Each country imposes taxes using particular criteria. Canada draws a distinction in how it taxes a person based on whether the person is a Canadian resident or a non-resident. The question of ‘residence’ can be complex, but a Tax Accountant Toronto can help you navigate the legal maze. Residence for tax reasons is not the same as residence when considering immigration or emigration. The tests apply differently to trusts, corporations, and individuals. Not understanding them can lead to inadvertent unfiled tax returns. Having unfiled tax returns exposes you to penalties, fines, interest, and possible criminal prosecution. A Tax Accountant Toronto can help you figure out your obligations and avoid the problems that come with unfiled tax returns.
As a Tax Accountant Toronto and they will tell you that Canada taxes residents on their world-wide income. There are also complex rules that connect Canadian residents to income of foreign corporations, partnerships, and trust. The Income Tax Act also imposes information reporting obligations on taxpayers depending on their circumstances. This can all get very confusing and without the help of a Tax Accountant Toronto, people accidentally have unfiled tax returns. Changing residency status also has consequences that have to be considered. It’s not just having unfiled tax returns that can be the problem.
One scenario that often catches Canadians is when they leave Canada or go to live overseas for a while. Just because you have left Canada doesn’t mean you’ve stopped being a Canadian resident for tax purposes. You can even be out of the country for years and still have to pay tax on your worldwide income and not knowing can cause you to have unfiled tax returns. For individuals, the legal test considers a number of factors that measure your social and economic ties to Canada. The list is very long and there are many court decisions that can be relevant. A Tax Accountant Toronto can either tell you whether you’re likely still a Canadian resident or help you remain or stop being a tax resident when you leave or are living abroad.
Take this scenario. Your company offers you a job at a branch outside of Canada. Your put your home up for sale and move before it’s sold. Maybe your family stays behind to finish packing, finish school, or wait for the house to sell. They come and join you at your new place of work sometime after you leave, and you may go back to visit family while you are working outside of Canada. Maybe you intend to come back to Canada, maybe you don’t, and maybe you don’t know. Are you still a tax resident of Canada? When did you stop being a resident? These are questions the answer of which depends on your particular circumstances. There is no one factor that gives the right answer but a Tax Accountant Toronto can help you figure things out. Know what your obligations are and don’t end up with unfiled tax returns. Make sure things go smoothly by getting the help of a Tax Accountant Toronto today.