When filing income tax returns as a Canadian working abroad, regardless of visa restrictions or residential ties to Canada, filing returns remains expected of you by CRA and may qualify you for deductions and credits that might benefit.
Check the offical tax rules for Canadians living abroad:
Personal Exemptions
Your goods brought back for personal use can be brought into Canada without incurring duties and taxes, provided they are in your possession on arrival and reported to CBSA; value in Canadian dollars must also be declared for such goods. Unfortunately, tobacco products and manufactured tobacco or alcoholic beverages are not exempt from duties and taxes and can only be shipped via mail or courier after arrival in Canada.
Income earned while traveling outside Canada must be taxed accordingly, unless your country of residence has signed a tax treaty with Canada. Your withholding tax rate depends upon whether or not you are classified as non-resident.
Personnel serving with the Canadian Armed Forces or government employees residing abroad maintain their resident status regardless of where they are living or working, although in certain instances you could be subject to the alternative minimum tax (AMT). Please visit CRA’s AMT page for more details.
Gifts
Personal items up to CAN$800 (excluding tobacco products* and alcoholic beverages ) may be brought back tax and duty free into Canada without incurring duty and taxes. You must bring these goods with you when entering Canada.
Canadian property is considered taxable if its value derives more than 50% from land or natural resources in Canada, such as shares in a corporation that generate more than 50% of their value from such resources. If you plan to sell any such taxable Canadian properties soon, any resulting capital gains tax should only become relevant once the sale occurs.
Your status as a non-resident depends on several factors: living abroad for more than 183 days in any tax year, having significant residential ties to countries with which Canada has tax treaties or fulfilling the conditions for an exemption. Please refer to CRA link on International and non-resident taxes to understand your responsibilities and obligations as soon as you become non-resident; typically speaking you would stop filing regular income tax returns once considered non-resident.
Prizes
If you win a significant prize while travelling overseas, its tax implications depend on whether Canada has signed a tax treaty with that country. In most instances, special prizes like these fall under regular income rules and must be treated accordingly.
For more information about winning prizes abroad, visit the Canada Revenue Agency’s page on winning prizes abroad.
Typically speaking, travelers can claim their personal exemption limit of either CAN$800 (48-hour trip) or CAN$800 (7-day trip) per trip; however, any goods exceeding these amounts require duty to be paid on. Therefore it is extremely important that records of what items were brought along are maintained.
Tax authorities determine your residency for tax purposes based on several criteria provided by the Canada Revenue Agency, such as significant residential ties in Canada such as ownership of property or having family there; economic ties (such as working outside Canada); social ties (like membership in Canadian organizations); and third-party professional valuation of your overseas assets immediately before returning home – this valuation must also include an estimate for capital gains taxes due when returning. It is vitally important that an accurate third-party valuation be carried out.
Departure Tax
As a Canadian working abroad, it pays to be aware of tax regulations. Depending on when you cease Canadian residency status and begin living outside Canada, filing an income tax return and/or paying departure tax could become necessary.
Determining whether you are considered a non-resident for tax purposes can be complex and depends on many factors, including significant residential ties (owning a home in Canada), social ties (membership in clubs or organizations), economic ties (Canadian bank accounts and credit cards), as well as how long you are away.
The Canada Revenue Agency (CRA) indicates that if you maintain significant residential ties outside Canada and intend to return in the near future, departure tax must be paid. This amount equals your net capital gain on properties sold prior to leaving; filing an income tax return also occurs annually upon reestablishing residency status. Taking time and care in understanding these obligations can save time and money when living overseas as well as provide peace of mind while abroad.
