2007 Canadian Provincial Tax for Non resident earning money in - T2203 Multi-national Return -

Thank you in advance for any information provided.

My wife is a US resident green card holder who works in Canada 4 days a week. 2007 was her first full year as a US resident. This past year, 2007 tax, she filed her Canadian income tax and the tax preparer did not file for BC provincial tax, she said we would not owe it. We reported her Canadian tax as foreign tax credit on our joint US 1040 return. My wife received a Notice of Assessment from Canada Revenue with a change to BC tax payable. I am looking for information as to what is correct here so that I know how to reply to the original tax preparer we used in White Rock. 


david ingram replies:

The assessment is correct but may be wrong because of incorrect information.  I bet that your preparer also failed to include Canadian forms SA and SB.

Your Canadian return was done incorrectly.  She was to pay BC tax and,  'if', for instance, she had worked in Alberta as well, she would have had to pay Alberta Tax on her Alberta earnings and BC tax on her BC earnings.

We have several Air Canada Flight personnel who live in the US.

As an example. 

If they leave Vancouver and fly to Calgary, 1/2 of the tax is paid to BC and 1/2 to Alberta.

If they then fly to Toronto, 1/2 is paid to Alberta and 1/2 to Ontario.

If they fly to Ottawa, all of it is paid to Ontario.

If they fly to Toronto, all is paid to Ontario.

If they then fly to Chicago, about 8% (Canadian Air space flight) goes to Ontario

If they fly back to Calgary, about 7% is credited to Alberta.

If they then fly back to Vancouver, 1/2 goes to Alberta and 1/2 goes to BC.

This is done of Canadian form T2203 - You can find and peruse the 93 page form at


This form would also be used if you lived in BC but had a proprietorship in Ontario

It is here as an example only.

In your wife's case, the preparer should have used Form BC428 to calculate the Provincial tax and as I suggested forms SA and SB.  If the Canadian return was incorrect, your US return will also be incorrect because the foreign tax claimed is now also incorrect on your US form 1116.  You will need to file US form 1040X.

I am assuming that he or she calculated the non-resident surtax.  The good news may be that the BC tax is LOWER than the Federal Surtax applied to non-residents.  This may not do you any good if you managed to use all the Canadian Tax paid on as a full credit on US form 1116.  However,  If you did not use it all, the net result will be a refund.

AND, when you did do the form 1116, I hope that you also claimed the Canada Pension Plan and EI premiums as part of your foreign tax credit.  Most people in your position miss it.

Good luck.  Remember, your kind of return is what we do and at least 35 percent of our clients do not live in Canada.

This older pilot's question explains that part further

I hope you're not too busy for a question about my tax situation. 

I am a pilot working for a Canadian airline in Toronto.  I am a U.S. permanent resident, married to an American, and living in XXXXXX, XX.  Last year I used an accounting firm in Mississauga to take care of my tax situation, but I had only been working at my current airline for a couple of months and had been in training during that time. 
This last year I was flying for the same company the entire year and flew a variety of routes in both Canada and the U.S. 
It is my understanding that as a pilot and a non-resident of Canada I should calculate what percentage of my income was earned while flying in Canadian airspace and what was earned outside Canada (while flying over the United States). 
The income earned while flying outside Canada would not be taxable by Canada and would be subject to taxation by the jurisdiction in which I live (ie. the U.S.A.) 
This should result in my paying significantly less tax, in proportion to the percentage of my flying that was conducted in U.S. airspace. 
Do you have any knowledge of or experience with this type of situation?

david ingram replies:

You are a non-resident  of Canada and as such have to pay tax to each province or territory you  land in.  The GOOD NEWS!  We have access to every Air Canada flight and have an excel program which allows us to calculate the earned income for each province for a multi-jurisdictional tax return as on form T2203.  You can find this '87' page form at http://www.cra-arc.gc.ca/E/pbg/tf/t2203/t2203-06e.pdf.  We have over 40 others in your position as clients.

If you are not flying for Air Canada or Air Transat or one of the larger carriers with regular flights, we can still look after the return but it takes more work if you are the only one because we have to start from scratch.

For instance, I have another charter pilot who has flown into Igloolik, Whitehorse, Inuvik, Old Crow, Whittier, Fairbanks, Dawson City, Anchorage, Atlin, Watson Lake and another twenty  communities in the Yukon,  Northwest Territories, Nunavut, Alaska, BC and Alberta.

'Her' situation requires her to keep track of time in each jurisdiction because the Yukon, NWT, Nunavut, BC and Alberta all get their piece of the action.

However, whatever  your situation, We would be pleased to help you with this.

And, that was very gallant of you to let your wife cross the finish line 2/10ths of a second in front of you.

This older question will give you some more input.
Hello David:

My name is xxxxxxx xxxxxxxxxx and I'm looking for a tax accountant who is well versed in Canada/US tax issues. I am a dual citizen currently residing in Washington state. I am an airline pilot and began working for Air Canada based out of Vancouver at the start of 2007. Prior to this I was employed by a US carrier. I will need to file both Canadian and US tax returns, and need guidance and assistance with filing my returns for 2007. Please get back to me at your earliest convenience and let me know if this is something you could help me with.


david ingram replies:

That is what we do.

Over the years i have dealt with over 100 CPA, CAIL, Air Canada and Western Airline pilots doing what you are doing.

We also have dealt with some 200 cabin crew in the same situation although they are now few and far between.

If you are flying domestic in Canada, it is more complicated than if you are flying international.

If flying domestic, each flight you make has to be prorated between the provinces you land in.

As an example.

If you  fly from Vancouver to Calgary, half the flight is credited to Alberta and half to BC. 
If you then fly from Calgary to Toronto, 1/2 goes to Alberta and 1./2 to Ontario.
Toronto to Ottawa and back to Toronto all goes to Ontario. 
Toronto to Chicago gives about 8% to Ontario and the US gets the rest. 
Chicago to Calgary gets about 8% to Alberta and the rest to the US
Calgary to Vancouver is half to Alberta and one half to BC.

You will be looking at a minimum of $1,500 and likely more if domestic as a fee.

If you are flying internationally, it is a little easier because there are less pro-rations necessary and it would be cheaper..


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This is not intended to be definitive but in general I am quoting $900 to $3,000 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.
$1,200 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

$3,000 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 $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
A Business for $400 - Rental and business likely $550 to $700
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 $900 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 for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.


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