It’s Your Money > Taxes

Canadian Pension Income, Canadian Employment Income, Philippine Income Tax

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starrt:
Hi,

DISCLAIMER: I am not a tax accountant or tax lawyer, and am only passing on general information to anyone that may need it. Always consult with the appropriate government agencies regarding your own situation, and if necessary, get a professional to help you out.

In preparation for my upcoming move to the Philippines, hopefully before the end of this year, 2015, I spoke to the Canada Revenue Agency (CRA) about my particular situation.

I will continue to earn a salary from a Canadian corporation for the work that I will continue to perform, after I move to the Philippines, technical support by telephone and internet to Canadian clients. Due to the tax treaty between Canada and the Philippines, because I will be deemed a non resident for tax purposes, I will receive my salary without any employment deductions, that is, the gross amount. I will have to file an income tax return in the Philippines on my earned employment income and pay whatever taxes are applicable in the Philippines.

By the time I move to the Philippines I will be receiving CPP (Canada Pension Plan) and OAS (Old Age Security). I will have to inform Services Canada of my move, and they will deduct 25% as withholding tax from my payments. I will then have to file a Canadian income tax return for this income, as it does not fall under the tax treaty. I will also have to inform any Canadian companies from whom I receive dividends of the move, and they will also be deducting 25% withholding tax. There are options and forms to reduce those amounts, which I won't get into here.

The benefit in filing a Canadian income tax return is that I can then claim all of the allowable medical expenses that I incur in the Philippines as tax deductions.

Hopefully this will help other Canadians in planning their moves to the Philippines.

Thomas

melissag:
Hello,

This is my first time to post here.  I'm a Canadian- 30 years old- living here for a few years, 2013 and 2014 on work contract where I was making ~12,000 CAD a year (in peso from a Philippines source).   Now I'm trying to get my Philippine citizenship (my mom's Filipina, but I was born in Canada).  I'm still living here but with freelance income as a yoga teacher/independent researcher.

I have income from a Canadian source as of August and I'm wondering how to deal with it in terms of taxes/pension.  I've been paying taxes here the last two years (but not SSS etc), and before that I paid Canadian taxes.   I haven't been paying into the CPP or filing in Canada the last two year because I figure i'm not a resident and had no Canadian income.

I know most folks here are retired.. I'm trying to figure out how to do all this right, so that I don't have to pay back taxes and even make the most of the CPP etc.  And of course I don't want to be double taxed for 2015. 

I'm not sure if I plan to settle here forever...  I'm happy here, in love and all...  I have a simple life, not a big earner or spender, but want to make sure I'm doing it right and setting myself up for the future whether I end up staying or moving back to Canada.

Any thoughts on whether I need to file a Canadian tax return for 2015, whether I'm a non-resident?  Whether it would be better to file as a deemed resident?

This is probably a complicated question so I'm also open to talking with a professional and could use a good referral :)

Thanks!

bigrod:
melissag,

Welcome to the forum.  Not being Canadian I cannot offer much help.  Since you are new would you mind introducing yourself again in the Meet Your Neighbors topic so all the members will know you are new.  Thanks.

Chuck

Art, just a re(tired) Fil-Am:
melissag,

Welcome to the board, I too am not a Canadian so no help from me either, but we have a member, his name is Thomas on here from Canada on his way to the Philippines to retire and if he reads your post he just may able to shed some light about your situation dealing with your Canadian tax issues, since he is sort of in the same boat as yourself. So in the mean time, just hang in there until he or some one from Canada can answer your main topic question.
I understand that you are applying for your dual citizenship, if you have any questions concerning the subject and need help, just ask anything under the appropriate category.
Yes, tell us more about yourself.

Thanks from me too!

Mods: I guess the Welcome Bot is still not working!

Hestecrefter:
melissag,

The following link to the Canada Revenue Agency website should lead you to answers.

http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nnrs-eng.html

Whether you have to file a return and pay taxes in Canada depends both on your residence status and, if you receive income from a Canadian source, as you say you do, the nature and source of that income determines whether it is taxable in Canada.

From the sparse information you have provided, my guess is that you would be considered a "non-resident" in Canada.  But the CRA website gives examples of ties to Canada that can make you a deemed resident. 

As contained in the information on the site to which I have provided a link, you will see this:

"If you want the Canada Revenue agency's opinion on your residency status, complete either Form NR74, Determination of Residency Status (Entering Canada) or Form NR73, Determination of Residency Status (Leaving Canada), whichever applies, and send it to the International and Ottawa Tax Services Office. To get the most accurate opinion, give us as many details as possible on your form."

So, while the info provided on the site is reasonably detailed and should enable you to answer your questions (better than any of us here guessing about your situation), if you are left with any doubts and want to be meticulously observant of the law, I would suggest taking the CRA up on its magnanimous offer to provide guidance. 

I think it can fairly be assumed that all taxing authorities deal with taxpayers, or potential taxpayers, with punctilious observance of fairness principles and would never provide self-serving information that favors the taxman.  While I have not looked closely, I am sure all Canadian currency is inscribed thus:  "In the CRA we trust".  So we can be confident that if you inquire of the CRA, you will be told you are taxable only if the law admits of no other interpretation.

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