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yTABDGdW

Jun 2, 2018, 11:55 AM

Views: 1567

Re: [sanjuan] Problems with Canadian bank accounts

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It's possible that we may both be right. It seems it depends on the kind of income to determine whether you file something in Canada or not.

I don't know what you may or may not be doing, but this is what you're supposed to do.

When you decide to become a non-resident of Canada, you are supposed to state that fact on your last tax return and pay a capital gains exit tax on whatever you sell before you leave (house, stocks, etc).

You are also supposed to notify your banks that you are now a non-resident of Canada (you are also now no longer able to contribute to RRSPs, brokerage accounts, etc).

Income type 1:

Any pensions funds, RRSP funds, dividends, stock sales etc. etc. are taxed at a 25% rate at source by the bank or brokerage account. If there is a tax agreement with the country you are now resident in (Mexico) you will only be taxed at 15%. Luckily, this is the case for Mexico, so you should only be taxed at 15%. There is no need to file a tax return with Canada because the tax has already been deducted at source.

I don't know if Mexico would still want you to file (since you're a resident of Mexico and Mexico taxes world income). Probably, perhaps. If you did, you would show you paid the tax and that would be that.

Income type 2:

If you earn employment income, business income, sale of a property income, etc. in Canada then, yes, you would file a Canadian tax return for that income.

When you file your Mexican taxes (as a resident who is taxable on world wide income) you would show that you paid X % of tax on the income in Canada. Mexico will determine the tax % you would owe to Mexico. If what you paid in Canada is less than what you would pay in Mexico, you will have to pay the difference to Mexico. If what you paid is more than what you would pay in Mexico, you can apply to Canada for a refund of the difference.

If you are a retiree who is getting all their income from pensions, RRSPs, dividends, etc. you do not have to bother filing a tax return and you would only be taxed at 15% (because of the tax agreement between Canada and Mexico) which is a pretty sweet deal.

Why are you filing tax returns in Canada San Juan? If I were a retiree with only pension, RRSPs, investment income etc. I would just be deducted at source and be done with it. No need to file.

Link: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4058/non-residents-income-tax-2016.html#P83_5491

Taxing Canadian-source income
As a non-resident, you are subject to Canadian income tax on most Canadian-source income paid or credited to you during the year unless all or part of it is exempt under a tax treaty. Canada's income tax system uses the following two methods to calculate the tax payable on Canadian-source income you receive.

Method 1 - Non-resident tax

Canadian financial institutions and other payers have to withhold non-resident tax at a rate of 25% on certain types of Canadian-source income they pay or credit you as a non-resident of Canada. The most common types of income that could be subject to non-resident withholding tax include:

interest;
dividends;
rental payments;
pension payments;
old age security pension;
Canada Pension Plan or Quebec Pension Plan benefits;
retiring allowances;
registered retirement savings plan payments;
pooled registered pension plan payments;
registered retirement income fund payments;
annuity payments; and
royalty payments.
However, if there is a tax treaty between Canada and your country of residence, the terms of the treaty may reduce the rate of non-resident tax to be withheld on certain types of income. To find out if Canada has a tax treaty with your country of residence, see Tax treaties.


Method 2 - Tax on taxable income

Certain types of income you earn in Canada must be reported on a Canadian tax return. The most common types of income include:

income from employment in Canada;
income from a business carried on in Canada;
the taxable part of Canadian scholarships, fellowships, bursaries, and research grants; and
taxable capital gains from disposing of taxable Canadian property.
You may be entitled to claim certain deductions from income to arrive at the taxable amount. You can also claim a credit for any tax withheld at source or paid on this income.

If there is a tax treaty between Canada and your country of residence, the terms of the treaty may reduce or eliminate the tax on certain types of income. To find out if Canada has a tax treaty with your country of residence, see Tax treaties. If it does, contact the CRA to find out if the provisions of the treaty apply.

By completing the return, you determine whether you are entitled to a refund of some or all of the tax withheld or you have a balance of tax owing for the year. Once we assess the return, we will issue you a notice of assessment to tell you the result.


(This post was edited by yTABDGdW on Jun 2, 2018, 12:05 PM)


Edit Log:
Post edited by yTABDGdW (User) on Jun 2, 2018, 11:56 AM
Post edited by yTABDGdW (User) on Jun 2, 2018, 11:58 AM
Post edited by yTABDGdW (User) on Jun 2, 2018, 11:59 AM
Post edited by yTABDGdW (User) on Jun 2, 2018, 12:05 PM


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