- Nigeria Taxes -

Hello,
 
I'm a an engineer from Canada working in Nigeria. I got this email address from the following site, http://centa.com/toc.htm
 
I was wondering if you guys have experience dealing with this type of tax situation and if you have any recommendations concerning what approach I should take doing my taxes.  Please let me know if you can offer assistance, if you need additional information, please advise.
 
Regards,
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david ingram replies:


Nigerian personal income tax rates range from 5% to 30% with the liklihood of your rate being 30% as a highly paid foreigner.


In general what happens with a worker in your position is that the company is paying the tax for you so that if your pay was $100,000 'after tax', the company is treating your wages as a $142,857.14, paying the Nigerian goverment 30% or $42,857.14 and giving you the $100,000 left over.

From that $100,000, they would likely deduct CPP and EI and about $10,000 in Canadian Income Tax.

If you have been working out of  Canada for a 12 month period and your employer qualifies as a Canadian Employer and you are working for a Canadian branch (they have at least 12 office locations in Canada) and can sign a T626 (Overseas Employemtn Tax credit form) you are essentailly exempt on up to $80,000 (prorated by the number of months if 6 or more) and taxable on the excess.

You can see the form at
http://www.cra-arc.gc.ca/E/pbg/tf/t626/t626-06e.pdf

When doing your return, you would fill in the T626 and a foreign tax credit (form 2209) for the tax paid on the (142,857 - 80,000) $62,857.

In a sample i threw together, as a single person living in BC with no RRSP or any other deductions, you would receive a $2,851.00 refund from Canada - remember the $10,000 of tax deducted.

Note that in this case, if you put $5,000 into an RRSP your refund actually goes "down" to $2,809.29. 

If you paid  $1,000 Union or professional fees, your refuind goes DOWN.

So be careful what you do in this situation.  Conventional tax deductions can take away from the benefits of the foreign tax and overseas employment tax credits and most of the run of the muill Canadian accountants do not realize this.

Therefore, if you are on a monthly RRSP contribution plan or something similar, stop it and if you are paying Union or Engineering  Dues, do NOT claim them on the return.  If you have already made RRSP contributions, do NOT claim them, carry them over to a future year. If this is NOT your first year and you have already filed for last year, check it over.

You asked if we can do this, the answer is yes.  That is 'what' we do.

Why did I answer the question as thoroughly?  I used it as a training question for an international  tax course.  It was picked out of about 60 questiosn, 59 of which are not being answered.  Your name has been added to an international Q & A list.  If there are too many replies that you do not want, just send back one with "remove please" in the subject line and you will be removed.
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David Ingram wrote:
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Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included." e bankruptcy expert  US Canada Canadian American  Mexican Income Tax help.
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Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. expert  US Canada Canadian American  Mexican Income Tax help.
This is not intended to be definitive but in general I am quoting $900 to $2,900 for a dual country tax return.
$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,100 would be the same with one rental
 
$1,300 would be the same with one business no rental
 
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
 
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$2,900 would be all of the above and you 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 and no capital gains, etc. for $175.00 up.
 
With a Rental for $375
 
A Business for $375 - Rental and business likely $500
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
 
Moving in or out of the country or part year earnings in the US will ALWAYS be $800 and up.
 
TDF 90-22.1 forms are $50 for the first 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 - (maybe amalgamate 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 the Canadian return as a guide will be $150 to $500.00 depending upon numbers of bank accounts, RRSP's, existence of rental houses, etc.

Just a guideline not etched in stone.
 
 
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