Hello
I hold a double citizenship (Canadian and Russian) and plan to accept employment in Russia (with a local company) and relocate to Moscow temporarily (for a year or so). My Russian income tax will be deducted and paid automatically by my employer. How do I go about claiming employment income and paying my income taxes in Canada? Should I establish a non-resident status for income tax purposes for the period of intended foreign employment?
Thanks
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david ingram replies:
If you are going for more than a year and give up your home, apartment, residence, etc in Canada, you will only be taxed in Russia on your Russian Earnings.
If you have left mutual funds or bank accounts in Canada, make sure to tell the payer that you are now a non-resident and the institution will deduct 10% non-resident tax on INTEREST under ARTICLE XI of the treaty and 15% tax on any dividends under Article X.
The interst and dividends would then be reported again on the Russian return and you would claim a foreign tax credit for any tax paid to Canada.
IF, the CRA demanded a return, you would either be a non-resident, or a Factual resident where you have to report your world income to CANADA as well. In the case of a FACTUAL resident, you will report the Russian Income on line 104 and deduct it on line 256 under Article IV of the Treaty.
If you file as a departing resident, make sure that you check out and fill in forms T1161, T1243 and T1244.
