Working Overseas - Tax implications

[broken_legs]

Mates,


I'm working international right now, still getting paid from a Canadian location though.

I have assets and a home in Canada, bank accounts etc...


Haven;t had a chance to talk to my accountant yet - Is anyone here in the same situation?

Are there any tax credits or benefits that I will gain by working overseas?

I've looked on the CRA site but I can't find anything clear cut about this.

Someone told me that if I spend over 6 months out of the country I wont have to pay the same amount of income tax... True? Rumor?


Advice? Experiences? Questions to ask my accountant?

Thanks for your hep beyond

Cheers

[USED1]

It's true, you are only allowed to be back in the country, I believe, a maximum of 3 weeks in that six month period. You will have to talk to an accountant that is familiar with expatriates.

[UndrgroundRider]

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns409-485/426-eng.html


Overseas employment tax credit

You may be able to claim an overseas employment tax credit if you meet all of these requirements:

* You work outside Canada for a period of more than six months in a row, and the six-month period began before the end of the tax year and includes any part of the tax year for which you're claiming the credit.
* You are employed throughout that period by one of the following:
o a person residing in Canada;
o a partnership in which Canadian residents or Canadian-controlled corporations own more than 10% of the fair market value of all interests in the partnership;
o a corporation that's a foreign affiliate of a person residing in Canada.
* You work during all or most of the six-month period to secure a contract for your employer or in connection with a contract your employer had previously entered into.
* The contract relates to one of the following:
o exploring for or exploiting petroleum, natural gas, minerals, or similar resources;
o construction, installation, agricultural, or engineering activities;
o an activity performed under contract with the United Nations.

Note
If you are employed under a program sponsored by the Canadian International Development Agency (CIDA), you do not qualify for this credit.

To claim this credit, both you and your employer must jointly complete Form T626, Overseas Employment Tax Credit and you must then file Form T626 with your income tax return.

The criteria is quite strict. You also cannot be self-employed, the company must have at least 5 full time employees, you cannot own more than 10% of the shares of the company and you must deal at arms length with the company.

If you do qualify, I think it's a tax credit of 80% on that income, to a maximum of $80,000.

[PeterGTiR]

Cut your primary ties, and limit your secondary ties and you'll be considered a non-resident and only be subject to Canadian tax on Canadian sourced income. Otherwise, you will be considered resident and subject to tax on worldwide income.

Your home is a primary tie and will make you a resident of Canada.

If you are paying taxes somewhere else and considered a resident of Canada, you can claim a foreign tax credit on your Canadian tax return.

You should see if you are authorized for tax preparation services from your employer - some contracts specify that if you work at a foreign location, it would be a burden for you to complete tax returns in two separate countries...plus, there are additional complexities to taxation that you might want to talk to your employer's expatriate tax advisor about...

Might want to look at tax treaties between Canada and where ever you're working...