Claiming UK earnings as Worldly Income for Canada

mullinsky
Junior Member



Joined: 04 Apr 2008
Posts: 14
Location: London England

Posted: Sun Apr 06, 2008 4:33 pm

 

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I have read a lot on this forum in the last few days about this topic and just wanted a little more clarification on my actual situation.

I moved here January 1st, 2008. So I have been here just over 3 months. But I never told the CRA I was leaving or basically anyone besides friends and family members. never filled out any forms etc. Was this wrong?

I still have credit cards, a bank account, health card and a drivers license in Canada as well. I am not attempting to claim non-residency but I am also not married, no kids, no RRSP's, no investments and no house or car in my name, ever!

What I am wondering is about the taxing on my worldly income while working in the UK. I am on a working holiday maker visa for two years, which technically means I am here to travel first and foremost and only work to supplement my travel. So my earnings should not be on par with a full-time worker technically speaking.

So the 2007 tax year in Canada is over and I am filing my taxes for that year as per usual. But the UK tax year starts April 6th and goes until April 5th of the following year. So there is a 3 month gap where in 2008 I have been working in the UK and will be claiming tax in the UK for techniaclly the 2007 year, over here that is. What I want to know is if Canada goes January 1st - December 31st in its tax year should I even bother to claim this 2007 UK income on my 2008 Canada income tax?

I plan on living and working in the UK for about two years. As far as I have read and have been told after two years of working out outside of Canada the CRA cannot tax you. So I might as well pretend I started working in the UK in April of 2008 and if I do need to claim anything back home I would just claim my actual 2008 UK income from April 6th onward.

Would this raise any red flags to you guys? Is there anyway the CRA could discover I was working here since January? After all if I had to send them something I would imagine sending them the 2008 UK earnings stuff would suffice, since I am technically here to travel and in turn my income should be lower than someone else in the same teaching job as me who is here on an actual work visa.

Any thoughts are welcome. It is not that I do not pay tax, always have and I want to stay a resident of Canada, I just do not want to bother claiming earnings in Canada when I work outside of it. I do not see why I should have to pay Canada on top of the UK. Thanks for any help.

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Steven
CanuckAbroad VIP



Joined: 28 Sep 2007
Posts: 1362
Location: Calgary

Posted: Sun Apr 06, 2008 9:05 pm

 

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If you're planning on going back to Canada, the Canadian end of it is pretty simple, you just carry on filing an Ontario T1 every year exactly the same way that you always did, the only difference is that you have a foreign address on the T1. Also instead of a T4 you'll get a P60. This will be tricky for you as the tax year is different in the UK, you'll need to work out for the calendar year how much you actually got paid and that is what goes on your T1.

You'll need to check with the CRA as to what evidence of your income they actually need, they usually require a copy of US W-2s, not sure how they work it with UK P60s. (You've also got the exchange rate problem, the CRA has a deemed rate for US dollars but you'll need to check with them to figure out UK sterling).

As far as the UK end goes, you need to declare to the HMRC that your tax home is Canada so they repatriate all your PAYE withholding to the CRA as well as your NI contributions going to the CPP.

These are the forms: http://www.hmrc.gov.uk/cnr/form_canada.htm

However I'd check with the HMRC residency dept as well on the phone as there can be some quirks to doing this.

Note also the forms for claiming exemption from withholding on bank interest - UK banks automatically withhold 20% of that amount and send it to the HMRC. You are exempt from this, but you must tell the bank (some banks do not have a programme whereby you can avoid the withholding). There is a form they provide for this purpose. If you have already had taxes withheld from your bank interest, you can file a claim with the HMRC to have it refunded to you. (Which you will have to use every year if the bank will not stop the withholding).

But note that you must declare this income to the CRA on your T1. This can be tricky as you have to add it all up from your bank statements because the tax year end is different in the UK.

You don't really need to worry about this all too much right now because you were resident in Canada in 2007.
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Steve.

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mullinsky
Junior Member



Joined: 04 Apr 2008
Posts: 14
Location: London England

Posted: Sun Apr 13, 2008 12:21 pm

 

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Thanks for the detailed answer, it helped out alot man.

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