Take Home Pay for 85k /year
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Quote:
Originally posted by dimple2001
Quote:
Originally posted by web2000
Here is a case due to which I asked the question
A person is holding agricultural property in India which generates approx $50000 (Approx Rs 22,00,000) from agri. production. This income is not taxable in India. Since a person has Canada PR but living in India find himself in a trouble to pay heavy tax in Canada just because he has a RRSP account in Canadian bank. He is still in the process of figuring out if he has to pay tax in Canada or not. He cannot close his RRSP account in Canada as it will be a loss to take all his money from RRSP. There is no Canada source income in this case.
I hope this will make sense.
Does he have a RSP account or is he retired and withdrawing off his RSP money? If it is the former, there is no tax to pay on the RSP account as RSPs are tax deferred. If it is the latter, yes, he owes tax on this withdrawal and it is a Canada source income as a non-resident of Canada.
Having a dormant RSP account does not make him a tax resident of Canada. However, he is obligated to declare this Canada source income if and when there are withdrawals off the RSP account.
On the other hand, if he is continuing to contribute to RSP, then CRA will treat him as a tax resident since only residents can contribute to RSP. In that case, he will be subject to tax on worldwide income in Canada.
As I said, there is no Canada source income. RRSP account is just holding his past contributions and he will not withdraw any money for few years. He is also not contributing to RRSP account. Just imagine that the savings are frozen in RRSP account and there is no in/out from that account. My question is if he has to pay any tax on Rs 22,00,000 which he generates from agri. production in India? There is no tax imposed by Indian govt on that income?
Please note that Rs 22,00,000 is not taxable in India. Then will this be taxable in Canada?
Is it clear now?
Posts: 2873
Location: Western Hemisphere
Posted on: 11-01-11 12:07:01
Location: Western Hemisphere
Posted on: 11-01-11 12:07:01
Quote:
Originally posted by web2000
As I said, there is no Canada source income. RRSP account is just holding his past contributions and he will not withdraw any money for few years. He is also not contributing to RRSP account. Just imagine that the savings are frozen in RRSP account and there is no in/out from that account. My question is if he has to pay any tax on Rs 22,00,000 which he generates from agri. production in India? There is no tax imposed by Indian govt on that income?
Please note that Rs 22,00,000 is not taxable in India. Then will this be taxable in Canada?
Is it clear now?
In my opinion, he is then a non-resident for tax purposes and does not have to declare worldwide income in Canada. As I stated before, when withdrawals are made, he should then declare Canada source income.
Also, there is a section on the tax form that asks for the date one left Canada. Hopefully, he filled that out in the last (most recent) filing and declared himself a non-resident.
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Dimple2001
Quote:
Originally posted by dimple2001
Quote:
Originally posted by web2000
As I said, there is no Canada source income. RRSP account is just holding his past contributions and he will not withdraw any money for few years. He is also not contributing to RRSP account. Just imagine that the savings are frozen in RRSP account and there is no in/out from that account. My question is if he has to pay any tax on Rs 22,00,000 which he generates from agri. production in India? There is no tax imposed by Indian govt on that income?
Please note that Rs 22,00,000 is not taxable in India. Then will this be taxable in Canada?
Is it clear now?
In my opinion, he is then a non-resident for tax purposes and does not have to declare worldwide income in Canada. As I stated before, when withdrawals are made, he should then declare Canada source income.
Also, there is a section on the tax form that asks for the date one left Canada. Hopefully, he filled that out in the last (most recent) filing and declared himself a non-resident.
Confusion again man. Why you assume that he left Canada. I said that he is PR but has no ties except RRSP bank account. He will be maintaining his PR. If somebody leaves Canada then what is the point of asking this question?
Let me try to make it more simple
"Person has only RRSP account in Canada and there will be no withdrawals and contribution to this account for few years. There is no other tie except this account. Person travels to Canada occasionally to maintain his PR, but most of the time he lives in India and generates agricultural income in India which is not taxable in India. So my question is if his that income be taxable in Canada in anyway????????????????????" There is nooooooooo Canada source income.
Hope you will get my point.
Posts: 2873
Location: Western Hemisphere
Posted on: 11-01-11 14:46:09
Location: Western Hemisphere
Posted on: 11-01-11 14:46:09
Quote:
Originally posted by web2000
Here is a case due to which I asked the question
A person is holding agricultural property in India which generates approx $50000 (Approx Rs 22,00,000) from agri. production. This income is not taxable in India. Since a person has Canada PR but living in India find himself in a trouble to pay heavy tax in Canada just because he has a RRSP account in Canadian bank. He is still in the process of figuring out if he has to pay tax in Canada or not. He cannot close his RRSP account in Canada as it will be a loss to take all his money from RRSP. There is no Canada source income in this case.
I hope this will make sense.
Read your post, third line second para - ".....Canada PR but LIVING in India....". Hence, of course, I am going to assume he is living in India.
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Dimple2001
Posts: 2873
Location: Western Hemisphere
Posted on: 11-01-11 14:52:39
Location: Western Hemisphere
Posted on: 11-01-11 14:52:39
Quote:
Originally posted by web2000
Confusion again man. Why you assume that he left Canada. I said that he is PR but has no ties except RRSP bank account. He will be maintaining his PR. If somebody leaves Canada then what is the point of asking this question?
Let me try to make it more simple
"Person has only RRSP account in Canada and there will be no withdrawals and contribution to this account for few years. There is no other tie except this account. Person travels to Canada occasionally to maintain his PR, but most of the time he lives in India and generates agricultural income in India which is not taxable in India. So my question is if his that income be taxable in Canada in anyway????????????????????" There is nooooooooo Canada source income.
Hope you will get my point.
No need to get frustrated
You stated in your own post he is living in India. Hence I will assume he is living in India.
So, according to your post, he is living in India but "he has not left Canada" (meaning, he hasn't abandoned Canada). If he hasn't abandoned Canada, then he has failed to satisfy one of the 2 required conditions for non-residency and hence CRA might treat him as a tax resident. Might be a good question for CRA themselves.
Others can chime in, maybe.
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Dimple2001
Quote:
Originally posted by dimple2001
Quote:
Originally posted by web2000
Here is a case due to which I asked the question
A person is holding agricultural property in India which generates approx $50000 (Approx Rs 22,00,000) from agri. production. This income is not taxable in India. Since a person has Canada PR but living in India find himself in a trouble to pay heavy tax in Canada just because he has a RRSP account in Canadian bank. He is still in the process of figuring out if he has to pay tax in Canada or not. He cannot close his RRSP account in Canada as it will be a loss to take all his money from RRSP. There is no Canada source income in this case.
I hope this will make sense.
Read your post, third line second para - ".....Canada PR but LIVING in India....". Hence, of course, I am going to assume he is living in India.
But I never said he left Canada. You can live in India 3 out of 5 yrs and still maintain ur PR. This is what he will be doing.
Exception is that he has RRSP account in Canada and nothing else. Now coming to same question, Will he pay the tax in Canada on his income which he is generating in India from agriculture?
My query is still there and hope you can answer now if it is more clear.
Posts: 2873
Location: Western Hemisphere
Posted on: 11-01-11 15:23:29
Location: Western Hemisphere
Posted on: 11-01-11 15:23:29
Quote:
Originally posted by web2000
But I never said he left Canada. You can live in India 3 out of 5 yrs and still maintain ur PR. This is what he will be doing.
Exception is that he has RRSP account in Canada and nothing else. Now coming to same question, Will he pay the tax in Canada on his income which he is generating in India from agriculture?
My query is still there and hope you can answer now if it is more clear.
No, I do now understand what the situation is. What I don't know is how CRA would interpret his visits which are clearly meant to maintain ties and PR status even though he does not have intent to live on a long term basis.
For example, if someone landed today, left 3 hrs later, did nothing else and came back after 3 years and decided to live, it's a straightforward case. No tax obligations while he was gone and then when he is settling, tax obligations begin.
In this case, the idea is for him to continue to visit Canada periodically for one purpose - to maintain PR. For how many times can he do this and claim he has no ties to Canada even though he is trying to do just that to keep his PR? Although, I stated previously, PR and citizenship status has nothing to do with tax residency, in this case, there is a risk of him being interpreted as a tax resident solely due to his actions.
Sorry, I don't have a black and white answer, but I am afraid, this case would be subject to interpretations that may or may not be favorable to him.
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Dimple2001
