Canadian In London, Canadian Income Tax

Hi

I am a Canadian CGA and UK Chartered Accountant practicing in the UK. I can help with your Canadian and UK tax filing obligations and tax planning. Check out my website at lynch.pro

Tel; 01782 444256

Kieran Lynch

I am a UK Chartered Accountant and Canadian CGA practicing in the UK. I can help with both your UK and Canadian tax filing obligations. My fees are reasonable. Check out my website www.lynch.pro

Hi All,

I have been reading through different pieces of information regarding the UK and Canadian tax systems to try to resolve my own tax dilemmas. My fiancee and I have been living in the UK since Nov 2006 and have been using a Canadian accountant to file our tax claims. But this year's claim has got me seriously questioning if I am getting the right kind of advice.

I made approx £29K in gross salary last year and paid into the UK tax system. Although the amount of total tax paid (including NI and income tax) is similar to Canadian total tax amounts, the income tax component that I paid here is much less than in Canada. As a result, my accountant has estimated that I owe a whopping $4.5K to CRA. I expect my fiancee will be in the same boat as we are both currently considered residents of NB and made similar amounts last year. Because of this situation, we are now questioning whether we can afford to continue to live in the UK.

Before we make any drastic life plans to move back to Canada , I wanted to get any advice on what our options may be. At this stage is it possible to apply as non-residents? When we initially moved over, we sent in the application to CRA that deemed that we would remain factual residents in NB. I think it may be difficult to switch our residency status over now as we both have Canadian bank accounts, life insurance, RRSP's, and my fiancee still has a Canadian driver's license. Is there any other option that we may have to address our current tax issues?

Your advice is much appreciated!
Neil

Well the solution is to sever residential ties now so you don't get hit with it again, from the sounds of it, it's too late and go back retroactively as you still have residential ties to Canada and the CRA would probably deem you resident. So sever them now and the 2008 tax year will be the last time you pay tax to Canada.

There's nothing to stop you from having a life insurance policy in Canada or bank accounts in Canada, you just need to tell them you're non-resident for tax purposes. The RRSP will be tricky though because the UK doesn't recognize it as a tax shelter, that one you probably need advice on if you've got a significant amount in it.

I am a UK Chartered Accountant and Canadian CGA practicing in the UK. I can help with all your UK and Canadian tax filing obligations and refund claims.

Check out my website at www.lynch.pro. Give me a call if I can be of help.

Kieran Lynch

Hi - i'm new to this forum (found it by doing a search for Canadian non resident taxes or some such). I'm extremely anxious about some unresolved tax issues (which is why i'm AnxiousGirl : ( ). Does anyone know of a really good canadian tax accountant here in London (preferably someone with a good bedside manner - a saw an accountant a few years back who practically yelled at me for my handling of my Cdn tax return - i never went back and the tax issues have dragged on).

I basically have no ties with Canada and have tax issues from years back from one year (the first year i was in UK) where i stupidly did my own tax return and ended up owing thousands. I went to an accountant here in London who assured me that with foreign tax credits and because of my low income etc i certainly did not owe that much - but then he proceeded to tell me off - and i had other stresses and severe financial problems in my life - so i just never went back to him. I'm petrified of revisiting all of this and need a REALLY good and understanding accountant. tx AG

Does anybody else out there have stories about being surprised with a stiff tax bill from canada? Can anyone recommend a decent UK accountant in central London that could help with my Canadian tax return for future years?

After my first year of living in the UK (2006), I reported my worldwide income on my Canadian income tax return, as well as the foreign tax paid. I'm not sure which bracket I was in, but my income was around $100,000. Unfortunately, the foreign tax credit was not enough to completely offset the Canadian income tax owed on the worldwide income, so I ended up paying the CRA the differnce (approximately $1000). It wasn't a massive amount, but still, that's a grand that I wouldn't have had to pay if I was considered a non-resident (i'm still a little fuzzy on how that's determined - is it a matter of fact? who decides? do i decide? does the CRA decide?). Anyways, The CRA requested documents to support my foreign tax credit claim, which I did, and everything was peachy. I filed this return on my own (because I like to think I'm a smart guy how knows what he's doing), but in retrospect I should have sought the advice of a professional. I advise everybody to do that, especially if you're a high income earner.

So after that year, I found myself a professional accountant who is familiar with my particular situation (he too is a Canadian expat). Send me a personal message and I'll send you his contact details if you like. He now handles my Canadian and UK returns and provides good tax advice. Last year he got me a refund of £1600 on my UK return!

Best of luck dude.

I was under the impression that because the UK and Canada have a double-taxation treaty, for people who are in the UK for short periods of time (ie, less than 3 years), that you pay UK tax on your UK income, and Canadian tax on your Canadian income, depending on your situation. For instance, to be considered a non-ordinarily resident of the UK for tax purposes, you must live and/or work in the UK for 183 (I think) days of the tax year (April 6 to April 5). CRA also has something called a "deemed non-resident" which means you do not pay taxes on foreign income if you qualify as a resident under the tax laws of a country with which Canada has a double-taxation treaty, like it does with the UK. Am I completely crazy?

I am a Uk chartered accountant and chartered tax adviser as well as a Canadian CGA. I specialise in providing Expat tax services to UK, Canadian and US services.

Visit my website at www.lynch.pro for further information. Give me a call or end me an e-mail.

Kieran Lynch
kmlynch@btinternet.com
01782 444 256

Hi All,

I have been reading through different pieces of information regarding the UK and Canadian tax systems to try to resolve my own tax dilemmas. My fiancee and I have been living in the UK since Nov 2006 and have been using a Canadian accountant to file our tax claims. But this year's claim has got me seriously questioning if I am getting the right kind of advice.

I made approx £29K in gross salary last year and paid into the UK tax system. Although the amount of total tax paid (including NI and income tax) is similar to Canadian total tax amounts, the income tax component that I paid here is much less than in Canada. As a result, my accountant has estimated that I owe a whopping $4.5K to CRA. I expect my fiancee will be in the same boat as we are both currently considered residents of NB and made similar amounts last year. Because of this situation, we are now questioning whether we can afford to continue to live in the UK.

Before we make any drastic life plans to move back to Canada , I wanted to get any advice on what our options may be. At this stage is it possible to apply as non-residents? When we initially moved over, we sent in the application to CRA that deemed that we would remain factual residents in NB. I think it may be difficult to switch our residency status over now as we both have Canadian bank accounts, life insurance, RRSP's, and my fiancee still has a Canadian driver's license. Is there any other option that we may have to address our current tax issues?

Your advice is much appreciated!
Neil

I have NO idea if this is right or not....but....

I know this is old, but I'm trying to see if this would be worthwhile....but would that be because the NB provincial tax is at a higher rate? I'm going with the tax rates on the CRA's website where it states that Federal tax would be calculated at 22% (converted £29K gross which would put you in the approx. $46K range here). Then, NB taxes would be approx. 12.4%. Therefore total tax would be almost 35% here. If you look at the PAYE, you'd be taxed at the 20% rate and adding in your NI contributions as well, you'd only be paying a total of approx. 25% to the UK. Therefore, you will owe an additional 10% to the CRA?

I'm from Ontario and hoping to actually acquire a job for £28K/yr. According to PAYE, that would put me in the 20% tax rate in the UK and with NI contributions, put me paying 25% tax in the UK total. Federally for Canada, that would mean I would be paying 22% tax plus being in Ontario, I would be in the 9.15% tax bracket. (31.5% total). Even with the Foreign Tax Credit, would that mean that I owe Canada an additional 6.15%?? What about other deductions (rent), etc? Does that get counted towards deductions you can claim on Cdn income tax even if in the UK? Based on this calculation I'd owe approx. $2.7K to the CRA.

I just had a thought: would it not make sense (if you kept your Canadian bank accounts, etc.) to figure out approximately what you would owe to the CRA and instead throw it into an RRSP here?? e.g. if I make £28K in the UK ($44K CAD) and put say $3K (approx. £2K) into an RRSP here to bring my overall income down to approx. $41K - therefore paying 15% federal income tax + 9.15% provincial (ON) = 24.15% total tax to Canada (remember I'm being taxed 25% total in the UK). As much as it looks like I'd end up "paying more", I'd actually just be helping my retirement savings!