Resident individuals can remit up to $50,000
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Posted on: 01-11-06 14:06:38
Quote:
Originally posted by alexm
Yeah, that's what I meant. First you have to declare it as worldwide income and allow the Canadian govt to take its cut.
Then you transfer it to Canada. As opposed to spending it outside Canada...perhaps you could get away with not declaring it.
Hi Alexm,
I believe it does not relate to income earned - but capital assets in India - Chandreshji - please correct me if I am wrong. If you liquidate assets in India n remit the amount overseas - there is no tax (or minimal) in Canada f the declarations have been made in your earlier returns.
Hiren
Quote:
Originally posted by hchheda
Quote:
Originally posted by alexm
Yeah, that's what I meant. First you have to declare it as worldwide income and allow the Canadian govt to take its cut.
Then you transfer it to Canada. As opposed to spending it outside Canada...perhaps you could get away with not declaring it.
Hi Alexm,
I believe it does not relate to income earned - but capital assets in India - Chandreshji - please correct me if I am wrong. If you liquidate assets in India n remit the amount overseas - there is no tax (or minimal) in Canada f the declarations have been made in your earlier returns.
Hiren
Yes Hiren you are right. That is why I had asked this question to Alexm - which tax is he talking about??
However, regarding your initial query - I am unable to comment since I have (almost) never worked in India and do not understand the concept of capital account or current account.
Chandresh
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Chandresh
Advice is free – lessons I charge for!!
Please note Residents can remitt this money, not NRI's.
Though they came up with another relaxation saying nri's can remit the real estate sale funds.
I believe it goes like this.
1. Declare the assets here in Canada
2. When you sell those assets pay the applicable tax in India and then you can remitt funds.
3. You need to provide all the documents plus CA's certification to the bank to prove your claim
Quote:
Originally posted by Val
Please note Residents can remitt this money, not NRI's.
Though they came up with another relaxation saying nri's can remit the real estate sale funds.
I believe it goes like this.
1. Declare the assets here in Canada
2. When you sell those assets pay the applicable tax in India and then you can remitt funds.
3. You need to provide all the documents plus CA's certification to the bank to prove your claim
Thanks Val,
You are right. I realised my mistake when I reread the article this afternoon. The remittance on real estate sale funds or any liquidated capital / asset has a set of rules as you stated above - only the amount limit has been raised to $1 Million.
And Chandreshji,
Capital account convertibility relates to release of forex for the purpose of investing in capital equipments for trade or personal use. Current account is more for the IT companies who have a lot of inward forex remittances as well as payments to be made in forex for expenses of thier staff overseas. I stand corrected for any mis-interpretation of these terms - coming from a non accounting background.
Hiren
Chandresh....what I understood is that if you make any capital gains abroad and want to bring the money back here, the Canadian govt will tax it as part of your income.
So say you invest $20,000 in Indian mutual funds which goes up to $30,000 in 4 years. If you do decide to bring the money back you will be taxed on the $10,000 gain. Assuming with this extra 10K your total income is close to 100K that $10K will be taxed at 42%....or whatever the slab is for 85-100K range.
Same goes for funds that you might have invested in India prior to coming here.
If this is incorrect please tell me because I'd be quite happy if I'm wrong here.
Quote:
Originally posted by alexm
Chandresh....what I understood is that if you make any capital gains abroad and want to bring the money back here, the Canadian govt will tax it as part of your income.
Same goes for funds that you might have invested in India prior to coming here..
Sorry to say, but your understanding is slightly flawed. I will give a slightly detailed explanation for your and others benefit.
There are basically four types of countries for taxation:
1. those countries which do not tax individual on any income atall - like UAE, and most of the tax havens like Cayman Islands, Isle of Man, Gibralter etc.
2. those countries which tax only local income - that is income earned in the country. For such countries, offshore income is not taxable, whether brought into the country or not. Hongkong is one such country (if it has changed after 1997, I am not aware, but I think it remains to be the same rule.
3. those countries which tax all local income plus offshore income received or deemed to be received in the country. So if you invest in India into real property and make gains, but do not bring the gains to such country, it will not be taxed. Singapore and many other countries fall into that category. Your understanding is flawed when you think that Canada falls in that category.
4. those countries where you are taxed for worldwide income, whether or not brought into the country of residence. Canada falls in that category. And if you do not pay taxes on income earned offshore, it is hiding income.
Hope that clarifies things.
Quote:
Originally posted by alexm
If this is incorrect please tell me because I'd be quite happy if I'm wrong here.
I would think that you would be happy if your misunderstanding is causing you greater grief than correct understanding, not the other way round (which seems to be your case right now!!)
Chandresh
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Chandresh
Advice is free – lessons I charge for!!
Hi Chandresh,
Thanks for explaining it better.
My understanding, and I think I didn't put this properly, is that the Canadian govt wants their cut for every single penny you make anywhere in the world.
What I was trying to say was that, for those so inclined, it will be difficult for the govt to police income earned and spent outside Canada.
Anyways, so now I know...there is no way around this. 
