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canada tax on expats

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thorky
8/9/2019 11:35 EST

Hi. I plan to move to Panama from Canada later this year. Can anyone tell me what tax rate I will have to pay to Canada once I leave the country with no ties whatsoever. I now pay 24% on my private pension. Thanks.

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ranadelnorte
8/9/2019 13:22 EST

Hello
Canada does not have a reciprocal income tax treaty with Panama. Therefore you’ll be subject to 25% withholding tax on your Canada-sourced income. HOWEVER, if you file as a Non-resident, Canada will reevaluate this withholding, and you’ll eventually (like in a year or more) have your tax rate reduced, depending on your income. I can’t tell you how much your rate will be, but it will be less than 25%. I urge you to consult a tax specialist with experience in filing non-resident returns (most don’t).
You’ll also have to do a deemed disposition of your investments, and pay capital gains tax owing. Your investments can then continue to grow, either in Canada or abroad, with no income tax owing.
Good luck!

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WillingWanderer
8/10/2019 09:08 EST

I also have this question,
I only have a winter coat and touque in Canada but use my family's address for now. Just sold my car, everything else tangible is dispersed.. I've been traveling for the last 2 years but I am about to settle in Panama for the foreseeable, but not necessarily permanent, future.
Do I have to do a deemed disposition if I leave my registered investments in Canada? Can't I file as a non-resident, do the automatic 24-25%, then file for a refund on my tax payment indefinitely as long as I leave money invested in Canada?

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ranadelnorte
8/10/2019 09:24 EST

No, you don’t have to do a deemed disposition of your RRSP/RRIF or your TFSA. They can continue to grow tax-free in Canada until you start withdrawing from them, at which time they’ll be subject to the % withholding that CRA has agreed to. HOWEVER, you can’t continue contributing to them as a non-resident.
You’ll have to do a deemed disposition of your other non-registered investments. If you decide to leave these in Canada to grow tax-free, you can’t hold mutual funds, and dividend paying investments will be taxed at 25% if you leave them in Canada.
As far as filing requirements, at this point you’d be better off consulting a tax advisor with expertise in assisting non-residents. We had 3-4 meetings with a tax accountant in preparation for our move to Panama to get things right, and we still didn’t get it perfect.
Good luck!

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Mikxx
8/10/2019 09:28 EST

Interesting topic.
My girlfriend owns real estate in Canada and wants to move to Panama as well.
Is the rental income of Canadian real estate subject to taxation in Canada? If yes, how much will the rate be?
Thanks

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ranadelnorte
8/10/2019 09:34 EST

CRA has a list of 50+ criteria for what it takes to be considered a non-resident of Canada for tax purposes. Consult the CRA website.
If your friend moves to Panama and keeps real estate in Canada, she can’t be considered a non-resident. Her income from the property will be taxed at the rate she pays as a resident.
These issues can be quite complex. It is best to consult a tax advisor with proven expertise in helping non-residents.
Good luck!

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StanleySankey
8/10/2019 13:28 EST

You will find some of the info here.

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/determining-your-residency-status.html

Biggest issue is whether you still have access to your Canadian healthcare, I have been non-resident for over seven years and kept my bank accounts there for the first 3 years as I had rental properties and the income was deposited into them. To be non-resident they needed to be managed at arms length by a professional property management company. The rental property and bank accounts are all disposed of now.

Also, depends on how often you return for visits etc. Unfortunately with CRA they can arbitrarily deem you resident, then make you prove otherwise.

They almost always lose in tax court, but it is a time consuming waste of money to fight them.

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StanleySankey
8/10/2019 13:37 EST

More in depth can be found here.

https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-5-international-residency/folio-1-residency/income-tax-folio-s5-f1-c1-determining-individual-s-residence-status.html

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