Seriously, the Canadian Revenue Agency website is really good at publishing pretty much anything you need to know about Canadian taxes. Not only do they have the actual laws, but there is a virtual cornucopia of questions and answers covering most scenarios, all in relatively plain, if not quite Queen’s, English. And pretty much all forms are available in fillable and printable formats. You shouldn’t need to fill any of them out but they’re a good reference for when you call CRA so you can expect which questions they’ll ask.

The main phone number for CRA is 1.800.959.5525. As a call centre, they are better than Expedia but worse than Go Daddy (who, admittedly, gets a few bonus points for having the best on-hold music ever). For the most part, you aren’t on hold *too* long and the agents are friendly and seem knowledgeable enough even if they give conflicting advice.

Specific sections:

• International and non-resident taxes
• Non-residents
• GST
• CPP
• EI

Note that it’s still hard to get concrete answers to some questions, even if you call them up but this is still the best resource I’ve found short of paying someone a lot of money for advice. And speaking of paid advice, if you are serious about this scenario, you should seek it out. After you’ve gleaned all you can from the CRA website. I used KPMG in Calgary and am reasonably happy with the advice I got, if not the price I was charged (** UPDATE ** or the follow-up service I got). I also talked with someone at Continental Tax and I wish I remembered his name because he was amazing. Gave me a ton of free advice over the phone and I will not hesitate to engage their services in the future.

http://codebetter.com/blogs/kyle.baley/archive/2008/06/17/rehash-canadian-taxes-for-non-residents.aspx

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CPP/EI

I normally wouldn’t add this section but recent adventures warrant mentioning. Until then, I would have said you don’t need to pay CPP or EI, nor does the company who pays you. This is based on conversations with both CRA and a fairly confident-sounding international tax accountant. As a non-resident, you aren’t entitled to EI so it makes sense that you shouldn’t have to pay it. CPP is more of a grey area but by most accounts, you shouldn’t need to pay into that either.

The sole dissenting voice in this is the contracting agency I currently go through who is rather insistent that they have to charge me for it as well as pay their share. They claim that there are different rules for contracting agencies which could be the case but I suspect they just want to cover their asses and not do anything that may trigger an audit. In any case, I’ve sent numerous e-mails quoting international tax accountants and linking to relevant CRA sites, all of which have gone ignored. So I’m letting them have their way partially because I’m in the country only for another month and partially because I think their share of the EI/CPP payments cost more than the commission they’re charging me.

No tax and kayaks, too! Which reminds me: CPP and EI are charged only while you are in the country, assuming they should be charged at all, which I doubt.

** UPDATE ** The contracting agency in question claims there was a miscommunication and they recanted when I pressed them.

Residency

Residency means different things for income tax than for GST. For GST, if you earn $30,000 while in Canada, you are a resident for GST purposes. Otherwise, you have to consider the many other scenarios on their website.

For income tax, the rules are not nearly as concrete. If you are physically in Canada for 183 days or more (whether you work or not), you are a Canadian resident.

There are some dire ramifications if you are considered a Canadian resident for income tax. Namely, you are taxed on your entire worldwide income for the year, regardless of where you earned it. Unless, of course, you pay tax on your external income in another country, in which case, Canada does not double-tax. But since there is no income tax in the Bahamas, this means I’d have to pay tax on my total income for the year. And given the cost of living, it’s something I like to avoid.

Even if you are in the country less than 183 days, you still may be considered a Canadian resident. And this is where it gets iffy. There is nothing that says, “If you meet this set of criteria, you are a Canadian resident”. Rather, CRA will look at a combination of factors and essentially make a judgement call. Some of the questions they’ll consider:

* Do you own a home in Canada?
* Do you have a registered vehicle in Canada?
* Do you have bank accounts and credit cards in Canada?
* Do you have family and other personal ties to Canada?
* Do your spouse and/or children live in Canada?

Answering yes to any of these questions is a mark against you but again, it doesn’t mean you’re a resident. For example, maybe you own a home but rent it out. Then it becomes more of an investment than a residential tie.

All in all, it’s kind of wishy-washy so the more you can do to wedge yourself into the country to which you’re moving, the better. Get a local driver’s license. Buy property. Enroll your children in local schools. Get credit cards. Attend a local gay pride parade. That sort of thing.

Final note on residency: when you leave Canada, I believe there is a formal process to follow to claim you are no longer a resident. I haven’t followed it. I just left and stopped paying taxes (which was easy to do because I didn’t earn money in Canada for the first two years after I left). You could do the same thing but the underlying theme I’m picking up from my dealings with CRA is that they are fairly practical, at least in the tax department. As long as you act in a relatively reasonable manner, they should leave you alone.

http://codebetter.com/blogs/kyle.baley/archive/2008/06/17/rehash-canadian-taxes-for-non-residents.aspx

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