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In Canada, all income is taxable except for consumption. When you become a Canadian tax resident, you will be taxed globally and will be required to report all of your income, both inside and outside of Canada, as well as your global assets. Although Canada does not yet have an asset tax, there are other taxes that can be imposed on property. Therefore, you may have to pay a large tax bill if you do not handle your assets properly before or after immigration.
In fact, there are two types of tax residents and non-tax residents in Canada. All tax residents in Canada are obligated to pay global profits tax. Regardless of whether you are a permanent resident or not, basically everyone who lives in Canada is a tax resident, as long as they live in Canada for more than 183 days a year from January 1.
If you have not received any Canadian benefits since you left, if you have reported your departure to Canada, if you have contacted your bank account as a non-tax resident, and if you have told your tenant that you have paid a quarter of your rent to the government as pre-tax after you left Canada, then you are a non-tax resident. As long as all procedures are completed, you are a non-tax resident.
Canada is a popular country for retirement immigrants. Many people are able to enjoy the retirement benefits of their home country, such as pensions and superannuation, after they have immigrated. However, these retirement benefits can be divided into two types: one-time withdrawals and ongoing withdrawals. In the former case, if you withdraw all your retirement benefits before you immigrate, you will not be taxed because you earned them before coming to Canada. Therefore, it is important to calculate which is the greater total benefit and to decide on a case-by-case basis.
For example, if a property is transferred to a child in Hong Kong, the difference between the declared value on the date of emigration and the price on the date of transfer will be used to calculate the income benefit and will be taxed. However, there are two situations where tax will be levied even if the property is not sold: a change of status from a tax resident to a non-tax resident; and death.
In addition, there is a situation where the interest earned on an investment in Hong Kong stocks is tax-free in Hong Kong, but still subject to tax in Canada.
In fact, a spouse or minor child in Canada automatically becomes a tax resident, and the tax regulations state that the person must pay taxes whenever and wherever he or she earns money. In fact, many new immigrants immigrate to Canada to meet their family’s needs and responsibilities, and then return to their place of origin after arriving in Canada and finding that it is not as enjoyable a place to live as they thought.
In the former case, if a non-tax resident gives a gift (e.g., household) to a Canadian resident, the recipient does not have to pay tax, but must prove that the gift-giver is related to the recipient (e.g., spouse and parents), otherwise they may have to face the problem of money laundering and passive income, which the IRS will automatically treat as income.
It is a common misconception that having a property is the same as being a tax resident, and you may invest in real estate at various countries.
Foreign investors do not have to pay tax on the money they earn in Canada. For example, if you buy Canadian stocks, the money you earn is legally tax-free, but dividends are taxed at a rate of one quarter. Generally speaking, dividend tax is deducted from the dividends paid by non-residents, so there is no need to file a separate tax return.
Even if you do not owe taxes, you are required to file a tax return if you receive government benefits or subsidies, such as the Canada Child Benefit or the Canada Recovery Benefit. All money earned in Canada, whether legally or illegally, is considered as income, and welfare is classified as income as well. Benefits in Canada are based on total family income, but if one of you comes to Canada and live in your home country, you still need to take your income into account. Some of the benefits you receive are also classified as income, such as the Pension and Old Age Security Pension (OAS), to determine whether you are eligible for more benefits. However, this portion is subtracted from your tax return to determine how much tax you will pay.
Canada is famous for its loyalty system, where people declare their income and the local government will believe all of it. However, once a situation is discovered, proof will be required and the burden of proof is on the citizen.
In addition, the Income Tax and Benefit Return is a tax form that shows that residents are obligated to pay taxes and have the right to receive benefits as well as health care, education and welfare systems. This is one of the reasons why Canada is considered by many people to be the best country to live in.
For more information on Canadian immigration and taxation, please contact Simard & Associates, we are a team of experienced immigration consultants who have worked with numerous families and applicants in a variety of Canadian immigration programs, providing one-stop immigration consulting services that make it easy for you to live in Canada.