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Canadian Taxes

One of the many benefits of working offshore, aside from the lifestyle, is that many of these locations have little to no income tax.  We are often asked about tax implications for a Canadian living and working abroad.  We've put together the basics here but would be happy to refer a qualified Accountant with expertise in this area for professional Accounting advice.

In order to be exempt from Canadian income tax while working internationally, one generally needs to qualify as a "non-resident" of Canada.  The Canada Customs and Revenue Agency (the CRA) looks at each case individually but in general, to be considered non-resident, an individual must cut significant residential ties with Canada.

That might sound somewhat daunting, but it's fairly straightforward.  There are three primary residential ties that the CRA lists as being considered significant:

1. Home in Canada (dwelling place or places)
2. Spouse or Common-Law partner in Canada
3. Dependents in Canada

You are generally able to maintain ownership of a home in Canada, as long as it is not sitting vacant for your own use.  So if you choose to keep your property, it is often advisable to rent it out on what the CRA refers to as "arm's length terms and conditions".  A spouse or common-law partner that remains in Canada would be considered a significant residential tie, as will dependents that remain in Canada.  

Provided you are able to deal with these three major ties, you should be in good shape for earning a tax free (or very low tax) income abroad!  There are secondary residential ties that the CRA also considers, but generally a secondary tie or two will not be sufficient for an individual to be deemed a factual resident (and therefore subject to Canadian tax on their worldwide income). 

To learn more, you may wish to visit the non-residency section of the CRA website and/or consult with an Accountant specializing in non-residency and expatriate taxes.  

Author: Jocelyn Poulsen