Part II = Question on Income tax for Income earned

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David,
I really appreciate your reply.  I read through web
site that you sent me.  By the way, you guessed right.
 I am from the Philippines, however, I have been
working in Indonesia for quite some time.
The plan is to leave my wife and children in Canada
while continue and complete my work in Indonesia.
Let me read through the materials.  If fine with you,
I may send a follow up question later.
Regards.
Rxxxx
-----------------------------------------------
david ingram replies:
Indonesia has a tax treaty with Canada.
You will pay tax to Indonesia first.  Then ytou will repeat the income to Canada. Then you can exempt it on the Canadian return by deducting on line 256 under the treaty OR you can claim the foreign tax credit.
I expect that the tax paid to Indonesia will be high enough to wipe out the Canadian tax.
> Sent: Friday, June 13, 2003 10:05 PM
> To: [email protected]
> Subject: Question on Income tax for Income earned
> outside Canada
> 
> 
> Sir,
> 
> My permanent residence in Canada has been approved. 
> I
> will be landing in Vancouver in the next couple of
> months.  However, I will most probably continue to
> work in a foreign country for another several
> months.
> 
> My question is, will the income I earn while in a
> foreign country be taxable in Canada.
> 
> I appreciate your help.
> 
> Regards.
> 
> 
> --------------------------------------------------
> david ingram replies:
> 
> What an interesting question, what you are
> describing is a situation where
> you will undoubtedly be taxable in both countries on
> the same income.
> 
> The situation will be a little different if you are
> married and leaving your
> wife and children in Canada while you are still
> working in the other country
> and it will be treated differently if you are
> working in a Country with an
> Income tax Treaty (such as the US, Spain, Mexico,
> New Zealand,  Indonesia)
> or are working in a no tax treaty country like
> Kuwait, Dubai, Saudi Arabia
> or the Grand Cayman Islands.
> 
> I am guessing that you might be from the
> Phillipines.
> 
> If so, in another simnilar case, my client works for
> an Oil Company in
> Libya.  He pays a high income tax there and then
> claims credit for the tax
> paid to Libya on his Canadian Tax return.
> 
> The Libyan tax is high enough that there is no tax
> difference to Canada.
> The same is true for people working at places like
> the Kaltrin Coal Mine in
> Indonesia.
> 
> However, if you were working in Saudi Arabia where
> there is no income tax,
> you would owe significant tax to
> Canada in the same situation as hasppened to David
> MacLean in the chapter
> mentioned in the next paragraph..
> 
> You should read my US/Canadian tax chapter at
> http://www.centa.com/U.S.Cdntaxation.htm
> This situation is mostly aimed at US / Canadian
> Income taxation but Article
> IV applies to any tax treaty country and there ae
> some sample tax cases
> dealing with Saudi Arabia and Libya.
> 
> 
> 

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