Hong Kong Overseas Pilot moving to British Columbia, Canad


My client has a married daughter in Hong Kong. Her husband is a pilot for Cathay Pacific. They want to come and live in Canada.

They want to know the tax rules. Not clear if he will be paid from Hong Kong (does it matter?) Their actual question is, "Will we have to pay tax for the whole year?"

I've forgotten all I ever knew on this subject, which wasn't much to begin with. Or is it merely the Dec 31th residency determination?

I've got a horrible feeling I'll be doing their tax returns as well, not to mention the client's son's two daughters who are now working in the parents' stores!


david ingram answers:

The pilot and his wife will have to pay Canadian Taxes on world income from the day that they land in Canada. I presume that the wife is a Canadian Citizen and will sponsor her husband into Canada as a landed immigrant or permanent resident.

For Canadian Tax purposes, if they have established residency in Canada, they are taxable in Canada on their world income whether it is paid from Hong Kong, Ethiopia, or Australia.

So, when time to do the returns, the first returns will have the date from when they came to Canada put in the "Date of Entry" box on page one of the return.

You then have to pro-rate all their personal exemptions by the number of days they were in Canada.

If we could assume that they came on Oct 1, they would be in Canada (31+30+31) 92 days. Their exemption amounts would be 92/365 x's the amount.

You can learn a lot more about this and see some sample tax cases at www.centa.com - click on "US/Canada Taxation".



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