As a Canadian earning abroad you often have a number of tax obligations that it is essential you are aware of.
Here is some essential information you must be aware of as a Canadian working abroad.
Income earned in Canada and abroad are BOTH liable to taxation from the CRA (Canada Revenue Agency)
Worldwide income can be subject to taxation under Canadian Tax Law. Therefore, a Canadian living, working or travelling abroad who is still considered a resident of Canada will have to pay taxes to the CRA.
Determining whether you are liable to pay Canadian tax depends on what classification of resident you fall under. If you maintain significant residential ties to Canada then you are considered a ‘Factual Resident’ and are likely to be subject to tax.
In order to cease your Canadian residency you must sever all residential ties. This means you must no longer have property in Canada etc.
The destination where you earn your income has first right to taxation
Canada will give you credit for the tax you pay to the country you earn your income. For instance, if you earn $60,000 in the US and are taxed £8,138.75 by the IRS on the amount; Canada will take into account the amount you have paid and tax you the amount extra that Canada would charge.
Therefore if Canada’s tax would be $14,159.21 they would tax you $6020.46.
Double taxation is possible, however uncommon.
Canada has tax treaties with a number of different countries that override the domestic law of Canada and laws of the other countries, some non-treaty countries won’t give you full credit for all the taxes paid.
You are still required to file a Canadian tax return if the tax rate of your location is higher
If the tax rate is higher in the country you are living/travelling/working, you are still required to file a Canadian tax return. You will not be required to pay any tax to Canada. However you must still disclose the amount of income you earned and the amount of tax you paid.
Non-residents of Canada are still subject to taxation if they make income within Canada.
Non-residents are still required to pay tax if they earn income in Canada. The income is generally taxed at a flat rate.