Posted on: 30-05-10 20:27:38
My friend who is to move back to India and collect his pension there mentioned something abt a tax treaty between the two countries. As I understood, the CRA will withheld 15% becuase of the tax treaty. Not sure if this is right or not. Can someone please throw light on this?
KM
Quote:
Originally posted by KumarM
My friend who is to move back to India and collect his pension there mentioned something abt a tax treaty between the two countries. As I understood, the CRA will withheld 15% becuase of the tax treaty. Not sure if this is right or not. Can someone please throw light on this?
KM
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Here is a list of countries that Canada has Tax Treaties with : http://www.fin.gc.ca/treaties-conventions/treatystatus_-eng.asp#status
Some of the others they have agreed and signed.
Some of them they have agreed and not in force.
For some countries the Tax system provides them with a better relief and so you will have to delve a little deeper into it to find the rates. For Example, they might have a 15% tax with hold-ment on Pensions with Barbados. But with India they will have an agreement to with hold a 25% on Pensions.
So, be aware. It is a mine field.
Freddie.
In case you want to get in touch with them personally.
http://www.cra-arc.gc.ca/tx/nnrsdnts/menu-eng.html
Thx.
For India it is 25%! So what happens when my friend files for taxes for Canada? Is that 25% reduction permanent or would there be some refund based on the taxable income? His pension as I can roughly guesstimate (based on his service and position) will be around $12k gross per year.
Will the RRSP investments take a hit too?
KM
Quote:
Originally posted by KumarM
Thx.
For India it is 25%! So what happens when my friend files for taxes for Canada? Is that 25% reduction permanent or would there be some refund based on the taxable income? His pension as I can roughly guesstimate (based on his service and position) will be around $12k gross per year.
Will the RRSP investments take a hit too?
KM
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Based upon his world income, (With proper documentation, if none other and only the Canadian income) then he stands to get all of the with holding taxes back. You can talk with the Ottawa CRA guys freely and get all of the responses from them too.
Pardon me, I have not kept pace with the other thread that in which you posted the query. But I will also take some interest in that and give you a total summation as it was skimpy at the start.
Freddie.
Thx Freddie. Much appreciated. At least that's a good news.
I called CRA. Per the agent, 25% of fed tax is withheld assuming that people dont file for taxes when they live in India. If they file, there may be refund based on the taxable income. For small pensions less than say $12k, they may end up paying very less tax.
KM
