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My question is: Canadian-specific
QUESTION: Dear David,
I am a self-employed Canadian running a 100% Internet based web design business. All of my clients are American or UK based. I have a US bank account which all my funds are paid into. I like to live in other countries, and I am going to move down to Mexico in September for 6 months or more. My question to you is, should I try to stay for a year or more and claim non residency status? I own nothing in Canada and can sever all the ties easily.
But my main concern is the CCRA. The last thing I want to do is Flag myself for "looking" into on their systems. I would rather remain another anonymous number then subject myself to the perhaps lifelong scrutiny of big brother.
I filed my tax return for $120,000 this year, so I
make enough to make escaping seem worth while to me.
What do you suggest?
And what kind of power does the CCRA have to look into foreign bank accounts like my US account or a Mexican account. How would they find these accounts?
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david ingram replies:
Start off by going to www.centa.com and read the US/Canada Taxation section.
There are sample cases which show how easy and how hard it is to avoid paying Canadian Tax.
To be a NON-RESIDENT of Canada for Tax Purposes, you have to be a legal resident of another country.
Mexico is convenient becaus eit has a tax treaty wioth Canada. However, if you are there long enough top qualify as a resident of Mexico under Article IV of the Canadian/US Tax Treaty (which would let you escape Canadian Tax on non-Canadian source income) you will now be subject to Mexican Tax on your world income.
Mexican Tax can be higher than Canadian tax for foreigners.
The US and Canada are absolutely co-operating on cross border sharing of tax information on a pro-active basis. That means they give the information to the other country without being asked for it.
The United Kingdom and Canada and Mexico share information but it has to be asked for by the other country.
Are you getting an FM 1, 2 or 3 visa for Mexico or are you just going to overstay a visitor's visa?
You need a poersonal consultation with someone like me if you intend to escape Canadian taxation.
The Turks and Caicos or the Grand Cayman do not have a tax treaty with Canada because they have no income tax.
David Ingram of the CEN-TA Group
US / Canada / Mexico tax and working Visa Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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