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Old 03.06.2008, 03:37
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Maintaining Canadian residential ties

My question is directed at the Canadians reading the forum...anyone out there? I'm curious if you guys who work here in Switzerland have retained your residency ties --> and hence pay Canadian taxes?

I'm going to be here for another 3-4 years at least, and I'm thinking of giving up my residency status (**note**, not citizenship) so that I don't have to pay so much bloody tax. I guess one option is to just not declare my income, but I don't want to get busted for tax fraud later on. Just wondering if anyone knows what are the advantages of retaining the residential ties and how difficult it would be to get back when (if? -- most likely) I move back to Canada.

Thanks in advance!
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Old 03.06.2008, 08:52
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Re: Maintaining Canadian residential ties

I don't know why on earth you'd want to keep Canadian residential ties. The only things you get out if it are higher taxes and the option to get medial treatment when you're in the country.

So long as you remain a citizen of the country you'll always have the right to go back and live there whenever you choose, even if you've been living abroad for years. For now, declare that you've left the country, and whenever you go back for good, register with the feds and the provincial government. Easy as pie. When you move back there will be a three-month delay before your health care kicks in (at least this is the case in every province I lived in), but that's the only minor concern. It's easy enough to get private cover for this short period of time.

Heather

Last edited by HeatherM; 03.06.2008 at 09:21.
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Old 03.06.2008, 11:04
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Re: Maintaining Canadian residential ties

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When you move back there will be a three-month delay before your health care kicks in
I think that applies to "residents" as well.
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Old 03.06.2008, 11:09
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Re: Maintaining Canadian residential ties

yeah cut the ties; the only thing you get for it is paying taxes twice

first thing in this direction is to dump your health care there, mayeb get rid of your drivers' licence, etc (ie remove ties) and on your next tax form say you left the country
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Old 03.06.2008, 11:15
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Re: Maintaining Canadian residential ties

Actually it's a bit more complicated than that. You can maintain a bank account but not, for example, a residence. That means selling your house if you own one. As for
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I guess one option is to just not declare my income
trust me, this is not an option... while there may be no way for them to get at you for nonpayment while you are in Switzerland, most other countries will gladly put you on a plane and ship you home to the waiting arms of Revenue Canada (or whatever those Shawinigan assholes are called these days).
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Old 03.06.2008, 11:18
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Re: Maintaining Canadian residential ties

You can rent out the house, you dont need to sell it.
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Old 03.06.2008, 11:26
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Re: Maintaining Canadian residential ties

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¶ 6. Where an individual who leaves Canada keeps a dwelling place in Canada (whether owned or leased), available for his or her occupation, that dwelling place will be considered to be a significant residential tie with Canada during the individual's stay abroad. However, if an individual leases a dwelling place located in Canada to a third party on arm's length terms and conditions, the CCRA will take into account all of the circumstances of the situation (including the relationship between the individual and the third party, the real estate market at the time of the individual's departure from Canada, and the purpose of the stay abroad), and may not consider the dwelling place to be a significant residential tie with Canada except when taken together with other residential ties (see ¶ 17 for an example of this situation and see ¶ 9 for a discussion of the significance of secondary residential ties).
The keyword there is "may". As a rule of thumb you can rely on the CRA to **** you at each and every step. If you are gone for a year or three and rent out your house on a normal (i.e. not long term lease) you can count on them disallowing your claim.
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Old 03.06.2008, 11:28
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Re: Maintaining Canadian residential ties

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You can rent out the house, you dont need to sell it.
Couldn't one turn it into a 'holiday home' and just use it a few weeks of the year?
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Old 03.06.2008, 11:31
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Re: Maintaining Canadian residential ties

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The keyword there is "may". As a rule of thumb you can rely on the CRA to **** you at each and every step. If you are gone for a year or three and rent out your house on a normal (i.e. not long term lease) you can count on them disallowing your claim.
Hopefully a 2 year lease is good enough, cuz that is what mine is rented out with. And plan to continue like this thereafter.
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Old 03.06.2008, 11:55
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Re: Maintaining Canadian residential ties

it's actually not that easy to become non-resident (i.e. to not have to file a tax return form) --> http://www.cra-arc.gc.ca/tax/nonresi...leaving-e.html

i've not done so myself but an acquaintance has and you basically need to prove that you've severed ALL ties to Canada and have done so for a certain length of time (6 months? perhaps but not exactly sure...you'll need to go through the above link to verify).
to make it official (recognized by the tax services offices), you'll need to submit to the CCRA in order to obtain an official date declaration of non-resident status.
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Old 03.06.2008, 12:02
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Re: Maintaining Canadian residential ties

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it's actually not that easy to become non-resident (i.e. to not have to file a tax return form) -->
On a side-note: it's not easy the other way round either. Once you're a Swiss citizen, leaving the country can be a real pain. You need to prove that you're gone for good (or at last for 6 months) - otherwise they won't cash your "Säule 3a", they'll try to tax you wherever you may live and they'll even try to draft you for the military if your younger than 28.

Took my brother about a year to finally get rid of all the problems (AHV, military, taxes etc. etc.) and countless visits to the Swiss embassy when he decided to work in Hungary for a couple of years.

peter
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Old 03.06.2008, 12:25
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Re: Maintaining Canadian residential ties

My hubby and I have both filled out the forms and it was very simple. I have attached the appropriate PDF (if you don't own property in Canada) if anyone is interested.

We still have bank accounts, personal lines of credit, student loans and he still has his Canadian drivers license and it was no problem. As long as you are very specific as to why you maintain these items (bank account to pay student loans, etc) they are reasonable about it and if they have any questions they will give you a call. You also need to be very specific as to the ties you have established here (gym membership, member of a club, job, health insurance, house insurance, etc) and make sure that they outnumber what you are keeping in Canada. The biggest issue is owning property/assets and not selling them off and paying a departure tax and maintaining health insurance (which automatically expires when you leave Canada for 6 months anyways).

Going back is not that hard either, drivers license is transferable from here to there and depending on where you live you have to meet the requirements to get your health care back.


I don't know why you would want to keep the ties and pay the taxes - fill out the form and be done with it
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File Type: pdf Canadian Tax Form.pdf (35.8 KB, 853 views)
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  #13  
Old 03.06.2008, 12:37
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Re: Maintaining Canadian residential ties

Ok. guys... I am little confused now. When I left Canada, I asked Revenue Canada people and they told me that as long as I am paying tax in Switzerland, I don't need to pay any taxes in Canada. I also talked to Onatrio Health department people. I showed them my contract from Switzerland and they told me that I can stay out of country and still be eligible for health related cost while in Switzerland ( there are some conditions about what kind of treatment they will pay for). Just to clarify, I am a PhD student with salary.
So for last year, I have not filed any taxes in Canada. Do I need to worry about this?
Your input will be greatly appreciated.
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Old 03.06.2008, 12:38
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Re: Maintaining Canadian residential ties

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Hopefully a 2 year lease is good enough, cuz that is what mine is rented out with. And plan to continue like this thereafter.
Its all pretty wishy-washy about what counts you in or out, there is a list of things which may count you in on the RevCan website, but its not in stone, essentially you decide yourself if you are an effective resident or not, or you can ask for them to look at your info and tell you. Of course the problem comes when you declare yes and they say no. Apparently House, car, healthcare and bank accounts are the biggies. When I left I cashed my RRSP, closed my bank account and sent back my health card to be sure.

If you get caught, remember the tax difference between Can and CH is HUGE, and you will be expected to pay ca. 25-40% of your income to RevCan on top of your 10-15% CH taxes (can someone say ouch?)
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Old 04.06.2008, 00:05
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Re: Maintaining Canadian residential ties

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So for last year, I have not filed any taxes in Canada. Do I need to worry about this?
My understanding of the tax agreement between Canada and Switzerland (reading legal documents in English is infinitely more challenging than reading the newspaper in German!) is that we have to pay the difference in taxes back to Canada. For me last year, I was studying, and only made a few thousand francs in pocket money, so I dutifully filled out my tax returns and whatnot anyway because I knew I wouldn't have to pay anything. This year, it's a different situation (I just started my PhD) so I'm thinking of dropping the residential ties. A student's life is hard enough without dishing out the extra 15%, 20% in taxes AFTER being taxed already in Switzerland. Though I must admit...being a PhD student here is a LOT cushier than in Canada.

Thanks for the advice everyone, I think I'll go and send in the form. I've got no property and no vehicles in Canada -- only a bank account with no $ in it and a big pile of student loans!
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Old 04.06.2008, 15:13
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Re: Maintaining Canadian residential ties

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Thanks for the advice everyone, I think I'll go and send in the form. I've got no property and no vehicles in Canada -- only a bank account with no $ in it and a big pile of student loans!
Good decision, and good luck with you're Phd, remember the cardinal rule of grad studies - avoid supervisor at all costs, but never miss coffee or a beer!
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Old 21.01.2009, 15:57
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Re: Maintaining Canadian residential ties

My understanding of the situation is that since you are a student, you are by definition out of the country temporarily. You will always have to pay taxes in Canada while a student. Fortunately for you, the tax code recently changed and the majority of your stipend will now be considered a fellowship that is non-taxable, but you still have to fill out the tax form and send it in. Technically, if you don't owe any taxes, which is probably the case for you if all of your income is non-taxable, then you don't have to file. However, as the terms of the statue defining what parts of stipends are non-taxable are to some degree open to interpretation, it is in my opinion to file, and get it on the record that you are claiming this as non-taxable. The more it looks like you are avoiding taxes when they actually decide to look at you, the closer they will look, regardless of whether you have done anything wrong, and these guys can usually find something, even if it is small, to justify their inquest.

Besides, you are still eligible for the GST credit which is actually cash in your pocket, and you will keep your health card as long as you yearly register with them using the appropriate form to certify that you are enrolled full time as a student.

Furthermore, you get LARGE tax breaks of $400/month for being a full time student. Even if you cannot use them, you can pass them to parents or grandparents, regardless of whether they are contributing to your education. Thus you would be throwing away about $750/yr in tax breaks. Additionally, the unused portion moves forward, so if you returned after your Ph.D. you would at least for the first year back have this as your own tax break.

As a Ph.D. student, there really is no justification for "thinking" you might owe taxes, and just not filing them. Not to mention how many possible Canadian Ph.Ds could there be in Switzerland starting this year? You just posted to a public forum. If they see this and decide to track you down...say goodnight Gracie.
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Old 21.01.2009, 16:20
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Re: Maintaining Canadian residential ties

Go have a beer with the Canadian consul in Bern on the 1st of July and ask him all the questions .But before he is drunk
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Old 23.01.2009, 12:02
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Re: Maintaining Canadian residential ties

I also forgot to mention, that when you "pay" taxes in Canada as a student studying elsewhere, if there is a tax treaty (and perhaps even if there isn't) you should be able to claim the foreign tax credit. This means that whatever your Canadian tax bill is, it is decreased by the amount of taxes you have already been required to pay in the country you are currently in, and you only pay the difference. For most graduate students, since the vast majority of the stipend should be non-taxable fellowship, even if you did owe some tax, you are very unlikely to owe amounts that would exceed even the modest amount of tax you pay here in Switzerland.

Please note, since you will be paying withholding tax, if you make a claim for refund of your portion of church tax, or for any interest paid over the year, and receive it, then if you claimed your entire withholding tax on your Canadian taxes you would be committing a fraud. It would be valid I think to claim the entire amount prior to receiving any Swiss refund, however once you did, you would have to amend the amount of foreign tax credit claimed on your Canadian taxes.
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