must be too far from the special work site for daily commuting. The individual is required to be away from his/her ordinary residence, or at the special work site, for at least 36 hours. The term temporary nature refers to the duration of duties performed by the individual employee rather than the project as a whole. As a general rule, duties will be considered to be of a temporary nature if it reasonably can be expected that they will not provide continuous employment beyond two years. Additional Considerations Are there any additional considerations that should be considered before initiating a short-term assignment in Canada? Individuals are deemed to dispose of all property on ceasing Canadian residency. Exceptions include Canadian real property, certain property used in a business in Canada, and certain pensions and stock options, which remain subject to Canadian tax unless relieved by a tax treaty. The departure tax can be deferred until the asset is actually disposed of by posting security acceptable to the Minister of Revenue with respect to any tax so deferred. The intention is that taxpayers should be taxed on all gains that accrue during their period of residence. However, provisions exist to exempt short-term residents from the application of these rules in relation to property that was held throughout the period of residence. A short-term resident is an individual who has been resident in Canada for less than 60 months. If an individual qualifies for this exemption, they will only have a deemed disposition with respect to property (except gifts or inheritances) acquired while resident in Canada. Note: The short-term residency exemption only applies to individuals that were not previously resident in Canada during the 10-year period immediately before ceasing to be a resident. In addition, any property acquired in exchange for property owned when the individual last became resident is subject to the deemed disposition rules. Taxation of International Executives 31

Provinces and territories also impose income taxes on individuals in addition to federal taxes

Provinces and territories also impose income taxes on individuals in addition to federal taxes Worldwide personal tax guide 2013 2014 Canada Local information Tax Authority Website Tax Year Tax Return due date Is joint filing possible Are tax return extensions possible Canada Revenue Agency (CRA)

More information

Canada. Contact James Yager KPMG in Canada Tax Partner T: +1 416 777 8214 E: jyager@kpmg.ca

Canada. Contact James Yager KPMG in Canada Tax Partner T: +1 416 777 8214 E: jyager@kpmg.ca Canada Introduction Liability to Canadian tax is determined by residence status for taxation purposes and the source of income derived by an individual. Income tax is levied at progressive rates on a person

More information

INTERNATIONAL EXECUTIVE SERVICES. Australia. Taxation of International Executives TAX

INTERNATIONAL EXECUTIVE SERVICES. Australia. Taxation of International Executives TAX INTERNATIONAL EXECUTIVE SERVICES Australia Taxation of International Executives TAX : Taxation of International Executives Overview and Introduction 3 Income Tax 4 Tax Returns and Compliance 4 Tax Rates

More information

CANADIAN CORPORATE TAXATION. A General Guide January 31, 2011 TABLE OF CONTENTS INCORPORATION OF A BUSINESS 1 POTENTIAL ADVANTAGES OF INCORPORATION 1

CANADIAN CORPORATE TAXATION. A General Guide January 31, 2011 TABLE OF CONTENTS INCORPORATION OF A BUSINESS 1 POTENTIAL ADVANTAGES OF INCORPORATION 1 CANADIAN CORPORATE TAXATION A General Guide January 31, 2011 TABLE OF CONTENTS PART A PAGE INCORPORATION OF A BUSINESS 1 POTENTIAL ADVANTAGES OF INCORPORATION 1 POTENTIAL DISADVANTAGES OF INCORPORATION

More information

Canada-U.S. Estate Planning for the Cross-Border Executive

Canada-U.S. Estate Planning for the Cross-Border Executive February 16, 2010 Canada-U.S. Estate Planning for the Cross-Border Executive Beth Webel (Toronto) Nadja Ibrahim (Calgary) Agenda Canadian death tax regime US estate tax regime US citizens moving to Canada

More information

INTERNATIONAL EXECUTIVE SERVICES. Brazil. Taxation of International Executives TAX

INTERNATIONAL EXECUTIVE SERVICES. Brazil. Taxation of International Executives TAX INTERNATIONAL EXECUTIVE SERVICES Brazil Taxation of International Executives TAX : Taxation of International Executives Overview and Introduction 3 Income Tax 4 Tax Returns and Compliance 4 Tax Rates 6

More information

INCORPORATING YOUR BUSINESS

INCORPORATING YOUR BUSINESS November 2014 CONTENTS Advantages of incorporation Advantages of an SBC Summary INCORPORATING YOUR BUSINESS If you carry on a business, there are many tax planning opportunities which become available

More information

FACTS & FIGURES. Tax Audit Accounting Consulting

FACTS & FIGURES. Tax Audit Accounting Consulting FACTS & FIGURES Tax Audit Accounting Consulting FACTS AND FIGURES FOR TAX PREPARATION AND PLANNING JULY, 2013 CHAPTER 1B PERSONAL INCOME TAX 1.1 Federal Tax Rates - Individuals... 1 1.2 Federal Personal

More information

Receita Federal do Brasil (RFB) www.receita.fazenda.gov.br 1 January to 31 December Last working day of April following end of tax year

Receita Federal do Brasil (RFB) www.receita.fazenda.gov.br 1 January to 31 December Last working day of April following end of tax year Worldwide personal tax guide 2013 2014 Brazil Local Information Tax Authority Receita Federal do Brasil (RFB) Website www.receita.fazenda.gov.br Tax Year 1 January to 31 December Tax Return due date: Last

More information

2014 Year-End Tax Planning Tips for Seniors, Employees, Families and Students

2014 Year-End Tax Planning Tips for Seniors, Employees, Families and Students 2014 Year-End Tax Planning Tips for Seniors, Employees, Families and Students While the end of 2014 is approaching, there is still an opportunity for individuals to review their financial situation with

More information

CEASING CANADIAN RESIDENCE

CEASING CANADIAN RESIDENCE CEASING CANADIAN RESIDENCE REFERENCE GUIDE A person who is resident in Canada during a taxation year is subject to Canadian income tax on his or her worldwide income from all sources. A taxpayer who emigrates

More information

Income in the Netherlands is categorised into boxes. The above table relates to Box 1 income.

Income in the Netherlands is categorised into boxes. The above table relates to Box 1 income. Worldwide personal tax guide 2013 2014 The Netherlands Local information Tax Authority Website Tax Year Tax Return due date Is joint filing possible Are tax return extensions possible Belastingdienst www.belastingdienst.nl

More information

How Can You Reduce Your Taxes?

How Can You Reduce Your Taxes? RON GRAHAM AND ASSOCIATES LTD. 10585 111 Street NW, Edmonton, Alberta, T5M 0L7 Telephone (780) 429-6775 Facsimile (780) 424-0004 Email rgraham@rgafinancial.com How Can You Reduce Your Taxes? Tax Brackets.

More information

INTERNATIONAL EXECUTIVE SERVICES. India. Taxation of International Executives TAX

INTERNATIONAL EXECUTIVE SERVICES. India. Taxation of International Executives TAX INTERNATIONAL EXECUTIVE SERVICES India Taxation of International Executives TAX India: Taxation of International Executives Overview and Introduction 2 Income Tax 3 Tax Returns and Compliance 3 Tax Rates

More information

INCORPORATING YOUR PROFESSIONAL PRACTICE

INCORPORATING YOUR PROFESSIONAL PRACTICE INCORPORATING YOUR PROFESSIONAL PRACTICE REFERENCE GUIDE Most provinces and professional associations in Canada now permit professionals such as doctors, dentists, lawyers, and accountants to carry on

More information

taxation Current to June 20, 2013 What s Inside www.bdo.ca

taxation Current to June 20, 2013 What s Inside www.bdo.ca www.bdo.ca taxation Tax Facts 2013 Current to June 20, 2013 Tax Facts 2013 provides you with a summary of 2013 personal income tax rates and amounts, as well as corporate tax rates (as at July 1, 2013),

More information

31 October (paper filing) 31 January (Electronic Filing)

31 October (paper filing) 31 January (Electronic Filing) Worldwide personal tax guide 2013 2014 United Kingdom Local information Tax Authority Website Tax Year Tax Return due date Is joint filing possible HM Revenue and Customs (HMRC) www.hmrc.gov.uk 6 April

More information

INVESTMENT HOLDING COMPANIES

INVESTMENT HOLDING COMPANIES INVESTMENT HOLDING COMPANIES > RBC DOMINION SECURITIES INC. FINANCIAL PLANNING PUBLICATIONS At RBC Dominion Securities Inc., we have been helping clients achieve their financial goals since 1901. Today,

More information

INCORPORATING YOUR BUSINESS

INCORPORATING YOUR BUSINESS INCORPORATING YOUR BUSINESS REFERENCE GUIDE If you are carrying on a business through a sole proprietorship or a partnership, it may at some point be appropriate to use a corporation to carry on the business.

More information

How Canada Taxes Foreign Income

How Canada Taxes Foreign Income - 1 - How Canada Taxes Foreign Income (Summary) Purpose of the book The purpose of writing this book, entitled How Canada Taxes Foreign Income is particularly for the benefit of foreign tax lawyers, accountants,

More information

Tax Implications for US Citizens/Residents Moving to & Living in Canada

Tax Implications for US Citizens/Residents Moving to & Living in Canada Tax Implications for US Citizens/Residents Moving to & Living in Canada TAX Julia Klann & Domeny Wu March 20, 2014 Topics to Discuss Moving to Canada & Overview of Canadian & US Tax Systems US Filing Requirements

More information

Professional Corporations An Attractive Option

Professional Corporations An Attractive Option Professional Corporations An Attractive Option Recent and planned corporate income tax rate reductions mean that now is a good time for eligible professionals to consider incorporating their practices.

More information

The Expatriate Financial Guide to

The Expatriate Financial Guide to The Expatriate Financial Guide to Australian Tax Facts Australia Introduction Tax Year Assessment Basis Income Tax Taxation in Australia is mostly at a national/federal level with property taxes (council

More information

IBA 2001 CANCUN COMMITTEE NP STRUCTURING INTERNATIONAL EQUITY COMPENSATION PLANS CASE STUDY

IBA 2001 CANCUN COMMITTEE NP STRUCTURING INTERNATIONAL EQUITY COMPENSATION PLANS CASE STUDY IBA 2001 CANCUN COMMITTEE NP STRUCTURING INTERNATIONAL EQUITY COMPENSATION PLANS CASE STUDY CANADIAN APPROACH BY ALAIN RANGER FASKEN MARTINEAU DuMOULIN LLP Stock Exchange Tower Suite 3400, P.O. Box 242

More information

YEAR-END TAX PLANNER November 2014

YEAR-END TAX PLANNER November 2014 YEAR-END TAX PLANNER November 2014 Inside this issue: Dear Clients and Friends, as we approach the end of another year, now would be a good time to consider some tax planning measures that could help reduce

More information

German Tax Facts. The Expatriate Financial Guide to Germany

German Tax Facts. The Expatriate Financial Guide to Germany The Expatriate Financial Guide to Germany German Tax Facts Introduction Tax Year Assessment Basis Income Tax Taxation in Germany occurs at a national and municipal level. The Ministry of Finance controls

More information

Corporate taxation, CPP and EI 2015

Corporate taxation, CPP and EI 2015 Corporate taxation, CPP and EI 05 Table Business income eligible for SBD (05) Small business limit Federal $500,000.00 % Combined % Alberta 500,000.00.00 British Columbia 500,000.50.50 Manitoba 5,000 0.00.00

More information

2015 FEDERAL BUDGET. Tax highlights from the 2015 federal budget. By Jerry S. Rubin, B.E.S., B.Comm.(Hons), CMA, TEP, CFP

2015 FEDERAL BUDGET. Tax highlights from the 2015 federal budget. By Jerry S. Rubin, B.E.S., B.Comm.(Hons), CMA, TEP, CFP 2015 FEDERAL BUDGET By Jerry S. Rubin, B.E.S., B.Comm.(Hons), CMA, TEP, CFP Tax highlights from the 2015 federal budget Finance Minister Joe Oliver tabled the 2015 federal budget on April 21, 2015. The

More information

Cross Border Tax Issues

Cross Border Tax Issues Cross Border Tax Issues By Reinhold G. Krahn December 2000 This is a general overview of the subject matter and should not be relied upon as legal advice or opinion. For specific legal advice on the information

More information

TAX PLANNING FOR IMMIGRATION TO CANADA. Jack Bernstein & Ron Choudhury Aird & Berlis LLP Toronto, Ontario

TAX PLANNING FOR IMMIGRATION TO CANADA. Jack Bernstein & Ron Choudhury Aird & Berlis LLP Toronto, Ontario TAX PLANNING FOR IMMIGRATION TO CANADA Jack Bernstein & Ron Choudhury Aird & Berlis LLP Toronto, Ontario *Submitted for presentation at the Pre-immigration Planning and Exit Taxation, Visas and Passport

More information

TAX NEWSLETTER. February 2012

TAX NEWSLETTER. February 2012 TAX NEWSLETTER February 2012 RECORDING YOUR BUSINESS AUTOMOBILE EXPENSES PRESCRIBED AUTOMOBILE AMOUNTS FOR 2012 EMPLOYEE LOANS CRA SIMPLIFIED RATES FOR MOVING EXPENSES INCURRED IN 2011 CRA PUTS END TO

More information

There are no changes to personal federal income tax rates or income brackets for the 2015 tax year.

There are no changes to personal federal income tax rates or income brackets for the 2015 tax year. The 2015 Federal Budget was the first for Finance Minister Joe Oliver, and it tabled a number of proposals that will impact the financial, tax and estate plans of Canadians. The following is a summary

More information

Thinking Beyond Borders

Thinking Beyond Borders INTERNATIONAL EXECUTIVE SERVICES Thinking Beyond Borders Tanzania kpmg.com Tanzania Introduction Taxation of individuals under the Income Tax Act 2004 (ITA) is on the basis of both residence and source.

More information

THE TAX-FREE SAVINGS ACCOUNT

THE TAX-FREE SAVINGS ACCOUNT THE TAX-FREE SAVINGS ACCOUNT The 2008 federal budget introduced the Tax-Free Savings Account (TFSA) for individuals beginning in 2009. The TFSA allows you to set money aside without paying tax on the income

More information

A 5.5% solidarity surcharge is imposed on the income tax liability of all taxpayers.

A 5.5% solidarity surcharge is imposed on the income tax liability of all taxpayers. Worldwide personal tax guide 2013 2014 Germany Local information Tax Authority Website Tax Year Tax Return due date 31 May 2013 Is joint filing possible Are tax return extensions possible 2013 income tax

More information

EMPLOYEE STOCK OPTIONS

EMPLOYEE STOCK OPTIONS TAX LETTER May 2015 EMPLOYEE STOCK OPTIONS FOREIGN EXCHANGE GAINS AND LOSSES CAREGIVER AND INFIRM DEPENDENT CREDITS MAKING TAX INSTALMENTS EARNED INCOME FOR RRSP PURPOSES AROUND THE COURTS EMPLOYEE STOCK

More information

Making the Most of Your Charitable Gifts for 2015

Making the Most of Your Charitable Gifts for 2015 Making the Most of Your Charitable Gifts for 2015 January 30, 2015 No. 2015-07 Canada s tax incentives for charitable donations are designed to make it easier for you to support your favourite charities.

More information

Tax planning for employees coming to work in the U.S. Up close

Tax planning for employees coming to work in the U.S. Up close Tax planning for employees coming to work in the U.S. Up close Tax > International tax > Expatriate taxes In U.S. tax law the term alien refers to a foreign national (an individual who is not a citizen

More information

TAX CONSEQUENCES FOR U.S. CITIZENS AND OTHER U.S. PERSONS LIVING IN CANADA

TAX CONSEQUENCES FOR U.S. CITIZENS AND OTHER U.S. PERSONS LIVING IN CANADA March 2015 CONTENTS U.S. income tax filing requirements Non-filers U.S. foreign reporting requirements Foreign trusts Foreign corporations Foreign partnerships U.S. Social Security U.S. estate tax U.S.

More information

U.S. TAX ISSUES FOR CANADIANS

U.S. TAX ISSUES FOR CANADIANS March 2015 CONTENTS Snowbirds Canadians owning U.S. rental properties Summary U.S. TAX ISSUES FOR CANADIANS If you own rental property in the United States or spend extended periods of time there, you

More information

INCORPORATING YOUR FARM BUSINESS

INCORPORATING YOUR FARM BUSINESS February 2016 CONTENTS Advantages of incorporation Advantages of an SBC and an FFC Other considerations Summary INCORPORATING YOUR FARM BUSINESS If you carry on a farm business, and have significant income,

More information

CRA requires that all offshore assets in excess of $100,000 CDN be declared by the taxpayer. Please inform us if this situation applies to you.

CRA requires that all offshore assets in excess of $100,000 CDN be declared by the taxpayer. Please inform us if this situation applies to you. T1 Personal Income Tax Checklist THE MINIMUM FEE FOR A BASIC PERSONAL TAX RETURN FOR A FAMILY WILL BE $325. THE MINIMUM FEE FOR A PERSONAL TAX RETURN FOR A FAMILY, INCLUDING SELF-EMPLOYMENT INCOME, RENTAL

More information

USA Taxation. 3.1 Taxation of funds. Taxation of regulated investment companies: income tax

USA Taxation. 3.1 Taxation of funds. Taxation of regulated investment companies: income tax USA Taxation FUNDS AND FUND MANAGEMENT 2010 3.1 Taxation of funds Taxation of regulated investment companies: income tax Investment companies in the United States (US) are structured either as openend

More information

US Citizens Living in Canada

US Citizens Living in Canada US Citizens Living in Canada Income Tax Considerations 1) I am a US citizen living in Canada. What are my income tax filing and reporting requirements? US Income Tax Returns A US citizen residing in Canada

More information

Panel. U.S. and Mexican Taxation of Individuals Residing Abroad

Panel. U.S. and Mexican Taxation of Individuals Residing Abroad Panel U.S. and Mexican Taxation of Individuals Residing Abroad Diana S. Davis, Esq., Of Counsel, Greenberg Traurig, LLP Kenneth Guilfoyle, CPA, Expatriate Services Practice Leader, BDO Seidman, LLP U.S.

More information

The Professional s Option Professional Incorporation

The Professional s Option Professional Incorporation The Professional s Option Professional Incorporation Many professionals now have the opportunity to run their business as a professional corporation 1. The ability to incorporate raises a number of planning

More information

W ith the 2015 budget announcement and

W ith the 2015 budget announcement and WWW.SEGALLLP.COM NOVEMBER 2015 YEAR-END TAX PLANNER Our latest ideas and tips in reducing your 2015 tax burden INSIDE THIS NEWSLETTER 1-3 WELCOME! D ear clients and friends, as we approach the end of another

More information

Spanish Tax Facts. The Expatriate Financial Guide to Spain

Spanish Tax Facts. The Expatriate Financial Guide to Spain The Expatriate Financial Guide to Spain Spanish Tax Facts Introduction Tax Year Assessment Basis Taxation in Spain occurs at a national level and at a regional ( Autonomous Community ) or municipal level.

More information

Worldwide personal tax guide 2013 2014. Japan. Local information. 2013 National Income Tax Rates Taxable Income Band National Income Tax Rates

Worldwide personal tax guide 2013 2014. Japan. Local information. 2013 National Income Tax Rates Taxable Income Band National Income Tax Rates Worldwide personal tax guide 2013 2014 Japan Local information Tax Authority Ministry of Finance Website www.mof.go.jp Tax Year 1 January to 31 December Tax Return due date 15 March Is joint filing possible

More information

Understanding the Tax Implications of Exchange-Traded Funds

Understanding the Tax Implications of Exchange-Traded Funds Understanding the Tax Implications of Exchange-Traded Funds 11/21/2003 1 Forward Barclays Global Investors Canada Limited (Barclays Canada) is pleased to present "Understanding the Tax Implications of

More information

Advisor Guide. The BMO. Insurance Insured Retirement Plan

Advisor Guide. The BMO. Insurance Insured Retirement Plan Advisor Guide The BMO Insurance Insured Retirement Plan Table of Contents Introduction to The BMO Insurance Insured Retirement Plan 2 The Opportunity 3 The Solution 4 The BMO Insurance Insured Retirement

More information

Introduction. The Expatriate Financial Guide for UK Expatriates Working Overseas

Introduction. The Expatriate Financial Guide for UK Expatriates Working Overseas Introduction The Expatriate Financial Guide for UK Expatriates Working Overseas An individual who is considering a move from the UK in order to work overseas will need to take into account a number of

More information

Early Retirement Strategies

Early Retirement Strategies If you or a member of your family is facing a permanent lay-off, voluntary early retirement or forced early retirement, there are many important decisions to be made decisions that can have a significant

More information

2015 FEDERAL BUDGET SUMMARY

2015 FEDERAL BUDGET SUMMARY 2015 FEDERAL BUDGET SUMMARY April 21, 2015 TABLE OF CONTENTS Table of contents Introduction Personal Income Tax Measures Business Income Tax Measures Charities International Tax Notice to Users 2 2015

More information

Replacement Rules for Capital Property

Replacement Rules for Capital Property TAX UPDATE Replacement Rules for Capital Property If you sell a capital property (let s call it the initial property ) at a gain, but replace the property with a replacement property within a specifi ed

More information

Top 10 Tax Considerations for U.S. Citizens Living in Canada

Top 10 Tax Considerations for U.S. Citizens Living in Canada Top 10 Tax Considerations for U.S. Citizens Living in Canada Recent Canadian media reports have estimated that there are approximately one million U.S. citizens living in Canada and that a relatively low

More information

Professional Corporations Is One Right for You?

Professional Corporations Is One Right for You? Professional Corporations Is One Right for You? Recent and planned corporate income tax rate reductions mean that now is a good time for professionals to consider incorporating their practices. The low

More information

Tax Planning for New Immigrants and Returning Residents

Tax Planning for New Immigrants and Returning Residents Tax Planning for New Immigrants and Returning Residents Federated Press Seminar November 6, 2013 Presented by: Lorne Saltman Four Levels of Planning Pre-Immigration Planning Immigration Planning Post-Immigration

More information

Tax facts and figures Canada 2015

Tax facts and figures Canada 2015 www.pwc.com/ca/facts Tax facts and figures Canada 2015 Canadian individual and corporate changes, rates, deadlines and a wide range of other valuable information. Key 2015 income rates individuals and

More information

REMUNERATION. - List B - Benefits and allowances that are not remuneration and therefore are not subject to tax.

REMUNERATION. - List B - Benefits and allowances that are not remuneration and therefore are not subject to tax. BULLETIN NO. HE 002 Issued June 2000 Revised August 2014 THE HEALTH AND POST SECONDARY EDUCATION TAX LEVY ACT REMUNERATION This bulletin will help employers understand what kind of payments, made to or

More information

Personal Home and Vacation Properties -Using the Principal Residence Exemption

Personal Home and Vacation Properties -Using the Principal Residence Exemption Personal Home and Vacation Properties -Using the Principal Residence Exemption Introduction Your family s home is generally known to be exempt from capital gains taxation, but what about the family cottage

More information

Income Splitting CONTENTS

Income Splitting CONTENTS June 2012 CONTENTS The attribution rules Family income splitting Business income splitting Income splitting through corporations Income splitting in retirement Summary Income Splitting With Canada s high

More information

Income Tax and Social Insurance

Income Tax and Social Insurance The Global Employer: Focus on Global Immigration & Mobility Income Tax and Social Insurance An employee who works abroad is always concerned about the possibility of increased income taxation and social

More information

TAX LETTER for May 2004 INCOME ATTRIBUTION RULES SPLIT INCOME OF MINOR CHILDREN FEDERAL BUDGET HIGHLIGHTS AROUND THE COURTS

TAX LETTER for May 2004 INCOME ATTRIBUTION RULES SPLIT INCOME OF MINOR CHILDREN FEDERAL BUDGET HIGHLIGHTS AROUND THE COURTS BLAIN M. ARCHER, B.Sc., CA* PAUL M. FOURNIER, B.Sc., CA* RUSS J. WILSON, B.Sc., CA* KATRIN BRAUN, B.B.A., CA* KELLY A. RIEHL, B. Comm., CA* TAX LETTER for May 2004 INCOME ATTRIBUTION RULES SPLIT INCOME

More information

ASPECTS OF FINANCIAL PLANNING. Taxation implications of overseas residency. July 2012

ASPECTS OF FINANCIAL PLANNING. Taxation implications of overseas residency. July 2012 ASPECTS OF FINANCIAL PLANNING Taxation implications of More and more of our clients are being given the opportunity to live and work overseas. Before you make the move, it is worthwhile considering the

More information

RETIREMENT COMPENSATION ARRANGEMENTS

RETIREMENT COMPENSATION ARRANGEMENTS RETIREMENT COMPENSATION ARRANGEMENTS REFERENCE GUIDE A Retirement Compensation Arrangement ( RCA ) can be a valuable planning tool that can effectively provide solutions to retirement planning and, in

More information

CYPRUS TAX CONSIDERATIONS

CYPRUS TAX CONSIDERATIONS TAXATION The following summary of material Cyprus, US federal income and United Kingdom tax consequences of ownership of the GDRs is based upon laws, regulations, decrees, rulings, income tax conventions

More information

Choose the right investment. Segregated fund policies versus mutual funds

Choose the right investment. Segregated fund policies versus mutual funds Choose the right investment Segregated fund policies versus mutual funds Choose the best option for your clients investment needs Segregated fund policies and mutual funds provide clients: Professional

More information

Income Splitting. An excellent way to shift income between family members

Income Splitting. An excellent way to shift income between family members Income Splitting An excellent way to shift income between family members WHY INCOME SPLITTING? One of the easiest ways for families to reduce taxes is through properly structured income splitting. Income

More information

OF FOREIGN N ATIONALS

OF FOREIGN N ATIONALS U.S. TAXATION OF FOREIGN N ATIONALS gtn.com C O N T E N T S Introduction 1 1. Residency Lawful Permanent Resident Test 3 Substantial Presence Test 5 Which Test Prevails? 9 Special Considerations 9 2. Case

More information

1997 Supplement to the 1995 T2 Corporation Income Tax Guide

1997 Supplement to the 1995 T2 Corporation Income Tax Guide 1997 Supplement to the 1995 T2 Corporation Income Tax Guide You may need a copy of the 1995 T2 Corporation Income Tax Guide along with this supplement to complete your 1997 T2 Corporation Income Tax Return.

More information

This article, prepared by PARO s auditors Rosenswig McRae Thorpe LLP, outlines some points to consider in preparing your income tax returns.

This article, prepared by PARO s auditors Rosenswig McRae Thorpe LLP, outlines some points to consider in preparing your income tax returns. 2014 Edition for 2013 Returns This article, prepared by PARO s auditors Rosenswig McRae Thorpe LLP, outlines some points to consider in preparing your income tax returns. Remember that: RRSP Contribution

More information

Income tax rates for Canadian-controlled private corporations (CCPCs) 2012-2013

Income tax rates for Canadian-controlled private corporations (CCPCs) 2012-2013 Income tax rates for Canadian-controlled private corporations (CCPCs) 2012-2013 Federal income tax rates for income earned by a CCPC 1 Small Active Income between $400,000 and General Active General corporate

More information

Many individuals hold investment portfolios in

Many individuals hold investment portfolios in BMO NESBITT BURNS Understanding Personal Holding Companies Many individuals hold investment portfolios in a personal holding company. It is important for these investors to understand the various tax implications

More information

Estate planning: Taxation of deceased estates

Estate planning: Taxation of deceased estates TB 20 Estate planning: Taxation of deceased estates Issued on 15 November 2010. Summary Under Australian law there are no duties, however, income and some capital transactions may be taxed as a consequence

More information

Tax Guide for Individuals Moving to the UK

Tax Guide for Individuals Moving to the UK Tax administration and allowances The UK taxing authority is known as Her Majesty s Revenue and Customs (or HMRC for short) and the tax year runs from 6 April to the following 5 April. There is no system

More information

Equity-Based Compensation for Canadian Employees

Equity-Based Compensation for Canadian Employees Equity-Based Compensation for Canadian Employees By Leonard Glass May 2, 2002 This is a general overview of the subject matter and should not be relied upon as legal advice or opinion. For specific legal

More information

BANK OF MONTREAL SHAREHOLDER DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN

BANK OF MONTREAL SHAREHOLDER DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN BANK OF MONTREAL SHAREHOLDER DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN This Offering Circular covers common shares of Bank of Montreal (the Bank ) which may be purchased on the open market through

More information

Thinking Beyond Borders

Thinking Beyond Borders INTERNATIONAL EXECUTIVE SERVICES Thinking Beyond Borders Vietnam kpmg.com Vietnam Introduction Tax residents of Vietnam are taxed on worldwide income, whereas non-tax residents are taxed on Vietnam-sourced

More information

Common-law (including same-sex) partners taxation information

Common-law (including same-sex) partners taxation information Tax & Estate Common-law (including same-sex) partners taxation information Under the Income Tax Act (Canada), all common-law relationships, either opposite- or same-sex, are treated equally. For tax purposes,

More information

Doing Business In Canada

Doing Business In Canada Doing Business In Canada This chapter is a general overview of Canadian tax principles and has been prepared by Cadesky and Associates LLP, a Canadian and International Tax Advisory firm. Comments should

More information

Year-end Tax Planning Guide - 30 June 2013 BUSINESSES

Year-end Tax Planning Guide - 30 June 2013 BUSINESSES Year-end Tax Planning Guide - 30 The end of the financial year is fast approaching. In the lead up to 30 June, this newsletter covers some of the year-end tax planning matters for your consideration. BUSINESSES

More information

Income tax for individuals is computed on a monthly basis by applying the above progressive tax rates to employment income.

Income tax for individuals is computed on a monthly basis by applying the above progressive tax rates to employment income. Worldwide personal tax guide 2013 2014 China Local information Tax Authority Website Tax Year Tax Return due date Is joint filing possible Are tax return extensions possible State Administration of Taxation

More information

The Tax-Free Savings Account (TFSA) Frequently Asked Questions

The Tax-Free Savings Account (TFSA) Frequently Asked Questions TAX MANAGEMENT The Tax-Free Savings Account (TFSA) Frequently Asked Questions The Tax-Free Savings Account (TFSA) is a savings vehicle that started in 2009 and allows Canadian residents to earn investment

More information

8. Taxation. There are no local income taxes in the UK. The only local taxation on businesses is a property-based levy known as the business rate.

8. Taxation. There are no local income taxes in the UK. The only local taxation on businesses is a property-based levy known as the business rate. 8. Taxation 8.1 Overview of UK taxation The UK corporation tax rate at a maximum of 28%, recently decreased from 30%, is one of the lowest of the major economies in Europe. Value Added Tax (VAT) at 17.5%

More information

Federal Budget 2014 by Jamie Golombek

Federal Budget 2014 by Jamie Golombek February 11, 2014 Federal Budget 2014 by Jamie Golombek The February 11, 2014 federal budget included various tax measures that will affect individuals, registered plans, employers and trusts. Rather than

More information

Tax Facts. kpmg.ca/taxfacts

Tax Facts. kpmg.ca/taxfacts Tax Facts 2014 2015 kpmg.ca/taxfacts 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms Organization Web Site KPMG LLP.... www.kpmg.ca

More information

The Estate Preserver Plan. Advisor Guide

The Estate Preserver Plan. Advisor Guide The Estate Preserver Plan Advisor Guide Table of Contents Introduction to the Estate Preserver Plan 2 The Opportunity 3 The Solution 4 Tax Considerations 5 Probate and Executor Fees 7 Case Study 8 Underwriting

More information

The Bank of Nova Scotia Shareholder Dividend and Share Purchase Plan

The Bank of Nova Scotia Shareholder Dividend and Share Purchase Plan The Bank of Nova Scotia Shareholder Dividend and Share Purchase Plan Offering Circular Effective November 6, 2013 The description contained in this Offering Circular of the Canadian and U.S. income tax

More information

NORTHERN BLIZZARD RESOURCES INC. STOCK DIVIDEND PROGRAM

NORTHERN BLIZZARD RESOURCES INC. STOCK DIVIDEND PROGRAM NORTHERN BLIZZARD RESOURCES INC. STOCK DIVIDEND PROGRAM Introduction This Stock Dividend Program (the "Program") provides eligible holders ("Shareholders") of common shares ("Common Shares") of Northern

More information

New Canadian Tax Legislation. Hywel Jones Britannia Consulting Group

New Canadian Tax Legislation. Hywel Jones Britannia Consulting Group New Canadian Tax Legislation Hywel Jones Britannia Consulting Group 1 Introduction Trusts - Old rules New rules Case Studies Foreign Investment Entity rules What can you do? 2 Old Rules Deemed a Canadian

More information

National Instrument 55-104 Insider Reporting Requirements and Exemptions

National Instrument 55-104 Insider Reporting Requirements and Exemptions National Instrument 55-104 Insider Reporting Requirements and Exemptions PART 1 DEFINITIONS AND INTERPRETATION 1.1 Definitions and interpretation (1) In this Instrument acceptable summary form means, in

More information

Holding companies in Ireland

Holding companies in Ireland Holding companies in Irel David Lawless Paul Moloney Dillon Eustace, Dublin Irel has long been a destination of choice for holding companies because of its low corporation tax rate of 12.5 percent, participation

More information

Hardship distributions. A hardship distribution is not eligible for rollover.

Hardship distributions. A hardship distribution is not eligible for rollover. SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS 1 (Alternative to IRS Safe Harbor Notice - For Participant) This notice explains how you can continue to defer federal income tax on your retirement plan savings

More information

Year-end Tax Planning Guide - 30 June 2014 BUSINESSES

Year-end Tax Planning Guide - 30 June 2014 BUSINESSES Year-end Tax Planning Guide - 30 The end of the financial year is fast approaching. In the lead up to 30 June, this newsletter covers some of the year-end tax planning matters for your consideration. BUSINESSES

More information

Individual taxes, summary

Individual taxes, summary Individual taxes, summary Significant developments There have been no significant tax or regulatory developments in the past year. Territoriality and residence Switzerland taxes its residents on their

More information