Non Resident hit with a big tax by C-R-A
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Location: God's own country
Posted on: 03-06-12 13:34:25
To all:
I am a NR of Canada for Income tax purposes.
I stayed 3 months in 2011 and left Canada. I became a NR and informed C-R-A about it. I filed my tax return to the C-R-A for 2011. I expected a hefty refund but they hit me with a bill for $ 900.
How they did it was they prorataed my stay and gave prorated allowances for my income tax.
For example If I had earned $ 5000 for 3 months they considered $ 20000 as income for the whole year and taxed me on that.
I donot want to comment if it was fair or not but just wanted to inform people like KumarM, Timon, Bombay Duck, RajanD etc...
Peace
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I am a Gents and not a Ladies.
Pay it and suck it up!
You always crib about Canada system. You were right.
Hmm .. that s strange ... When a person becomes a resident of Canada , his income even if for 3 months is considered & taxed for the whole year ...
Anyway thanks for sharing and you might be contended in the fact that you do not have to pay tax on world income for the 9 mos. of income outside Canada because you are a NR ...
Did you consider the alternative of continuing as a Resident , paying your taxes in India and claiming the credit on the taxes paid ?? Will such a liability be +ve or -ve considering India's tax rates in high incomes are also not low ..... ?
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Fido.
Quote:
Originally posted by tamilkuravan
To all:
I am a NR of Canada for Income tax purposes.
I stayed 3 months in 2011 and left Canada. I became a NR and informed C-R-A about it. I filed my tax return to the C-R-A for 2011. I expected a hefty refund but they hit me with a bill for $ 900.
How they did it was they prorated my stay and gave prorated allowances for my income tax.
For example If I had earned $ 5000 for 3 months they considered $ 20000 as income for the whole year and taxed me on that.
I donot want to comment if it was fair or not but just wanted to inform people like KumarM, Timon, Bombay Duck, RajanD etc...
Peace
I do not think CRA inflated the income in your case. What they must have done is reduced / prorated the personal exemption and other refundable and non refundable tax credits and based on that you ended up owing tax to them.
The CRA does the same thing when someone becomes a PR of Canada. For example the Federal Basic Personal amount for 2011 is $10,527 and the Ontario Provincial Personal exemption is $9104.
So, if some one becomes a PR on 1st April, 2011 the same exemptions would reduce to $7931.30 and $ 6859.18 only.
Similarly, if some one becomes a NON RESIDENT on 1st April, 2011 these exemptions would be reduced to $2624.54 and $ 2269.76 only. And reduction in these exemptions most likely resulted in tax owing for you.
I hope it clarifies.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Quote:
Originally posted by ashedfc
Quote:
Originally posted by Pramod Chopra
Similarly, if some one becomes a NON RESIDENT on 1st April, 2011 these exemptions would be reduced to $2624.54 and $ 2269.76 only. And reduction in these exemptions most likely resulted in tax owing for you.
If this was the formula chosen, than the $5000 income with the $2624.54 federal exemption (& $2269.76 provincial exemption) should have very negligible tax bill. And since the $5000 was a T4 income, there must have been proportionate income tax deducted at source to offset that tax bill.
A $900 outstanding bill clearly indicates, something else is there in the calculation. & seems unjustified by your formula
TK has not mentioned his 3 months exact income. He has chosen a figure of $5000 only for example and I am sure TK, being an architect must have earned more than $5000 in the 3 months he was resident of Canada for tax purposes.
Let TK mention his exact income figures here along with tax deducted at source, EI and CPP etc. and you would be able to see things clearly. I still DO NOT think that CRA arbitrarily make up income for the time he was NON RESIDENT and tax him, though I may be wrong. However, in order to make any remarks about CRA, we need to see not only the T4 figures but the communication he received from CRA.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Quote:
Originally posted by tamilkuravan
To all:
I am a NR of Canada for Income tax purposes.
I stayed 3 months in 2011 and left Canada. I became a NR and informed C-R-A about it. I filed my tax return to the C-R-A for 2011. I expected a hefty refund but they hit me with a bill for $ 900.
How they did it was they prorataed my stay and gave prorated allowances for my income tax.
For example If I had earned $ 5000 for 3 months they considered $ 20000 as income for the whole year and taxed me on that.
I donot want to comment if it was fair or not but just wanted to inform people like KumarM, Timon, Bombay Duck, RajanD etc...
Peace
TK bhaiyya: If CRA does not collect taxes from NR's like yourself, how will our healthcare, our CPP, our roads, our forests and parks, our amenities and our 'beautiful white people(in your own words) survive?
On a serious note, I would pay off the amount imemdiately as CRA will tax interest on all balances and sometime in the future you will have a huge amount to pay.
It might even be a problem at the airport in your next Canada health visit.
Regards,
Rajagopal.
Location: God's own country
Posted on: 04-06-12 12:32:45
Notice of changes and other important information
TK,
Thank you for filing your income tax return. This notice explains the results of our assessment and any changes we may have made. Please refer to the "Summary" area for additional information.
We have recalculated your total federal non-refundable tax credits and revised your total on line 353 to $102.
We have adjusted your claim for the federal amount for children from $4,262 to $198, which is the maximum allowable. For more information, see the explanation at line 367 of your income tax guide.
We have corrected your total payable because of a calculation error. Our correction has changed your total payable to $1,068.18.
We have recalculated your Ontario non-refundable tax credits and revised your total to $23.
Your balance owing includes arrears interest which is compounded daily at a prescribed rate. We have calculated this interest from the due date of your balance to the date of this notice.
To avoid additional interest charges, you must pay the balance due by June 21, 2012.
A Tax-Free Savings Account (TFSA) allows Canadian residents, who are 18 years of age or older, to earn tax-free investment income throughout their lifetimes. To find out how much you can contribute to your TFSA for 2012, go to http://www.cra.gc.ca/myaccount" rel="nofollow">LINK or call our Enquiries service at the number shown on this notice. For more information concerning TFSAs, go to http://www.cra.gc.ca/tfsa." rel="nofollow">LINK
Since you were a resident of Canada for only part of 2011, we have adjusted your federal and Ontario claims for personal amounts to the maximum allowed. We have calculated these amounts based on the number of days you were a resident in Canada during the year.
Summary of assessment or reassessment
Line Description $ Amount
150 Total income 5,983
236 Net income 5,978
260 Taxable income 5,978
350 Total federal non-refundable 104
tax credits
6150 Total Ontario non-refundable 31
tax credits
420 Net federal tax 798.15
428 Net Ontario tax 289.02
435 Total payable 1,069.17
437 Total income tax deducted 199.00
482 Total credits 199.00
(Total payable minus Total credits) 878.27
Arrears interest DR 4.16
Balance from this assessment DR 875.35
Previous account balance DR 995.42
Balance due DR 1,872.97
* Amounts slightly varied to confuse CRA automated program
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I am a Gents and not a Ladies.
