Let us say a person have Rs 500,000 annual salary. He is a Canadian and Indian resident for tax purposes. He pays X amount of tax to Indian govt. Since his pay is below $10000 then while filing Canadian tax will he get back X amount (In equivalent to dollars) as a refund from CRA?

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Originally posted by web2000

Let us say a person have Rs 500,000 annual salary. He is a Canadian and Indian resident for tax purposes. He pays X amount of tax to Indian govt. Since his pay is below $10000 then while filing Canadian tax will he get back X amount (In equivalent to dollars) as a refund from CRA?

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Dimple2001

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Originally posted by dimple2001

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Originally posted by web2000

Let us say a person have Rs 500,000 annual salary. He is a Canadian and Indian resident for tax purposes. He pays X amount of tax to Indian govt. Since his pay is below $10000 then while filing Canadian tax will he get back X amount (In equivalent to dollars) as a refund from CRA?

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Since there is no witholding at source by Canada in your above example, the only possibility of a refund in Canada would be through available refundable credits. I can't think of any refundable credits that is available.

If there is a tax treaty, then one can take the tax paid as a foreign tax credit to offset any tax payable. Again, that can only be taken down to zero and refund cannot be created unless refundable credits are available.

Are there any refundable credits in the ON/Fed form that is available to most filers or is it only for someone with special eligibility criteria?

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Here is what I have done (after discussing with a few experts)

My Indian salary is say INR 2,000,000

The tax I paid in India say INR 450,000

My Canadian salary is CAD 17,000
tax paid is CAD 3,000


My Total Worldwide Income INR 2,000,000 (converted into CAD using a standard exchange rate)+ CAD 17,000


Total tax paid INR 450,000 (converted into CAD using a standard exchange rate)+CAD 3000 ..let us say it works out to CAD 12,000

My tax payable for the year (using Canadian methodology) CAD 9,000

Refund CAD 3,000

This is how I understand and have been advised to do by the experts. I am being taxed in Canada for my world wide income and hence, the numbers as above.

The above numbers are not the right now, they are just guidelines as to how the tax was calculated in my case. I have sent all backup papers along with my return to CRA. I also had rental income for the period when I was away.

I would like to hear from the experts in this forum on this methodology.

T

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Timon,

What you are saying is probably correct. In your case, you had Cdn source income and hence were eligible for a refund through that.

Web2000,

If on the other hand, if Timon did not have any Cdn source income and the tax liability happens to be 9000 CAD for the WW income (let's say just India), you'd be able to take UP TO 9000 as foreign tax credit and wipe out any that you might other wise be due to Canada.

Let's say in another case, if the tax payable is only $8000 to Canada and you paid $9000 equivalent to the foreign country. You can take upto $8000 as foreign tax credit. and bring your tax payable to zero. You cannot expect a refund from CRA for $1000 because a) there are no refundable credits and b) CRA has completed its obligation to give you tax relief for the taxes you have paid by allowing foreign tax credit up to the amount you owe to CRA.

In another case, if tax payable is $10000 and you paid $9000 equivalent to the foreign country, then you have the option of increasing the source witholding from the foreign country's payroll or use available RSP deduction amounts to reduce tax payable to 9000 and then take foreign tax credit to bring it down to zero or pay the difference of 1000 to CRA.

Just a note - increasing the source witholding in the previous paragraph does not make you pay more taxes to the foreign country. Rather, it generates a refund from the foreign country that you could use to pay CRA (if that's the situation you end up).

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Dimple2001

double entry.

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The cowards never started,
The weak died on the way,
Only the strong arrived.
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You could be a non-resident while you own a home, it should be rented with agreement and involves a relator, the income is tax deducted at source. Bank account is converted just to manage the investments.

Basically, it is same as a foreigner investing in Canadian Real estate.

My suggestion would be to consult a website.

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Originally posted by Timon

The reasons could be that I never cease to be a resident of Canada due to having a house in Canada.

T

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The cowards never started,
The weak died on the way,
Only the strong arrived.
http://www.youtube.com/watch?v=_yK1i9cLAMM