Globalization is luring Canadians every year to work, travel or retire in low- or tax-free countries with the mistaken belief that they can shed their tax obligations at home.
But experts in the field say the only way to legally free yourself of Canadian income tax is to completely sever ties with the country and become a permanent resident elsewhere.
“You cannot reduce your tax burden if you are a Canadian resident working and living abroad,” says Allan Madan, a chartered accountant and tax expert in Toronto.
Cleo Hamel, a senior tax analyst with H&R Block, says many Canadians only realize their mistake years after departing the country. Many assume payment of Canadian taxes isn’t required if they live outside the country for a year.
“Most people think about the actual move or they think about the life that they’re going to lead outside of the country, without actually thinking or researching if there are any tax implications,” she said from Calgary.
Expats who maintain close ties with Canada must file tax forms annually and pay Canadian taxes on their worldwide income. Credit is given for any taxes paid to the 93 countries that have tax treaties with Canada to prevent double-taxation.
Technology that allows electronic records to flow easily between governments is making it harder to get away with not paying taxes on worldwide income. Canadian law requires that the government be notified of transfers from foreign to Canadian bank accounts.
The restrictions have prompted some Canadians to completely sever their Canadian ties.
Madan says he’s been fielding a growing number of calls in the past couple of years, especially from middle-aged, high-income executives seeking to relocate to tax-free or low-tax zones in the Caribbean or the Middle East.
“For the most part, that’s where their work is taking them, but they’re decision is heavily influenced by the tax situation,” he said in an interview from Toronto.
Someone making $1-million a year abroad can save more than $450,000 in Canadian taxes by changing their residency from Ontario to a tax-free country like Saudi Arabia.
The tax savings would be much less if they relocate to the United States or Europe where tax rates are similar to Canada.
Michael Cadesky, an international tax specialist with Cadesky and Associates, says people are much more mobile these days because of globalization, EU laws that let their passport holders work without permits, and NAFTA that allows some professionals to work in the United States, Canada and Mexico.
more recommended stories
More than 40 thousand people witnessed the first ‘Grito’ by Mauricio Vila in Yucatán
More than 40 thousand people attended.
Bar attack on “Día del Grito” leaves five dead and three injured in Tabasco
In AMLO’s homestate of Tabasco, a.
AMLO to arrive in Mérida Thursday to participate in the Nobel Peace Prizes Summit
The governor of Yucatan, Mauricio Vila.
Investors are confident that their projects will be profitable in Cancun
The director of Tourism of the.
Mérida, ‘flooded’ with constructions
In the estate capital are located.
Warning as hurricane Humberto forms off Florida coast
MIAMI — Beachgoers on the southeastern.
The Buying Power of Bitcoin – 5 Things You Can Buy with Bitcoin
Are you wondering what you can.
Frida Kahlo Foundation launches new line of makeup inspired in the Mexican artist
The Frida Kahlo Foundation is partnering.
Yucatan becomes a national media trend
Yucatan now sanctions harassing women on.
Chihuahua dogs’ wedding goes viral on social networks
A video of the wedding ceremony.