Tax problems caused by your bank if you leave Canada

Steven
CanuckAbroad VIP



Joined: 28 Sep 2007
Posts: 1676
Location: Calgary

Posted: Wed Aug 20, 2008 8:34 am

 

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I'm not going to bore you with the ins and outs of this tedious story, but here is a piece of advice I can give you all:

If you leave Canada and become non-resident for tax purposes, or alternatively, you are non-resident for tax purposes and come back to Canada, make absolutely bloody SURE that your bank knows that you are either non-resident or resident in Canada for TAX PURPOSES if you receive any sort of bank interest from them (e.g. on a savings account). This does not mean you've told the bank your address is overseas and everything will be hunky dory, what it means is that in their computer system it specifically lists your residency status and they know whether to send you a T5 or NR4 to report your bank interest.

I've been talking to the CRA for the last two hours about this subject and basically what it boils down to is this: if they get a T5 they will expect you to file a T1 to report that income, if you don't, expect late filing fees to be assessed AUTOMATICALLY whether you are non-resident or not. If you get an NR4 and you are actually resident in Canada, expect a massive paperchase in order to recover the Part XIII tax your bank has incorrectly withheld.

So basically when you leave or re-enter, make sure the clod who is putting down your change of address in the bank's computer system also changes your residency status (assuming you need it moved).

The CRA seems to take this as a fairly major indicator of whether you have a "residential tie" to Canada, so be warned!
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Steve.

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dannykool
CanuckAbroad Regular


You can't win if you don't play

Joined: 16 Oct 2007
Posts: 71
Location: Europe

Posted: Wed Aug 20, 2008 9:20 am

 

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thanks for the info. Important details mentioned here.

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