Hello Sir

 

I am currently working in US on H1B Visa.

My employer is planning to move me for 1 year assignment from California to Montreal(Canada) and I will continue to be paid the base salary in the US.

 

The employer will pay all my canadian taxes for this one year

Now I heard Canadian Government will tax the "worldwide income" of the person who stays in Canada for more than 183 days.

 

Does it mean that I can claim my entire 1 year income tax refund from the US government since my company will already have paid those taxes in Canada?

 

The answer is that you will not owe taxes to California  and the US  AND "if" your employer was so ill advised as to pay both taxes in your name, you could get a refund of the US taxes. However, I think what you have is a tax "equalization" scheme where your employer has said:

 

We will pay you the same salary to work for a year in Canada.

 

If you were still in California, your income tax would be:   $XXXXX.XX

 

In Canada, your income tax will be:                                       $YYYYYY.YY

 

We, the company, will pay the tax difference of                       $ZZZZ.ZZ       for you.

 

The biggest problem with this is "tax on tax".  If this is what they are going to do, you actually owe tax in the next year on the taxable benefit for the tax paid in your name in the current year.

 

It is therefore really important that you make sure that they pay the tax on the tax on the tax. To be efficient, the tax on tax on tax should be calculated in advance and added to your salary for the year in question so that it all takes place at once.

 

If your paymaster does not understand this (and they do not lots of times if it is a first time transfer), have them phone me.

 

This all means that they will not be paying or deducting US taxes while they are paying your Canadian taxes. Do NOT expect a refund from the US.

 

 

 

david ingram - taxman@centa.com

108-100 Park Royal South

West Vancouver, BC, CANADA, V7T 1A2

(604) 913-9133 - (604) 913-9123 www.centa.com

Cell is (604) 657-8451 (10 AM to 10 PM seven days a week)

US / CANADA / MEXICO

Working Visa and

Income Tax Specialists