TAX - Non-resident

okucu
New Member



Joined: 09 Sep 2008
Posts: 1

Posted: Tue Sep 09, 2008 7:51 am

 

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Hi ,
We are moving from Switzerland to Canada early November and wonder what our tax situation will be . We will be on work permits .
Will we be filing tax return for 2008 only for our Canadian income or will we taxed also for all our income in Switzerland in 2008 ?
I also withdrew my retirement fund savings and paid the tax on it in Switzerland .Will I be taxed on it once more in Canada if I declare it ?
Does it matter if I transfer the money in my saving account ( which consists also my withdrawn retirement funds ) before or after my arrival in Canada ?
Thanks,
Ugur

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Steven
CanuckAbroad VIP



Joined: 28 Sep 2007
Posts: 1676
Location: Calgary

Posted: Tue Sep 09, 2008 9:19 am

 

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Not sure why you're posting in this section, but it sounds as though you've liquidated your assets in Switzerland - this wasn't strictly necessary because I think under the tax treaty your retirement fund would have been treated as an RRSP under Canadian law. However it's too late now.

No you won't be taxed on it again, capital transfers are rarely if ever subject to taxation between developed countries. You just open a bank account and wire the money in. Doesn't matter when you do it. You can keep a bank account in Switzerland if you want, the only caveat is that you must declare foreign bank accounts over $100,000 on Form T1164 in the second year of residence in Canada to the CRA.

To avoid taxation in Switzerland you need to move your tax home to Canada, not sure what the process is in Switzerland to do this, but presumably there is some form to fill in to state you no longer reside in Switzerland for tax purposes. You will need to cut all residential ties to Switzerland to be able to do this, i.e. no driving licence, no healthcare claims, etc.

If you're only going to be in Canada temporarily, you can keep your tax home as Switzerland, and claim a foreign tax credit there for any income tax you pay you in Canada. However you will have to pay CPP contributions.

When you file your first Canadian tax return you state on the return when you became a resident (for tax purposes) of Canada. The CRA will prorate your personal exemptions based on the number of days you have been in Canada. Therefore it's helpful if you can move your tax home to Canada on January 1st as it makes it much easier to calculate your taxes.
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Steve.

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