Dealing With Taxes When Living Abroad

It doesn’t matter how it’s cracked up, dealing with taxes can be a nightmare. For those Canadians who have left the country’s fair shores in search of greener pastures, filing returns can prove to be even more of a headache. Expats will find there are a number of rules that apply to them. Understanding them and seeking help when it’s needed can keep expats in good graces. Failing to do so can get them in a lot of hot water.

Dealing with taxes is never easy, especially when you start mixing countries!


So, what do Canadian expats need to know to handle their taxes whilst living abroad? There are a number of potential things to consider when trying to file taxes from outside the country. Residency status is the biggest thing to pay attention to when it comes to figuring out if you need to file taxes in Canada in addition to returns in a new country of residence.

A Look At Residency Status

Residency status is important to determine since it will have a direct impact on what types of income taxes are owed on. When people leave Canada to emigrate to other countries, they are still granted resident status if they have not severed residential ties. The ties that can bind include:
* Ownership of a home within the country;
* Leaving a spouse or other dependents behind;
* Retaining a Canadian driver’s license;
* Holding onto Canadian bank accounts and/or credit cards;
* Hanging on to Canadian provincial health insurance.
Canadians become non-residents for tax filing purposes on the date:
* They personally leave the country without having residential ties;
* Their dependents leave Canada;
* They become residents of the country immigrated to.

How It Adds Up In Taxes

Resident and non-resident status are important for tax purposes for a number of reasons. The biggest is what kind of obligation an expat will face.

Residents of Canada must claim “world income” on their Canadian tax returns for the part of the year they were considered residents of the country. This means if residential ties haven’t been severed, that could equate to the entire year.

Non-residents need to pay Canadian taxes on income that originates in Canada. The types of income that might be included here include pension payments, Old Age Security pension, dividends, rental payments, annuity payments and so on.

Filing From Abroad

Taking care of taxes hundreds if not thousands of miles away from home can be a bit daunting. Fortunately, the Canada Revenue Agency has a well-established Web site to help. Here taxpayers will find information on filing aboard and many of the forms they will need to do so. In addition, it is also possible to use software programs, such as TurboTax Canada, to help Canadians through their taxes.

Moving out of Canada doesn’t necessarily mean an end to tax obligations within the country. On the upside, it can also mean returns that come in the mail, as well. To cover the right bases, make sure to consult with the Canada Revenue Agency and seek professional assistance if questions remain.