Work in Dubai and CRA - T626 - Overseas Employment Tax Credit -

QUESTION:I will be working in Dubai for 2 months with a residency permit earning good money. This can be paid to me or to my Canadian company which I own ((its an Inc).I own and will be commuting from a home in Edmonton ( 2 weeks in Dubai, 2 weeks home) and my wife will make a trip but will stay at home in Alberta.I cant see a way of avoiding tax. I suspect its better for the company to be paid rather than me personally - any advice?
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david ingram replies:

For the two months or six months, there is no way to avoid income taxas described. Paying your corporation would likely help in the shortterm or in income splitting. However, if you are truly incorporatedand have A NON-DEDUCTIBLE MORTGAGE ON YOUR HOUSE, you should not beincorporated until you have used the techniques in my November 2001newsletter.

IF, and I say IF you were going to be there for six months or more, youcould arrange for a Canadian company (not yours) with more than 5 fulltime employees to hire you and send you to Dubai as their employee.

In that case, by filing form T626, you could earn up to 80% of $100,000over a year. to qualify, you have to be employed out of the countryfor for at least six months. 5 months and 21 days does NOT QUALIFY.

This older question will help


Hello David,

I found your contact information byGoogling for help on preparing Canadian 626 OETC forms. xxxxxx xxxxxhas field service personnel that spend weeks, months, and sometimesyearsout of the country while supervising the installation of mechanicalequipmentsold by xxxxxxxx to a client. We have been preparing 626's foremployeefor several years, but administrative staff has changed and we havelostthe experience in this.

Question is:

One employee was in Australia for theentire year of 2006 and for about 4 months of 2007. He received theOETC for 2006 taxation year. Obviously he only effectively needed6 months of 2006 to qualify for the 626 for that year, so can theremainingmonths of 2006 be used to establish a claim for 2007 (in which he wasawayonly 4 months).

I don't expect to access your time andexpertise for free, so please let me know how compensation can bearranged.



Thank you in advance,





------------------------------------------------------
david ingram replies:

For the two months or six months, there is no way to avoid income taxas described. Paying your corporation would likely help in the shortterm or in income splitting. However, if you are truly incorporatedand have A NON-DEDUCTIBLE MORTGAGE ON YOUR HOUSE, you should not beincorporated until you have used the techniques in my November 2001newsletter.

IF, and I say IF you were going to be there for six months or more, youcould arrange for a Canadian company (not yours) with more than 5 fulltime employees to hire you and send you to Dubai as their employee.

In that case, by filing form T626, you could earn up to 80% of $100,000over a year. to qualify, you have to be employed out of the countryfor for at least six months. 5 months and 21 days does NOT QUALIFY.

This older question will help


Hello David,

I found your contact information byGoogling for help on preparing Canadian 626 OETC forms. xxxxxx xxxxxhas field service personnel that spend weeks, months, and sometimesyearsout of the country while supervising the installation of mechanicalequipmentsold by xxxxxxxx to a client. We have been preparing 626's foremployeefor several years, but administrative staff has changed and we havelostthe experience in this.

Question is:

One employee was in Australia for theentire year of 2006 and for about 4 months of 2007. He received theOETC for 2006 taxation year. Obviously he only effectively needed6 months of 2006 to qualify for the 626 for that year, so can theremainingmonths of 2006 be used to establish a claim for 2007 (in which he wasawayonly 4 months).

I don't expect to access your time andexpertise for free, so please let me know how compensation can bearranged.



Thank you in advance,



-----------------------------------------------------------------------
david ingram replies:

To qualify for the maximum exemption, an employee requires 12 monthsaway.

six months qualifies one for a $40,000 tax free exemption and 9 monthsfor $60,000. It is prorated by the number of days.

Therefore, someone leaving to work in Australia on Dec 1, 2005 wouldqualify for the month of Dec being tax free when he or she had workedin Australia unitl the end of May, 2006. If someone worked in Australia=66rom Jan 1 to April 30th, 2007, he or she would have to have startedwork in Australia about Oct 29th, 2006 to qualify. If they were inAustralia from Aug 1, they would get the one month of Jan 2007 as aproportional part of $80,000 tax free if they had left on Jan 31st. Asyou can see, you can do a great disservice to an employee (and createanimosity) by bringing someone home a month too early..

Hope this helps.

I charge $450.00 an hour for this type of consultation..

Make a $225 donation to your local food bank.

david ingram
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On February 11, 2008, DavidIngram wrote:

It is very unlikely that blind or unexpected email to me will beanswered. I receive anywhere from 100 to 700 unsolicited emails a dayand usually answer anywhere from 2 to 20 if they are not from existingclients. Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject lineand get answered first. I also refuse to be a slave to email and donot look at it every day and have never ever looked at it when I am outof town.
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However, I regularly search for the words"PAYINGCUSTOMER" and always answer them first if they did not get spammed out.For the last two weeks, I have just found out that my own email notesto myself have been spammed out and as an example, as I wrote this onDec 25, 2007 since June 16th, my 'spammed out' box has47,941 unread messages, my deleted box has 16645 I have actually lookedat and deleted and I have actually answered 1234 email questions forclients and strangers without sending a bill. I have also put aside847 messages that I am maybe going to try and answer because they lookinteresting. -e bankruptcy expert US Canada Canadian American Mexican Income Tax service and help
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Disclaimer: This question has been answered without detailed information orconsultation and is to be regarded only as general comment. Nothingin this message is or should be construed as advice in any particularcircumstances. No contract exists between the reader and the author andany and all non-contractual duties are expressly denied. All readersshould obtain formal advice from a competent andappropriately qualified legal practitioner or tax specialist for experthelp, assistance, preparation, or consultation in connection withpersonal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must beincluded." e bankruptcy expert US Canada Canadian American Mexican Income Tax service and help.
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Phone consultationsare $450 for 15 minutes to 50 minutes (professional hour). Please notethat GST is added if product remains in Canada or is to be returned toCanada or a phone consultation is in Canada. ($472.50 with GST if inCanada) expert US Canada Canadian American MexicanIncome Tax service and help.
This is not intended to be definitivebut in general I am quoting $900 to $3,000 for a dual country taxreturn.
$900 would be one T4 slip one W2 slipone or two interest slips and you lived in one country only (but werefiling 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 onerental
$1,300 would be the same with onebusiness no rental
$1,300 would be the minimum with amove in or out of the country. These are complicated because of theback and forth foreign tax credits. - The IRS says a foreign tax credittakes 1 hour and 53 minutes.
$1,600 would be the minimum with arental or two in the country you do not live in or a rental and abusiness 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 andyou 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 andno capital gains, etc. for $200.00 up.
With a Rental for $400, two or threerentals for $550 to $700 (i.e. $150 per rental) First year Rental -plus $250.
A Business for $400 - Rental andbusiness likely $550 to $700
And an American only (lives in the USwith no Canadian income or filing period) with about the same things inthe same range with a little bit more if there is a state return.
Moving in or out of the country orpart year earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for thefirst 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 - (maybeamalgamate 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 theCanadian return as a guide for seven years at a time will be from $150to$600.00 per year depending upon numbers of bank accounts, RRSP's,existence of rental houses, self employment, etc. Note that thesereturns tend to be informational rather than taxable. In fact, ifthere are children involved, we usually get refunds of $1,000 per childper year for 3 years. We have done several catch-ups where the clienthas received as much as $6,000 back for an $1,800 bill and one recentlywith 6 children is resulting in over $12,000 refund.

This is aguideline not etched in stone. If you doyour own TDF-90 forms, it is to your advantage. However, if we put themin the first year, the computer carries them forward beautifully.
This from "ask an income trusts tax service andimmigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily basis with expatriate taxreturns with multi jurisdictional cross and trans border expatriateproblems for the United States, Canada, Mexico, Great Britain, UnitedKingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan,China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia,Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida,Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan,Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, StVincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 stateswith state tax returns, etc. Rockwall, Dallas, San Antonio Houston,Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax andImmigration Tips, Income Tax Immigration Wizard AntarcticaRwanda Guru Consultant Specialist Section 216(4) 216(1) NR6 NR-6 NR 6Non-Resident Real Estate tax specialist expert preparer expatriate antimoney laundering money seasoning FINTRAC E677 E667 105 106TDF-90 Reporting $10,000 cross border transactions Grand Cayman ArubaZimbabwe South Africa Namibia help USA US Income Tax Convention. Adviceon bankruptcy e bankruptcy expert US Canada Canadian American Mexican Income Tax service and help .

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