Sent: Tuesday, November 29, 2005 7:08 PM
To: taxman at centa.com
Subject: Overseas move
Hello,
My question pertains to a move outside of Canada.
The company I work for wants to send me to either its Aberdeen, UK or
Portsmouth, UK office.
I would become an employee over there (its a different division of a large
European oil comany which operates under a different name in Alberta) as
opposed to being "seconded", and as such receive a salary in sterling.
Could you please tell me what problems would arise from the fact that I own
a condo in Calgary,
and whether renting this out as opposed to leaving it empty would cause me
any trouble taxwise.
Also they told me I would probably be sent to work in the Rotterdam office
after 9 months. I do not forsee myself returning to Alberta until at least
18 months to 2 years.
I am a Canadian citizen, but have a UK passport through my parents.
Thank you in advance for taking time to read this query.
-----------------------------------------------------
david ingram replies:
If you are physically in the UK and your Calgary home is rented out, you
will not / do not have a home available to you in Canada. Under Article IV
of the UK / Canada Income Tax convention, you will only be taxable in the UK
on your world income which will include the rental in Canada. For Canada,
you will file a return under Section 216(4) and pay tax to Canada on any
profits. If it is losing money on the rent, you will elect to capitalize
some or all of the expenses.
Any tax paid to Canada will be a foreign tax credit on your UK return.
Going to Rotterdam could throw a wrench into the works because it might mean
that you have not been in England long enough to qualify and will not be in
Holland long enough either.
In cases like that, it is common for the employer to put you under Tax
equalization so that you end up paying the tax you would have paid without
the transfers.
This may, or may not help. Try and read the US/Canada Taxation section in
the second box down on the right hand side at www.centa.com.
There are several examples of Canadians paying tax when they did not think
they would have to.
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