Confused about Canadian source income
Moderator: Mark T Serbinski CA CPA
Confused about Canadian source income
I'm a non-resident Canadian citizen, taking on a position with a Canadian-based charity. Duties are performed outside of Canada, but I would be paid directly to my Canadian bank account. Wondering what are the Canadian tax implications of this? Will my employer have to withhold non-resident tax, and will I need to file a return?
Depends.
Are you being considred an employee? (In my opinion, you should not since you don't live in canada and aren't performing any work in canada, you should not be considered a Cdn employee).
If you are a contractor, your client should only withhold non-resident tax on pay for work actually performed in canada. Only that would be considered Cdn-sourced. The rest should come to you without any withholding. Whether that Cdn-sourced income is ultimately taxable will depend on what the treaty between canada and your country of resisnce says.
Are you being considred an employee? (In my opinion, you should not since you don't live in canada and aren't performing any work in canada, you should not be considered a Cdn employee).
If you are a contractor, your client should only withhold non-resident tax on pay for work actually performed in canada. Only that would be considered Cdn-sourced. The rest should come to you without any withholding. Whether that Cdn-sourced income is ultimately taxable will depend on what the treaty between canada and your country of resisnce says.
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Would be considered an employee/missionary. Under CRA guidelines, Canadian missionaries can elect to file as a factual resident even with no residential ties. Previously did this when living in a non-treaty country. With the level of income I actually receive, being a resident of Canada is beneficial.
However, I moved to a treaty country and became taxable there, so filed a departure return from Canada.
I don't see how I could be classed as a contractor.
However, I moved to a treaty country and became taxable there, so filed a departure return from Canada.
I don't see how I could be classed as a contractor.
Obviously that would have been useful information to mention in your opening post.
These Cdn organizations would be allowed to have you as a "non-resident" missionary.
You will need to determine whether you wish to resume Cdn tax residency. This will have no impact on your tax residency in the country you now live in and will have to continue to abide by the tax rules of that country, including no doubt, reporting and paying tax on this missionary income.
if there is no advantage in resuming Cdn tax residency (CCTB seems to be big carrot) then simply inform the mission office in canada that you will be a non-resident for tax purposes. I assume that they do not withhold for non-residents, since you are not performing services in canada.
If you do decide that you want to resume filing a Cdn resident tax return (assuming you have not been outside canada for five years), then you would file as a "returning" resident (with an arrival date on page 1), presumably with the province in which your natioanl office is situated as the province of residence. You would only report world incvome from your missionary start date forward. You would get credit for any tax paid to canada on your home tax return.
I'm quite sure that your non-profit would know how to deal with missionaries in either cirumstance.
CCCC has some info that you and your orgnization might prove useful:
https://www.cccc.org/members_topic_show ... m_missions
if you see some sort of advantage
I don't see why,at this point, you would want to re-start filinga Cdn tax return.
I would inform your ministryty offcie in canada that you will NOT be choosing to resume Cdn tax residency. They should know how to
These Cdn organizations would be allowed to have you as a "non-resident" missionary.
You will need to determine whether you wish to resume Cdn tax residency. This will have no impact on your tax residency in the country you now live in and will have to continue to abide by the tax rules of that country, including no doubt, reporting and paying tax on this missionary income.
if there is no advantage in resuming Cdn tax residency (CCTB seems to be big carrot) then simply inform the mission office in canada that you will be a non-resident for tax purposes. I assume that they do not withhold for non-residents, since you are not performing services in canada.
If you do decide that you want to resume filing a Cdn resident tax return (assuming you have not been outside canada for five years), then you would file as a "returning" resident (with an arrival date on page 1), presumably with the province in which your natioanl office is situated as the province of residence. You would only report world incvome from your missionary start date forward. You would get credit for any tax paid to canada on your home tax return.
I'm quite sure that your non-profit would know how to deal with missionaries in either cirumstance.
CCCC has some info that you and your orgnization might prove useful:
https://www.cccc.org/members_topic_show ... m_missions
if you see some sort of advantage
I don't see why,at this point, you would want to re-start filinga Cdn tax return.
I would inform your ministryty offcie in canada that you will NOT be choosing to resume Cdn tax residency. They should know how to
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Check with your organization. It would depend on the totalization agreement between your home country and canada. These forbid double-dipping. Given your apparent reluctance to mention the other country, I can't begin to help you on that.
the website I pointed you to has information on this as well.
Under the circumstances you describe, you would not be a dual-resident (although that is sometimes possible), you would be a dual filer however, which is very common. CRA is not declaring you resident -- they are ALLOWING you to file as a resident, quite different. No impact on your other countried return., other than possible foreign tax credits.
the website I pointed you to has information on this as well.
Under the circumstances you describe, you would not be a dual-resident (although that is sometimes possible), you would be a dual filer however, which is very common. CRA is not declaring you resident -- they are ALLOWING you to file as a resident, quite different. No impact on your other countried return., other than possible foreign tax credits.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing