This is a multi-part message in MIME format.
---------------------- multipart/related attachment
--Boundary_(ID_VVz2l+IpczrbUoK0Wc51vQ)
Hi
A. I am an English Police Officer coming to the end of a 30 year "contract" in the UK, which means that I can "retire" from the Police with an equivalent superanuation pension of about $60,000 per year.
B. I will be 48 years old when I "retire" and I will get 73 points on the immigration process and therefore intend to sell up and come to Canada. In the first instance we intend to get landed immigrant skilled worker status and if we settle would want to probably apply to be Canadian Citizens.
C. I already note from David's advice that if we want to set up a business we would be best to purchase a new home for cash (we could probably afford a property costing up to $650,000 cads) and then borrow against the home to set up a business....Having said that, we may apply for jobs and seek to be employees of someone else's firm.
D. I was very interested in the attached query concerning the Canadian Pension Plan, particularly as my 47 year old wife hasn't got a pension of her own.. I understand from what you say that we would be expected to contribute to the CPP when we arrive.
My question is,
1. if we both start contributing to a CPP and possibly an RRSP, what would our expnditure actually be?...
2. Similarly, how much tax would we be paying on my pension?....
3. I also presume that there are contributions to compulsory health care plans. We are very happy to pay whatever it costs, but I am trying to do my sums to see how much we would actually have to live on before we either set up a business, or got ourselves jobs!
4. I presume that there would be taxes to pay on the house ...we call it community charge over here....How much would we expect to pay out each month on a $650,000 house?
5. We are seriously thinking about setting up the house as a bed and breakfast - possibly in the Vancouver of Banff area...Is there any tax advantage by locating in either area?..Is it true that Alberta has a lot less taxes than BC?
6. One other slightly complicating factor is that my wife and I own a small house which we rent out in Sussex, England. After expenses this brings in about $10,000 cads per year. We would intend to continue to rent out this property which has never been our primary residence. Is it right that because it was not our primary residence, it would be taxed as "world income" in Canada?...I am still slightly confused as to where we would be taxed ie in either the UK or Canada - I know that there is a tax treaty between our two countries but I don't really understand what would be happen in the three years it would take us to decide whether or not we wanted to apply to be Canadian Citizens.
Having spent a bit of time surfing the net I would like to say that your service is fantastic..there doesn't seem to be any other site which offers easy to understand advice on these issues...I know that several of my police colleagues would be very interested in your reply as there seems to be a bit of an exodus to Canada at the moment.
Thanks for your help
MXXXXXX
===========================================================================
david ingram replies:
You are too kind but I appreciate your comments nevertheless.
I have taken the liberty of identifying your paragraphs with letters and your questions with numbers to make it easier for me to address.
1. That question is answered in the question that you used to ask this question. I have left it below. Take another look at it.
2. The marginal tax rates are roughly 23% on the first $30,000, 32% on the next $30,000 and 40 to 43% on the excess. A $60,000 Cdn pension would have a tax of approximately $13,500 [ $6,900 (.23 x's $30,000) + $9,600 (.32 x's $30,000) - $3,000 (personal exemptions)] There are actually 5 tax progressions but this is close enough for your calculations unless you want to be really picky in which case, I send you a bill.
3. In BC, you will pay about $1,100 a year as a family for the compulsary BC Medical. The same coverage has no medical premium in Alberta. If you wish extra insurance, joining any Chamber of Commerce or Board of Trade allows you to join a large group at a lower group rate..
4. I am not going to tackle this because every municipality has a different tax rate and a differnt tax base. Expect up to $8,000 a year but more likely in the net $5,500 range in the Greater Vancovuer Area. I have no idea what the rate for Banff or Canmore, Alberta would be.
5. In my opinion, the income tax rate is not different enough between BC and Alberta to make your decision based on Income Tax. However, as well as the $1,100 medical premium (a tax) BC also has a 7.5% tax on goods and some services. Therefore, if you spent $10,000 on Goods and restaurant meals and legal fees and car expenses, you would pay $750.00 more in sales Taxes. Alberta is the only provionce without a provincial sales tax. All areas of Canada are subject to a 7% GST (goods and services tax) which you would call a VAT.
6. You will be filing an GB A4 tax return to report the rental house and pay tax to Great Britain First. Then you will report it again in Canada and pay tax again. BUT, Canada will allow you a foreign tax credit for the taxes paid to the United Kingdom.
I should mention that there is a five year Immigrant Trust which would allow you to exempt the rent from Canadian Tax.
I do not suggest that you take advantage of this for $10,000 a year. The only tax you might save would be the diffeence between the GB tax and the Canadian tax. I am sure that the costs of operating the Trust would be greater than the tax you would save. If you had $10,000 a year from a non taxed country like the Grand Caymans or Turks and Caicos, it would barely be worthwhile doing. Of course, $5,000,000 stuck inteh Isle of Mann would be a completely different story.
Of course, I would be glad to assist in any of these endeavours and you are welcome to pass this along to any of your compatriots. I have several friends and clients (including my brother) who are involved in Private Security in the Greater Vancouver Area. I would be happy to introduce you to them.
And, I hate to be too commerical but we are also a full service real estate agency specializing in out of country purchasers and sellers.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321
[email protected]
www.centa.com www.david-ingram.com
-------Original Message-------
From: [email protected]
Date: 12 December 2003 10:25:57
To: CENTAPEDE
Subject: Canadian Wants to know about Canada Pension Plan andRRSP Accounts Ask an income tax guru or income taxman
Hi
I am working on contract, how i can get maximum pension when i retire.At present i am 35 and i am self empoyed.
I heard about CPP contributions,and Rssp.which is benefical for me.
Thanks
Sincerely
IXXXXXXXXXXX
-----------------------------------------------------------------
david ingram replies:
I gather that you are new to Canada from the nature of your quesiton and your age.
The Canada Pension Plan is mandatory and is paid by all employed or self-employed Canadians between 18 and the day they start taking the pension out which is usually between 60 and 70 unless they become disabled and take it out earlier in the form of a disability pension.
The premiums are roughly 10% of a maximum of $40,000 with about a $4,000 deductible. Roughly speaking then, you would pay (as a Self employed person) a maximum of $3,600 premiums or $1,800 as an employee. (when you are an employee, your employer pays half. When you are self-employed, you pay both halves. CPP is only payalbe on earnings for services. You cannot pay CPP on investment income or rental income or capital gains.
RRSP's are a little different. They are a voluntary contribution you make based upon 18.5% of your earned income from the year before. the maximu this year is $14,500 of contributions which then becomes a tax deduction. However, if your incoem was only $10,000, you could only put in 18.5% of the $10,000 for a maximum of $1,850..
When you do not have the money to put in this year, the amount that you could have put in gets carried forward and you can make more than one years's contirbutiosn in a year when you have the money to do so.
In the case of RRSP contributions, rental income counts towards the amount you can put in. A Rental loss and EI premiums and a few other things also come OFF your income when it comes to calculating your allowable amount.
This has been quick and dirty. If youlive int eh Vancouver Area, George Hatton is ourt RRSP? specialist with Cartier Partners (Which has just been bought out by Dundee Investments) is available for individual consultations and sales at (604) 913-9137 or [email protected]
From your email address, I would guess that you are in Toronto or Ontario however.
____________________________________________________
IncrediMail - Email has finally evolved - Click Here
--Boundary_(ID_VVz2l+IpczrbUoK0Wc51vQ)
An HTML attachment was scrubbed...
URL: http://www.centa.com/CEN-TAPEDE/centapede/attachments/252a74cc/attachment.htm
--Boundary_(ID_VVz2l+IpczrbUoK0Wc51vQ)--
---------------------- multipart/related attachment
A non-text attachment was scrubbed...
Name: IMSTP.gif
Type: image/gif
Size: 669 bytes
Desc: not available
Url : http://www.centa.com/CEN-TAPEDE/centapede/attachments/d4e54a16/IMSTP.gif
---------------------- multipart/related attachment--
What's Related