Canadian expats

Richard Colburn

‘Snow Birds’ is the term applied to the tens of thousands of Canadians who fly or drive south every year to spend their winter months in Florida. They enjoy the warm weather of the Sunshine State but return home in time to ensure that they maintain their entitlement to social benefits. Financial planning and lifestyle planning at their most basic.

Nowadays, Snow Birds are flying further a field and settling permanently in popular expat locations like Thailand.

Canadian expats

Unlike their cousins across the pond in Europe, Canadians don’t automatically end their liability to the taxes of their home country by jumping on a plane and disappearing into the tropics, but they can do so with considerably more ease than their neighbours living south of the border.

Give and take

Canadians enjoy the luxury of not having to pay Inheritance Tax or death duties on their worldly belongings when they die, in stark contrast to citizens of the US and the European Union.

However Canadian expats may need to make some specific financial planning arrangements to ensure that they meet the tax criteria for being ‘non-resident’ in Canada in order to completely avoid their liability to taxes back home.

Tax residency

Canadians who are classified as ‘tax-resident’ are taxed on their worldwide income while those who are classified as ‘non-tax-resident’ are taxed only on their income that is received from Canadian sources.

It is important to realize that those who have permanently emigrated can still be liable to tax on their worldwide income, depending on their circumstances. This is because the law requires emigrants to sever their ‘residential ties’ in order to escape liability to Canadian tax on their world wide income.

The main residential ties with Canada include:

• Owning a home and other personal property
• Having a resident spouse or civil partner and any other dependants
• Having social ties, including club memberships

Other factors taken into consideration include maintaining a Canadian driver’s license, bank account and credit cards as well as having health insurance with a Canadian Province or Territory.

To maintain non-residency, Canadians should spend no more than 183 days of each year in their home country.

Your money

Canadian expatriates who have not severed their residential ties will be liable to Canadian Federal and Provincial Income taxes on their world wide income at the following current rates:

Taxable income CAD 34,000

Highest rate (Newfoundland): 30.48%
Lowest rate (British Columbia): 21.2%

Taxable Income CAD 74,000

Highest rate (Manitoba): 39.4%
Lowest rate (Ontario): 31.15%

Your ability to enjoy tax-free returns as a Canadian expat may very well be the ingredient that provides you with real comfort in retirement and the freedom to retire wherever you choose.

Are you taking full advantage of your situation?

If you are a Canadian living in Thailand it might be worth reviewing your situation to see if you are enjoying all of the financial benefits available to you.

It’s your money and your peace of mind.

Richard Colburn is a UK exam qualified financial adviser with Sterling Assets.

Questions to the author can be directed to 053 216 528 or email us

Published in: on September 4, 2007 at 1:43 pm  Leave a Comment  

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