Sydney Australia and international income Canada tax

[FlyingPeacock]

Hello Everyone,

I'm new the forum but I have read a lot of information here about working abroad as a Canadian.

I have some open things that I want to confirm and get some advice on as to a potential move to Sydney from Ontario!

This pertains how tax works on international income earned from Aussieland and the LAFHA if anybody knows about how this works?

LAFHA - Living Away From home Allowance
I understand how this sorta works. It's a tax credit based on rent, food, work expenses and on a hypothetical 100k AUD annual salary, the savings in tax can be from 10-12k AUD annual. (25-27% tax reduced to 15% tax or so?). Most 457 are eligible from what I read if they fit the criteria of intending to return to their home country (Ontario for me) after a stay of work of 2-4 years.

What I don't understand is how this works in terms of actually getting a benefit of more money in my pocket if I am still resident of Canada and have to report worldwide income (money earned in Australia working for the Australian company) and having to top up the 15% tax that I pay to ATO to the usual rate of 25-27% of Ontario, Canada on the 100k AUD salary????

Or is there something I am missing about the tax treaty between Canada and Australia that makes this a viable option.

Would I need to sever my ties to Canada for tax purposes (non-resident or deemed non-resident) in order to actually take advantage of this tax free benefit (more money in pocket with no added cost to my Aussie employer)?

Does being non-resident for tax purposes with Canada hurt my chances of being initially eligible or continuing to be eligible for LAFHA?

Residency with Canada and Tax Implications
Similar to the previous topic but more so about what you guys think on Non-Residency vs Residency Canada when planning to do a short/long term VISA work in Australia (knowing that there's LAFHA) for 2-4 years?

Is it more beneficial to be non-residence for tax purposes or stay as residence? (I have a long term girlfriend - pretty much common-law, who would come with me but maybe at a later time, RRSP account that isn't doing so well, no TFSA deposited, Driver license, a beat up car worth maybe a grand, some belongings, Canadian Passport)

I read there is departure taxes, taxes on transferring my RRSP money and would have to pay tax on it? Also something about within the first 6 months of arriving in Australia, if I claim non-residence Canada and sever ties, then I would just have to pay 15% tax on it? Basically, all money will have to be transferred out to some international bank account?

Any help would be much appreciated!

Looking to go down under...
Cheers!

[nelsona]

Because, like US, OZ-canada have a tax treaty which defines residence, it is quite simple to become a Cdn non-resident: simply establish and maintain MORE ties in OZ then in canada. At worst, you will be a deemed non-resident (only if you maintain a full-fledged home in Canada), but usually moving away to australia will be sufficient to break Cdn taxation, even if it is only for 2-3 years.

The temporary nature of your OZ visa does not prevent you from becomeing Cdn non-resident.

Imediately from that moving date, your non-Cdn income is no longer reportable in Canada. There are some departure tax requirements in Canada, but as you reead the emigrant guide, you will see that they are not that onerous. Non-residents generally have preferential tax treatmwent over residents, so I see no reason to fake cdn residency.

You are correct that if you do not sufficiently break ties in canada (ie do not make a home in australia), all australian income continues to be taxed in canada. Credit would be given for australian tax paid, so any reduction in ATO tax would merely be eaten up by CRA.


RRSP would be taxed by CRA 25% upon withdrawal. 15% is for periodic pension income. there is no need to transfer the money out of canada., just our of your RRSP -- if that is what you decide to do.