I've been living and working in the UK since October 2006 and have questions about Canadian taxes. I've read through previous posts and understand that becoming a 'non-resident' would be very difficult, especially seeing as I maintain a Canadian bank account and credit card (despite rarely using them now).
So, I filed my 2007 Canadian tax return stating all my UK income. I did some research and concluded that the only thing I needed to do differently is to fill out a federal and provincial foreign tax credit form to claim the taxes I paid to the UK on my UK income. I did the calculation on the T2099 and it seemed to result in me not owing any taxes to Canada. I was therefore unpleasantly surprised when I received a notice of assessment from Revenue Canada recently stating that I owed them several thousand dollars. This was due to their downward revisions to my foreign tax credits. I called them up and their response was that Canada has higher tax rates and therefore I pretty much owe the difference.
Is there some part of this process I am missing? Is this generally the case that Canadians living in lower income tax regions have to pony up extra money to the Canadian government every year? Any help would be much appreciated.
Important note: I did not earn any interest income. just my salary to which I paid PAYE taxes.


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