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QUESTION:
I'm a Canadian citizen, living in Vancouver, CA and working for Russian company based in Moscow. Now it's time to file taxes. How could I legally optimize my income - my taxes paid in Russia already. My company understand that some of creative approach needed to be used. They ready to pay my rent here (my highest expense for my living here) from there Russian account so to minimize taxed amount and do every possible things accordingly. Thus, if there is a grounds for this approach, I'm ready to come to your office for futher cooperation. "Average" accountants i've seen had no idea how to solve this issue.
Thank you very much,
Respectfully,
---------------------
david ingram replies:
In the past I have had clients who worked for both MOROFLOT (Russian
Shipping) and AEROFLOT (Russian Airline) in Canada so have a little
experience with the situation. Another 30 or so have worked for
Canadian Companies in Russia. I have no experience with the Russian
returns if necessary but can certainly deal with the Canadian side and
with a translation can interpret the foreign tax credits for the
Canadian return.
If you are based in Moscow working for a Russian Company and only here
occassionally on their business, than their providing an apartment or
hotel room would NOT be taxable to you.
However, as I believe you described your situation, you should not be
paying any tax to Russia if you are
living and working in Canada. If that is the case, If the Russian
Company pays your rent here, that is a taxable benefit to you if you
are a full time resident in Vancouver.
If you are performing some of the
services in Russia, it is possible that some tax should be paid there
on a pro-rata basis.
Article IV of the Russia Canada tax treaty is the governing factor.
Article IV determines where one is taxable on their world income. See
the Article in italics following:
ARTICLE 4
Resident
1. For the purposes of this Agreement, the term "resident
of a
Contracting State" means any person who, under the laws of that State,
is liable to tax therein by reason of his domicile, residence, place of
management or any other criterion of a similar nature.
2. Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, then his status
shall be determined as follows:
(a) he shall be deemed to be a resident of the
State
in which he has a permanent home available to him; if he has a
permanent home available to him in both States, he shall be deemed to
be a resident of the State with which his personal and economic
relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital
interests
cannot be determined, or if he has not a permanent home available to
him in either State, he shall be deemed to be a resident of the State
in which he has an habitual abode;
(c) if he has an habitual abode in both States or in
neither of
them, he shall be deemed to be a resident of the State of which he
is a
citizen;
(d) if each State considers him as its citizen or if
neither
State considers him as its citizen, the competent authorities of the
Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a
company
is a resident of both Contracting States, then its status shall be
determined as follows:
(a) it shall be deemed to be a resident of the
State under the laws of which it was created;
(b) if it was created under the laws of neither of the
States,
it shall be deemed to be a resident of the State in which its place of
effective management is situated.
Article XV of the treaty identifies where the tax should be paid on
earned income
ARTICLE 15
Income from Dependent Personal Services
1. Subject to the provisions of Articles 16, 18 and 19,
salaries, wages and other remuneration derived by a resident of a
Contracting State in respect of an employment shall be taxable only in
that State unless the employment is exercised in the other Contracting
State. If the employment is so exercised, such remuneration as is
derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1,
remuneration
derived by a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be taxable
only in the first-mentioned State if:
(a) the recipient is present in the other State for
a
period or periods not exceeding in the aggregate 183 days in any twelve
month period from the day of his arrival in the other State, and
(b) the remuneration is paid by, or on behalf of, an
employer who is not a resident of the other State, and
(c) the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article,
(a) remuneration in respect of an employment
exercised
aboard a ship or aircraft operated in international traffic by a
resident of a Contracting State, shall be taxable only in that State
unless the remuneration is derived by a resident of the other
Contracting State;
(b) remuneration derived by a resident of a Contracting
State
in respect of an employment connected with a place of business in the
other Contracting State which does not constitute a permanent
establishment under the provisions of paragraph 3 of Article 5 shall be
taxable only in the first-mentioned State.
I would be glad to consult with you. The fee would be $450 per
hour. However, as described in your question, you are subject to full
Canadian taxes unless I have misunderstood your syntax.
On February 11, 2008, David
Ingram wrote:
It is very unlikely that blind or unexpected email to me will be
answered. I receive anywhere from 100 to 700 unsolicited emails a day
and usually answer anywhere from 2 to 20 if they are not from existing
clients. Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line
and get answered first. I also refuse to be a slave to email and do
not look at it every day and have never ever looked at it when I am out
of town. e bankruptcy expert US Canada Canadian American
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However, I regularly search for the words"PAYING
CUSTOMER" and always answer them first if they did not get spammed out.
For the last two weeks, I have just found out that my own email notes
to myself have been spammed out and as an example, as I wrote this on
Dec 25, 2007 since June 16th, my 'spammed out' box has
47,941 unread messages, my deleted box has 16645 I have actually looked
at and deleted and I have actually answered 1234 email questions for
clients and strangers without sending a bill. I have also put aside
847 messages that I am maybe going to try and answer because they look
interesting. -e bankruptcy expert US Canada Canadian American
Mexican Income Tax service and help
Therefore, if an email is not answered in 24 to
48 hours, it is likely lost in space.
You can try and resend it but if important AND YOU TRULY WANT OR NEED
AN ANSWER from 'me', you will have to phone to make an appointment.
Gillian Bryan generally accepts appointment requests for me between
10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los
Angeles) time at (604) 980-0321. david ingram expert
US Canada Canadian American Mexican Income Tax service and help.
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Disclaimer:
This question has been answered without detailed information or
consultation and is to be regarded only as general comment. Nothing
in this message is or should be construed as advice in any particular
circumstances. No contract exists between the reader and the author and
any and all non-contractual duties are expressly denied. All readers
should obtain formal advice from a competent and
appropriately qualified legal practitioner or tax specialist for expert
help, assistance, preparation, or consultation in connection with
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David Ingram
gives expert income tax service & immigration help to non-resident
Americans & Canadians from New York to California to Mexico
family, estate, income trust trusts Cross border, dual citizen - out of
country investments are all handled with competence & authority.
Phone consultations
are $450 for 15 minutes to 50 minutes (professional hour). Please note
that GST is added if product remains in Canada or is to be returned to
Canada or a phone consultation is in Canada. ($472.50 with GST if in
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Income Tax service and help.
This is not intended to be definitive
but in general I am quoting $900 to $3,000 for a dual country tax
return.
$900 would be one T4 slip one W2 slip
one or two interest slips and you lived in one country only (but were
filing both countries) - no self employment or rentals or capital gains
- you did not move into or out of the country in this year.
$1,200 would be the same with one
rental
$1,300 would be the same with one
business no rental
$1,300 would be the minimum with a
move in or out of the country. These are complicated because of the
back and forth foreign tax credits. - The IRS says a foreign tax credit
takes 1 hour and 53 minutes.
$1,600 would be the minimum with a
rental or two in the country you do not live in or a rental and a
business and foreign tax credits no move in or out
$1,700 would be for two people with income from two countries
$3,000 would be all of the above and
you moved in and out of the country.
This is just a guideline for US /
Canadian returns
We will still prepare Canadian only
(lives in Canada, no US connection period) with two or three slips and
no capital gains, etc. for $200.00 up.
With a Rental for $400, two or three
rentals for $550 to $700 (i.e. $150 per rental) First year Rental -
plus $250.
A Business for $400 - Rental and
business likely $550 to $700
And an American only (lives in the US
with no Canadian income or filing period) with about the same things in
the same range with a little bit more if there is a state return.
Moving in or out of the country or
part year earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the
first and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to
$100.00 each.
18 RRSPs would be $900.00 - (maybe
amalgamate a couple)
Capital gains *sales) are likely
$50.00 for the first and $20.00 each after that.
Catch - up returns for the US where we use the
Canadian return as a guide for seven years at a time will be from $150
to
$600.00 per year depending upon numbers of bank accounts, RRSP's,
existence of rental houses, self employment, etc. Note that these
returns tend to be informational rather than taxable. In fact, if
there are children involved, we usually get refunds of $1,000 per child
per year for 3 years. We have done several catch-ups where the client
has recieved as much as $6,000 back for an $1,800 bill and one recently
with 6 children is resulting in over $12,000 refund.
This is a
guideline not etched in stone. If you do
your own TDF-90 forms, it is to your advantage. However, if we put them
in the first year, the computer carries them forward beautifully.
This from "ask an income trusts tax service and
immigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily basis with expatriate tax
returns with multi jurisdictional cross and trans border expatriate
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