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US CANADA Immigration to Canada - Self Assessment Test - Answered by david ingramUS / Canada Income Tax Help - CEN-TAPEDE centapede at lists.centa.comSat Apr 26 19:51:20 PDT 2008
style="PADDING-RIGHT: 10px; PADDING-LEFT: 10px; PADDING-TOP: 15px" bgColor=#ffffff leftMargin=0 topMargin=0 name="Compose message area" CanvasTabStop="true"> Hi Mr. Ingram -
I found your information online, and was wondering
if you could answer a question for me. Is it possible for a US Citizen to
purchase a home, live in Canada, and work for a US employer (not Canadian
based)? One person would be crossing the boarder 2 or 3 times a week to
work, and the other person telecommutes from their home office who's employer is
based in New York City.
Thanks,
-----------------------------------------------------------------------------------
david ingram replies:
It is possible. You would have to immigrate to Canada.
but even that is not hard (just time consuming) if either you or your spouse
(common-law, same sex, conjugal or married in a church) cam get 67 out of 100
points on the following test.
Try filling out the self assesment questionnaire at:
Your question seems like a same sex couple question to
me. I have had at least thirty same sex couples do this in the last couple
of years and half the time, one is still working in the USA.
If either of you is a professional under NAFTA, you could get
a job , qualify in one day and bring your significant other to Canada with
you. It would only have to be a part time job to qualify in this
manner.
The following is written for a Canadian going to the US under
NAFTA but the rules are the same in reverse.
We have done an amazing number of these.
On December 8, 1993, President
Clinton signed the NAFTA Agreement, which took effect on
January 1, 1994 under 101(a)(15).
TD - Spouse or
Child of NAFTA Professional under 214(e)(2) (TN holder)
TN - NAFTA
Professional - (North America Free Trade Agreement) PROFESSIONAL BUSINESS
PERSON
A professional is defined as a
person with a minimum of a bachelor's degree, who applies for a position, which
requires a degree as its minimum entry-level requirement unless otherwise
specified.
This is the one we heard about in the news. To meet this
classification which is unique to Canadians, you must have a bone fide job offer
and all licenses and degrees in place for your profession.
CHECK LIST for the TN Visa
*
An applicant for admission must establish Canadian
citizenship
*
The applicant must be entering the United States to engage in a
profession or occupation at a professional level under NAFTA
*
The applicant must be in possession of an offer or contract of
employment from a United States employer stating:
1)
The professional activity to be engaged
in
2) Purpose of
entry
3)
Remuneration
4) That the position is temporary
in nature and will not exceed one year (although it can
be renewed)
* The
applicant must provide documentation of his or her educational degree or
professional qualifications
* The
applicant must meet all licensing requirements
*
Employment need not be full-time
*
Permanent residence abroad is not a prerequisite
*
Maximum period of admission of a TN is one year
* TN
dependents accompanying the principal TN will be admitted under
the "TD" classification for the same amount of time as
the principal
* A
$56 U.S. fee is required ($85.00 for renewal by mail)
* TN applicants
are not permitted to enter as a professional to participate in any way to
circumvent a strike
*
SELF EMPLOYMENT IS NOT
PERMISSIBLE
The following is a partial
list of some who qualify under a TN Visa. Please note that extensive experience
can equal a degree in many cases. All need a Bachelor or Baccalaureate degree
unless otherwise noted. In some cases, 3 or 4 years of
practical work in a discipline can count for one year of a University
degree. Therefore if the University BA requires 3 years, you
need 9 or 12 years of work experience to qualify.
* Accountants -
RIA or SIA or CPA or CGA or CMA or CA
** Actuaries (this
is one of two classifications added since 1989)
*
Agriculturalists
*
Agronomists
* Animal
Breeders
* Animal
Scientists
*
Apiculturist
* Architects - BA
or state / provincial license
*
Astronomers
*
Biochemists
*
Biologists
*
Botanists
*
Chemists
* Computer Systems
Analyst - BA or Post-secondary Diploma or Post-secondary certificate and three
years of practical experience. This does not get you to the USA, if your job is
programming a computer. An Analyst might spend a day a month
working on some modifications (in a testing mode for instance), but they better
not be thought of as a "programmer" within the company.
****
Computer Software Engineer *** This is NOT here as an approved
occupation. However, Jackie Bednarz (US head of the NAFTA
Section 16 Working group in Washington stated specifically that if a recognized
University was to offer the degree, she would consider computer software
engineers under the ENGINEER classification when a recognized University granted
the degree. My understanding is that SFU and McGill are now
granting such degrees and that the Professional Engineers of British Columbia
have recognized graduates as members of their professional society.
Note that TC and TN's were being granted for this category on a sporadic
basis until the INS realized that no such "official" degree
existed.
Jackie Bednarz also pointed out
(She was part of the original negotiating team when the original FTA (Free Trade
Agreement) was being negotiated in 1985, 86, 87 and 88, there was no such thing
as the INTERNET, "web masters" and "web sites". When negotiating the job titles,
no thought was given to the computer revolution, other than the computer system
analyst designation, which at the time meant a main frame analyst for a
$1,000,000 computer.
(Thanks to Stuart Lynne and
Richard Pitt) (www.fireplug.net), the CEN-TA Group was an
official member of the Internet as far back as 1986 and thanks to Bill Gates
himself (he told me to use Microsoft Xenix as my operating system) and Radio
Shack Model 16 computers, CEN-TA was using "email" between offices in Toronto,
Ottawa and Vancouver as early as 1983.
As another aside, Stuart Lynne
and Richard Pitt went on to found WIMSEY, the FIRST ISP in CANADA. Bill Gates
became quite famous as well.
* Dairy
Scientists
* Dentists - DDS,
DMD, or state / provincial license
* Dental
Technicians
*
Dietitian
* Disaster
Relief Insurance Claim Specialists - (claims adjuster employed by an
insurance company located in the territory of a party or an independent claims
adjuster) - BA and successful completion of training in the appropriate areas of
insurance adjustment pertaining to disaster relief claims; or, three years
experience in claims adjustment and successful completion of training in the
appropriate areas of insurance adjustment pertaining to disaster relief
claims
* Doctors - (see
physician further on)
*
Economists
* Engineers - BA
or state / provincial licensing
*
Entomologists
*
Epidemiologists
* Forester - BA or
state / provincial licensing
*
Geneticists
*
Geochemist
*
Geologist
*
Geophysicists (including Oceanographer in the United States)
* Graphic Designer
- BA or post-secondary diploma and three years
experience.
* Hotel Managers -
BA in hotel / restaurant management; or,
post-secondary diploma or post-secondary certificate in hotel / restaurant
management and three years experience in hotel / restaurant
management
*
Horticulturist
* Industrial
Designer - BA or post-secondary diploma or post-secondary certificate and three
years experience
* Interior
Designer - BA or post-secondary diploma or post-secondary certificate and three
years experience
* Journalist BA
plus three years experience - (This category is no longer valid and has been
left in to explain the circumstances. As I understand it, journalists in general
took it as an insult that they had to have a BA degree, because, "most, if not
all," of the best known journalists do not have a BA degree.)
* Land Surveyor -
BA or state / provincial licenses
* Landscape
Architect
* Lawyer
(including notary in the Province of Quebec) - LLB, JD, LLL, BCL degree (five
years); or membership in a state or provincial bar
* Librarians - MLS
or BLS (for which another BA was a prerequisite)
* Management
Consultants - BA; or equivalent professional experience as established by
statement or professional credential attesting to five years experience as a
management consultant, or five years experience in a field of specialty relating
to the consulting agreement. I must make it clear
here. A Management Consultant is NOT a manager.
The surest way to lose your management consultant renewal is to show up
at the border with a business card with the title General Manager, Western
Region, or Human Resources Manager, or, or, or. A management
consultant could consult with the actual sales manager about sales techniques or
about selling into Canada. A management consultant could be
advising the actual human resources manager in hiring techniques or even
suggesting that one candidate is a better fit than another one.
A management consultant can do market research, gather and assemble data
and write a report to give to the manager. This is likely the hardest TN visa to
get but is also a very important one when it comes to serving the needs of the
US company.
Note that the management
consultant does NOT need a degree, just five years experience.
This is the perfect job description for the person with 23 years of job
experience who has never gone through the formal process of getting a university
degree in the discipline.
* Mathematician
(including statistician)
* Medical
Laboratory Technologist (Canada) / Medical Technologist (U.S.) - BA; or
post-secondary diploma or post-secondary certificate and three years
experience
*
Meteorologist
*
Nutritionist
* Occupational
Therapist - BA; or state / provincial license
* Organic Chemist
* Pharmacologist
(Pharmacist) - BA; or state / provincial license
* Physician -
(teaching or research only), MD or state /provincial license. To work as MD, a
doctor must pass his MLE (medical licensing exam), which has three, parts
written over a year. After passing, he or she would enter the
U.S. under an H-1A.
* Physicist
(including oceanographer in Canada)
*
Physiotherapist/Physical Therapist - BA; or state
/provincial license
* Plant
Breeder
** Plant
Pathologists (This is one of two professions added since 1989)
* Poultry
Scientist
* Professional
(most recognized professions)
* Psychologists -
state / provincial license
* Range
Conservationist
* Recreational
Therapist
* Registered Nurse
- state / provincial license
* Research
Assistant (working in post-secondary educational
institution)
- *
Scientific Technician - Possession of: (a) theoretical knowledge of any
of the disciplines: agricultural sciences, astronomy, biology, chemistry,
engineering, forestry, geology, geophysics, meteorology, or physics; and (b) the
ability to solve practical problems in any of those disciplines, or the ability
to apply principles of any of those disciplines to basic or applied
research.
* Social
Worker
* Soil
Scientist
*
Sylviculturist
* Teacher
(College, Seminary, or University) (Post Secondary level only)
* Technical
Publication Writer - BA, or post-secondary diploma or post-secondary
certificate, and three years experience
* Urban Planner
(including geographer)
*
Veterinarian
* Vocational
Counselor
*
Zoologist
SUBJECT TO CHANGE
This list is subject to change at
any time. When talking to Dennis Olsen about updating the rules, I mentioned a
nurse who had found out that nurses could go south instantly in the late
1970's. She got a job offer from a Hawaii hospital, came back
to Vancouver, quit her job, sold her house, kicked out her husband, gave away
the dogs and showed up at the airport to move to Hawaii, only to find out that
they had closed the quota for nurses.
And then, as I was
writing this exact section of the book in March, 1995, I received a call from a
Doctor who had a job offer from the U.S., sold his house and Canadian practice,
only to be told that he did not qualify when he showed up at the border because
although a practicing family physician in Canada and fully qualified to go south
with a Green Card (a resident alien immigrant visa), he did not qualify as a TN
(can only teach or do research) and he did not qualify as an H-1B because he had
not written an MLE. This medical licensing exam is written in three stages over
a one year timetable. I guess he has to sue his immigration
attorney in Los Angeles. This attorney knew he did not have
his MLE, but charged him significant monies and told him he could get in
now!
Remember, NONE of the
foregoing confers permanent status. For permanent status, you must still stand
in some sort of line. However, it seems to be true that if
you are in the U.S. as a TN or as a L-1, your line moves much faster than if you
start from out of the
country.
--------------------------------------------------------------------- QUESTION:
Hi, I'm an American citizen residing in Canada (permanent resident) and working for an American company remotely from home in Canada. I get a W2 at year-end. I assume I have to file both US and Canadian tax returns. My questions are : 1) Do I file a US tax return and claim a foreign tax credit on my Canadians tax return. Or is it vice versa? 2) Do I still file state/local tax return in the US (I lived in Maryland prior to landing in Canada), even though I now reside in Canada? 3) For the extra tax I end up paying to the 2nd country (in excess to what I pay to the first country), can I claim any type of credit or deductions on that tax in next tax year? Thank you very much! ====================================================
david ingram replies: If you are working in Canada, you should not be getting a W-2. The reason is that as a reasident of Canada, you should not be paying into US Social Security or Medicare or paying basic income tax to the USA. Your first tax liability for services rendered in Canada under Article IV of the US Canada Incomne Tax Treaty is to Canada. You should be filing a Candian T1 return and paying Canada and provincial income tax first. Then you would file your US return and either: 1. Use form 2555 to exempt up to $82,400 of income from US tax and then file US form 1116 to claim a foreign tax credit on the excess OR 2. Use form 1116 to claim the foreign tax credit onyour US return for tax paid to Canada. If you have children, you woul dusually do the latter because it would usually qualify you for the $1,000 per child USA refundabvle tax credit. 3. In the case of interest (10%) and dividends (15%), you must get any excess tax back from the US by reclassifying the income on form 1116. 4. In the case of interest, you can claim the difference between 10 and 15% as a deduction on Canadian schedule 4. 5. You should NOT be paying into a US 401(K) or US Social Security. Canada will not allow the 401(K) as a deduction. Your employer should start paying you on a 1099 Basis and pay you your salary plus their share of Social Security plus their share of Medicare plus their share of any 401 or other pension plan they contruibute to. ------------------------------------------------------------------------------------------------------ QUESTION: Is it difficult to reside in Canada if you are an American citizen? Can you have a dual citizenship? I want to know about the health care rules for such a person. thank you ----------------------------------------------------------------
david ingram replies; It is substantially easier to immigrate to Canada from the US than from Canada to the US. However, you still have to either qualify on your own under a self-assessing point system (simialr to the system proposed and rejected in June by the US Senate), get hired by a Canadian Company and they get a working visa for you, invest substantial sums of money $400,000 in a business as a rule for five years, OR marry a Canadian who sponsors you. To do it yourself, answer the following: http://www.cic.gc.ca/english/skilled/assess/index.html - This is the self-assessment test for an individual to determine his or her eligibility to immigrate to Canada without being sponsored by a spouse. You can find out about Canadian Healthcare here: http://www.canadian-healthcare.org/ Then goto www.centa.com and read the October 1995 newsletter in the top left hand box and then read the US/Caanda Taxation section in the second box down on the right hand side to learn about the tax forms a US citizen in Canda has to file. When you have done all of that, if you still have questions, I do phone consultations for $450 Cdn as you will find in the following. ----------------------------------- Hi David, I was looking for some info about live in Canada and work in U.S and I found this web site accidentally. I am a single person and I live in buffalo, NY. I do have my U.S citizenship and I would like to build a house in Canada at fort Erie and live permanently but keep my job in U.S. I spoke with the guy who does my taxes in here and he told me he would take care of anything in NY but he does not have any info about Canada. Now my question is that, Do I have to pay income tax in Canada or not even if I have zero income in Canada? What kinds of tax I would pay on the house that I would have? Is it same like U.S? Do I have to pay school tax or not? Any answer and help highly appreciated, Thanks, ------------------------------------------------- david ingram replies: First, you have to immigrate or have a valid status to "LIVE" in Canada. If you also have a full blown house in the US, you can have a seasonal house in Canada that you stay in a lot but not all of the time, particularly if you try and commute on a daily basis. If you sleep in Canada more than 183 days under any circumstance, you owe tax to Canada on your world income. If you fill out the following self-assessment test, it will give you an idea about whether or not you qualify as a Permanent Resident of Canada. http://www.cic.gc.ca/english/skilled/assess/index.html This is the self-assessment test for an individual to determine his or her eligibility to immigrate to Canada without being sponsored by a spouse. In Canada you will pay the same taxes for property that any Canadian would - School tax, special levies, etc./ ------------------------------------------------------------- QUESTION:
I'm a U.S. Citizen with a travelling job that would like to move in with my boyfriend in Vancouver, B.C. I don't want to immigrate/seek permanent residence in Canada, but would like to live in Vancouver during the time I am not travelling in the U.S. (weekends and the off-hand week off) I can maintain a permanent residence in the U.S., will have U.S. income, bank accounts, driver's license/car, and maintain U.S. healthcare. I will be entering/leaving the U.S. on a regular basis. My biggest question is what are the legalities of this? If I can do it legally, what should I do when I move some of my things over the border? Additionally how do I protect myself from having to pay Canadian taxes (should I keep my name off the lease, not open a bank account, etc., or can I do some of those things?) Thank you so much for any advice you can give. Additionally, thank you for your excellent website. I have been searching the internet for days, and this is the best resource I have found, though I can't seem to find an answer that quite fits my situation. ========================== david ingram replies: Without immigrating, you can not live in Canada and commute to the US. However, if you maintain your residence in the US complete with phone and hydro. Maintain your State Driver's licence and have US medical and are working and vacationing in the US 280 days a year, you will only be "visiting" your boy friend in Canada. Your boyfriend should be sure to visit "you" in the US at least one weekend a month to show that you live there. If that does not work for you, it will be necessary for you to immigrate or be transferred to Canada by your company. For instance, they might be really interested in having you selling in Canada as well. You should prepare a "border kit" which consists of copies of your US lease, your US driver's licence, your US healthcare, your US phone bills, your US employment contract, your US video store rental card, your local US library card, your US Safeway Store card, your US credit cards. You should NOT have any of the above issued in Canada. For instance, being on the lease is a real NO NO in these circumstance. And although the official rule is 183 days in Canada makes you an automatic resident for tax purposes, having a conjugal partner whom you have been with for more than a year means that that conjugal partner could sponsor you in to Canada. Try and stay less than 100 days in Canada to be really safe. Read the following cases and it will give you an idea. AND, under the circumstances, you and the BF should likely come and spend a few dollars with me to learn what the rules really are. The cost would be between $350 and $700 CDN and can save you one heck of a lot of trouble. So what are the rules? Well, to leave Canada for tax purposes, you must give up clubs, bank accounts, memberships, driving licences, provincial health care plans, family allowance payments (if you are a returning resident, you can continue to get Family Allowance out of the country), your car, and furniture. You can keep a house here as an investment and rent it out, but it must be rented on lease terms of a year or more. And you MUST have an agent sign an NR6 for you (see example). This NR6 has the Canadian Resident AGENT ** guarantee the Canadian Government that if YOU do not pay your tax to Canada, the AGENT WILL. Even after fulfilling the foregoing, the Canadian government can still tax you or "try" to tax you on your income out of the country. If you are being paid by a Canadian Company, they can quite often succeed. Even though you can collect family allowance out of the country, don't! One client's wife found out that she could get family allowance out of the country if she said they were coming back to Canada. She got some $3,000 of family allowance and cost the family some $80,000 in income tax when they came back to Canada from Brazil. I will never forget the husband's expression when he found out why he had been reassessed and I will never forget his wife's explanation. She said he was a skinflint and never gave her any money. The total episode cost them their house. ** The "agent" referred to above can be a friend, relative, or a business such as ours. We charge a minimum of $40.00 per month to be an "AGENT" for an NR-6 filing. This $480 per year is "in addition" to any other fees but "well worth it" of course. It stops your mother, father, brother, next door neighbour or ex-best-friend from being plagued by paperwork they do not understand. OUT OF CANADA AND RESIDENT - IN CANADA AND NON-RESIDENT It is possible to be physically "in Canada" and be treated as a Non-Resident and it is possible to be out of the country for seven years, or never have even lived in Canada, but wanted to, and be taxed as a Canadian resident as the following three cases show. In case you missed it, the reason for the different rulings is the "INTENT" of the parties involved. Wolf Bergelt intended to leave Canada. David MacLean was only working out of the country. He still maintained a residence and could not ever become a resident of Saudi Arabia anyway. Dennis Lee "wanted" to live in Canada. In 1986, Wolf Bergelt won non-resident status before Judge Collier of the Federal Court, even though he was only out of the country for four months and his family stayed behind to sell his house. He had given up his memberships, kept only one bank account and rented an apartment in California until his house in Canada was sold. Four months after his move, his company advised him that he was being transferred back to Canada. Judge Collier said his move was a permanent (although short) move and he was a non-resident for tax purposes for those four months. In 1985, David MacLean lost his claim for non-residence status even though he was gone for seven years. He kept a house and investments in Canada and returned a couple of times a year to visit parents. He had even been to the Tax Office and received a letter on January 29, 1980 stating that his Canadian Employer could waive tax deductions because he was a non-resident. However, he did not advise his banks, etc. that he was a non-resident so that they would withhold tax, he did not rent his house out on a long term lease and he did not do any of the things that makes a person a "NON-RESIDENT". Judge Brule of the Tax court of Canada said that he thought Mr. MacLean had stumbled on the non-resident status by chance rather than by design. In other words, to become a non-resident of Canada, you must become a bone fide resident of another country. As a rule, only a Muslim born in Saudi Arabia to Saudi Arabian parents can become a Saudi Arabian citizen. The best that David MacLean can hope for is that he has a Saudi Arabian temporary work permit. In other words, when a person leaves a place, they usually leave and establish a new identity where they are because the "new place" is where they live now. Trying to "look" like a non-resident is not the same as "BEING" a non-resident - think about it. In 1989, Denis Lee won part but lost most of his claim for non-resident status. He was a British Subject who worked on offshore oil rigs. He maintained a room at his parents house in England and held a mortgage on his ex-wife's house in England. For the years 1981, 82 and 83 he did not pay income tax anywhere. in 1981 he married a Canadian and she bought a house in Canada in June of 1981. On September 13, 1981, he guaranteed her mortgage at the bank and swore an affidavit that he was "not" a non-resident of Canada. [As I have said in the capital gains section of this book, bank documents will get you every time.] During this time he had a Royal Bank account in Canada and the Caribbean but no Canadian driver's licences or club memberships, etc. Judge Teskey said: "The question of residency is one of fact and depends on the specific facts of each case. The following is a list of some of the indicia relevant in determining whether an individual is resident in Canada for Canadian income tax purposes. It should be noted that no one of any group of two or three items will in themselves establish that the individual is resident in Canada. However, a number of the following factors considered together could establish that the individual is a resident of Canada for Canadian income tax purposes": - past and present habits of life; - regularity and length of visits in the jurisdiction asserting residence; - ties within the jurisdiction; - ties elsewhere; - permanence or otherwise of purposes of stay; - ownership of a dwelling in Canada or rental of a dwelling on a long-term basis (for example, a lease of one or more years); - residence of spouse, children and other dependent family members in a dwelling maintained by the individual in Canada; - memberships with Canadian churches, or synagogues, recreational and social clubs, unions and professional organizations (left out mosques); - registration and maintenance of automobiles, boats and airplanes in Canada; - holding credit cards issued by Canadian financial institutions and other commercial entities including stores, car rental agencies, etc.; - local newspaper subscriptions sent to a Canadian address; - rental of Canadian safety deposit box or post office box; - subscriptions for life or general insurance including health insurance through a Canadian insurance company; - mailing address in Canada; - telephone listing in Canada; - stationery including business cards showing a Canadian address; - magazine and other periodical subscriptions sent to a Canadian address; - Canadian bank accounts other than a non-resident account; - active securities accounts with Canadian brokers; - Canadian drivers licence; - membership in a Canadian pension plan; - holding directorships of Canadian corporations; - membership in Canadian partnerships; - frequent visits to Canada for social or business purposes; - burial plot in Canada; - legal documentation indicating Canadian residence; - filing a Canadian income tax return as a Canadian resident; - ownership of a Canadian vacation property; - active involvement with business activities in Canada; - employment in Canada; - maintenance or storage in Canada of personal belongings including clothing, furniture, family pets, etc.; - obtaining landed immigrant status or appropriate work permits in Canada; - severing substantially all ties with former country of residence. "The Appellant claims that he did not want to be a resident of Canada during the years in question. Intention or free choice is an essential element in domicile, but is entirely absent in residence." Even though Dennis Lee was denied residency by immigration until 1985 (his passport was stamped and limited the number of days he could stay in the country) and he did not purchase a car until 1984, or get a drivers licence until 1985, Judge Teskey ruled that he was a non-resident until September 13, 1981 (the day he guaranteed the mortgage and signed the bank guarantee) and a resident thereafter. My point is made. Residency for "TAX PURPOSES" has nothing to do with legal presence in the country claiming the tax. It is a question of fact. My thanks to Judge Teskey for an excellent list. The italics are mine and refer to the items which I usually see people trying to "hold on to" after they leave and are trying to become non-residents. No single item will make you a resident, but there is a point where the preponderance of "numbers" leap out and say, "He / She is a resident of Canada, no matter what he / she says." The case above is not unusual in any way. It is a fairly typical situation in my office. In 1990, John Hale was taxed as a resident on $25,000 of directors fees he had received from his Canadian Employer and on $125,000 he received for exercising a share stock option given to him when he had been a resident of Canada (the option, not the stock). Judge Rouleau of the Federal Court ruled that section 15(1) of the Great Britain / Canada Tax Convention did not protect the $125,000 as it was not "salaries, wages, and other remuneration". It was, however a benefit received by virtue of employment within the meaning of section 7(1)(b) of the act. Even a car you do not own can make you a resident as the next sailor found out. In 1988, Frederick Reed was claimed by the Canadian Government as one of their own. He lived on board ship and shared an apartment with a friend in Bermuda but only occasionally. He also stayed with his parents in Canada when visiting his employer in Halifax. Judge Bonner of the Tax court ruled that he could not claim his place of employ or the ship as his residence and just because he did not have a fixed abode, did not make him a non-resident. He was also the beneficial owner of a car in Canada which even though of minor consequence, served to add to his Canadian Residency. He had in fact borrowed money from a credit union to buy the car, even though it was registered in his father's name. He had maintained his Canadian Driver's licence as well. An interesting case in June, 1989 involved Deborah and James Provias who left Canada in October of 1984. They had sold a multiple unit building to James' father on September 21, 1984 but the statement of adjustments did not take place until December 1, 1984. They tried to write off rental losses and a terminal loss against other income as `departing Canadians'. Judge Christie of the Tax Court ruled that they had left before the sale and were not entitled to the terminal loss or another capital loss as these could only be applied against income earned in Canada from October 13, 1984 (the day they left) to November 30, 1984 (the day before the sale) and there was no income, only a rental loss. But June, 1989 was a good month for Henry Hewitt. He had been a non-resident living in Libya for four years and received some back pay after returning to Canada. DNR tried to tax him on the money but Judge Mogan of the Tax Court came to the rescue. He ruled that although Canadians were usually taxable on money when received, that assumed that the money itself was taxable in Canada, which was not true in this case. In 1989, James Ferguson lost his claim for non-residency status but from the information, it didn't stand a chance anyway. He had been in Saudi Arabia on a series of one year contracts for four years. His wife remained employed in Canada, and he kept his house, car, driver's licence, union membership, and master plumber's licence. Judge Sarchuk ruled that he had always intended to return to Canada and was a resident. A similar situation involved John and Johnnie M. Eubanks in the United States. He was working on an offshore oil rig in Nigeria with a Nigerian work permit and attempted to claim non-resident status for the purposes of exempting the foreign earned income exclusion. His wife was in the United States at all times and because he worked 28 days on and 28 days off, he returned to the U.S. for his rest periods using 4 days for travel and 24 days for rest with his family. He did not spend any 330 day period (out of a year) in Nigeria and only had a residency permit for the purposes of working in Nigeria. Judge Scott ruled he was a resident of the U.S. and taxed him some $20,000 with another $6,000 penalties and interest. The Tax departments in Canada and the U.S. issue Interpretation Bulletins and Information Circulars and Guidance Pamphlets. These documents sometimes get people in trouble because the individual reads the good part and doesn't pay any attention to the exceptions. The following case ran contrary to a Guidance Pamphlet issued by the IRS. On and Off-shore Oil rigs were involved with William and Margaret Mount and Jesse and Mary Wells. William and Jesse worked in the United Arab Emirates. However, they kept their homes and families in Louisiana and kept their driver's licences in Louisiana and voted in Louisiana. No evidence was shown that they had tried to settle in The United Arab Emirates. Judge Jacobs turned down claimed exclusions of approximately $75,000 each. There isn't any question about what oil rig people talk about on oil rigs. It has to be "how to beat the tax man". Unfortunately, they all seem to think it is easy. Another such story follows. In 1989, Clarence Ritchie found out that bona fide residence means just what it says. You cannot be a non-resident of the U.S. for tax purposes if you are not a bona fide resident of another country. He was working on the Mobil Oil Pipeline in Saudi Arabia and although when he left he was married with a couple of kids, by the time he returned permanently, he was a happily divorced man. Judge Scott ruled that though he did not have an abode in the United States, he had not established one in Saudi Arabia and therefore was not entitled to the foreign earned income exclusion which requires you to be away for 330 days out of 365. He had worked a 42 days on, 21 days off schedule and usually returned to the U.S. for his days off although he did spend time in Tunisia, England, Italy and Greece. On a final note, as explained on page 143 of the "PINK" 17th edition of my ULTIMATE TAX BOOK, it is possible to have three countries after you for tax. If you are thinking of taking a job because a recruiter told you the money is tax free, think twice and check three times with competent individuals about what the rules "really are". No government likes giving up the right to tax its citizens. DEBT SECURITIES - BANK ACCOUNTS Non-residents of Canada with investments in Canada are subject to a 25% non-resident withholding tax on any money paid to them while they are out of the Canada. Therefore, if they have $10,000 in the Bank of Montreal and they live in Argentina, The Bank of Montreal must withhold 25 cents out of every dollar of interest paid to the account. Most tax treaty countries such as Great Britain, Germany, the United States, and Australia have a reciprocal agreement with Canada that limits the withholding to 15%. So we have the anomaly that a Canadian with money in a bank in the U.S. has no withholding but an American with money in a Canadian Bank has 10 cents out of every dollar withheld as a foreign withholding tax. The American would report his interest on schedule A of his 1040 tax return and claim the tax withheld as a foreign tax credit on a form 1116. Answers to this and other similar questions can be obtained free on Air every Sunday morning. Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Dundee Wealth Management (formerly Cartier Partners ) and I will be hosting an INFOMERCIAL but LIVE talk show called "ITS YOUR MONEY" Those outside of the Lower Mainland will be able to listen on the internet at www.600AM.com Local phone calls to (604) 280-0600 - Long distance calls to 1-866-778-0600. Old shows are archived at the site. ----------------------------------------------- For more information on what a US citizen
living in canada has to file or deal with, goto www.centa.com
and
and read the Oct 1995 Newsletter in the top left hand box and then go to the second box down on the right hand side and read the US / Canada Income Tax section ------------------------------------------------------
On April 26. 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 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. SUGGESTED PRICE
GUIDLELINES david ingram's US / Canada Services US / Canada / Mexico tax, Immigration and working Visa Specialists US / Canada Real Estate Specialists My Home office is at: 4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7 Cell (604) 657-8451 - (604) 980-0321 Fax (604) 980-0325 Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) expert US Canada Canadian American Mexican Income Tax service help. pert US Canada Canadian American Mexican
Income Tax service and
help.
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
Canada)
expert US Canada Canadian American Mexican
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. However, if you have a stack of 1099, or T3 or T4A or T5
or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00
for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are
an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
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 received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files. As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files. It can take us a valuable hour or more to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance. 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.
Be ALERT, the world needs more
"lerts".
bankruptcy expert US Canada Canadian American Mexican Income Tax
service help. - expert us Canada Canadian Mexico income tax service and help
help
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