# Recently moved to Canada - foreign earnings/Wedding/ Pension



## jmomcc (Mar 23, 2016)

sorry, I have a number of questions as I just realised that I really need to get on top of this. I grew ip in Ireland, where you basically don't have to do tax returns and then lived in Korea, where my work handled it. 

*1: Foreign Earnings*

I moved to Canada and became a PR (spousal) on December 22. I'm assuming that I have to complete a tax return for those 9 days, right? 

I didn't earn any Canadian money for those days, but I did earn money from elsewhere. When I moved, I was still under contract at my old job (until February actually) as those last few months of each contract are vacation. It was a university job. 

How do I list that 9 days of foreign earnings on my tax return? Does it matter that I paid korean tax on it already? This is important to me because obv I will have to declare january and february on next year's return. 

*2: Foreign Pension*

This one is for next year too. I'm receiving a lump sum payment from my korea teacher's pension (not national pension - this is private for university teachers) in April. How do I go about paying tax on that. I contributed to this pension monthly so the only contributions that existed whilst resident in Canada were for Jan and Feb (and 9 days of Dec). Does this matter or is it considered earnings for April 2016 in the eyes of the CRA? 
*
3: Wedding money*

My wife and I received lump sum wedding gifts in the summer. I wasn't a resident then but I did have a Canadian bank account and we hold a joint one also. How do we declare that? Solely on her form? 

Thanks in advance. Sorry for the massive post - if anyone could answer even one section, I'd be much obliged.


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## Mukhang pera (Feb 26, 2016)

Q1, I would see as almost a non-issue, given that only 9 days are involved. I do not know if there is a Canada/Korea tax treaty that might apply, but, at minimum, I would expect that any Korean tax paid on that 9 days worth on foreign income would get you a tax credit in Canada.

Q2 I'll leave to someone else.

Q3. So far as I am aware, there is no gift tax in Canada and there should be no need to report the wedding gifts.


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## heyjude (May 16, 2009)

Hey, welcome to Canada (from another Irish expat). Come on in and we'll put the kettle on! 

I'm by no means a tax expert. The very first year I moved to Canada (from the US) I had to submit two returns and was very confused. I got a local accountant to help and it was the best $25 I ever spent. (This was a long time ago). Ever since, I have worked with an accountant. I have to, because I have a company, and I need financial statements. Over the years, having an accountant at my back has saved me megabucks in strategic tax planning. It might be a good idea to engage an accountant for your first year. 

Canada has a tax treaty with South Korea, so you will not be double taxed. 
https://www.fin.gc.ca/treaties-conventions/korea_-eng.asp

With respect to wedding gifts (congratulations!) you will be delighted to hear that gifts are not taxable in Canada. 
http://www.taxtips.ca/personaltax/giftsandinheritances.htm

By the way, the taxtips.ca website is an excellent reference source, with calculators. They even have updates from yesterday's budget.


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## gibor365 (Apr 1, 2011)

> 2: Foreign Pension


 My mom is getting OAS-like pension from Israel. We fill out taxes using Turbotax. So she just enters her annual net pension (from Israeli bank statement) into Foreign Pension field in Turbotax (converted to $CAD)


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## jmomcc (Mar 23, 2016)

Thanks guys!

HeyJude, yea I think we will get an accountant to help us. I looked at the Korean-Canada tax treaty and it appears that I might have to pay tax on the pension and possibly some on the salary if canadian tax rates are higher than korea (I'd pay the diff). I'd need to get confirmation on that though. I'll check out TaxTips!

Gibor, does your grandma pay tax on the pension?


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## mordko (Jan 23, 2016)

@jmomcc

When we moved from the UK we hired an accountant and he dealt with all these issues. Just for the first year you need one; not after that. Doesn't cost much. 

Your foreign pension will be taxed, but there will be no "double taxation". It basically depends how much tax you will have paid on it in Korea.


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## gibor365 (Apr 1, 2011)

> Gibor, does your grandma pay tax on the pension?


 It's my mom , not grandma 
In Israel people don't fill out taxes , everything done automatically, so she enters amount that comes into her Israeli bank account....This amount is pretty small and she doesn't pay any taxes on it in Canada


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## NorthKC (Apr 1, 2013)

I always recommend an accountant for the first year to deal with this due to the complexity of the taxes between two countries then after that, you're good to go on your own assuming that you're not self-employed in which case, I recommend the accountant again.


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## gibor365 (Apr 1, 2011)

> I always recommend an accountant for the first year to deal with this due to the complexity


 The problem is to find GOOD accountant and it's not easy  . When we just came here, we changed several accountants , but all of them were one big BS


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## jmomcc (Mar 23, 2016)

gibor said:


> The problem is to find GOOD accountant and it's not easy  . When we just came here, we changed several accountants , but all of them were one big BS


Sorry! I have no idea why I wrote grandma. 

I'm realizing that I'm going to need an accountant. At least my 2015 should be easy enough. It will get very complicated in 2016 as I have foreign income, foreign pension and freelance (that is all US clients). Finding an accountant will be fun, though.


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## heyjude (May 16, 2009)

jmomcc said:


> I'm realizing that I'm going to need an accountant. At least my 2015 should be easy enough. It will get very complicated in 2016 as I have foreign income, foreign pension and freelance (that is all US clients). Finding an accountant will be fun, though.


Yes, you definitely should hire an accountant. If you are in a larger city, there should be plenty of expertise in foreign holdings at the big firms. I would suggest asking knowledgeable friends for recommendations, and then interviewing one or two accountants with the requisite skills. It's important to find someone who listens well, too. I have moved several times, and my accountant in my previous city recommended a firm in my new home based on professional collaboration with one of the principals. He in turn suggested the partner who had the most relevant skill set and all three of us had a meeting. I could tell she knew her stuff. That was five years ago, and it has been a wonderful professional relationship.


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## OhGreatGuru (May 24, 2009)

See http://www.cra-arc.gc.ca/newcomers/#ftr

You have to report your world wide wide income for the period after you became a PR.

It is possible you will be able to claim a credit for the Korean taxes. But this will vary with the country and presence or absence of tax treaty. Another reason to consider an accountant.

It's not likely you will owe much, if anything, in taxes, but it would be worthwhile filing so CRA has a record of your date of entry and your initial return for the year of immigration. It will avoid any awkward questions when you file for the 2016 tax year.


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## jmomcc (Mar 23, 2016)

So - update. I called an accountant, I was recommended. The price seems steep to me but it might not be. He quoted up to $4000 for the following:

2011, 2012, 2013, 2014 and 2015 tax returns for my (Canadian) wife, all of which have foreign income on them. 

2015 tax return for me (all 9 days of it) and advice on how to do 2016 return. 

Does that seem reasonable? 

It will be less for sure as I actually made a mistake and she did file for 2011, so that is one less year. I'm also thinking of removing myself from the proceedings and just getting hers done. I can get do my own 2015 and then go back to him for 2016 advice later in the year. This will be the last time she will need an accountant (her taxes should be simple after this) but I will need one for at leas 2016 so maybe separating our involvement would be better. 

If I do 2015 myself, I basically have only one question -

I became a PR on dec 22. I got paid on Dec 24 for the month of December. Do I pay tax on all of that - or do I pro rate it to 9 days? 

I'm going to claim it as foreign income - even though its probably not worth it for 9 days - but it would be good to get some understanding of the process.


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## mordko (Jan 23, 2016)

Does seem on the high side but I don't know the details. Ten years ago I was charged $250 for a single tax return on 1 year split between Britain and Canada.


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## Eclectic12 (Oct 20, 2010)

jmomcc said:


> ... If I do 2015 myself, I basically have only one question -
> 
> I became a PR on dec 22. I got paid on Dec 24 for the month of December. Do I pay tax on all of that - or do I pro rate it to 9 days?
> 
> I'm going to claim it as foreign income - even though its probably not worth it for 9 days - but it would be good to get some understanding of the process.


If you are running short of time (if someone here on CMF does not know the answer, it is typically difficult to get a hold of CRA to ask with it being busy season), you could always include the full amount on the return. If you discover later that it is allowed to be pro-rated, once a notice of assessment (NOA) is received, you can file a change.

http://www.cra-arc.gc.ca/changereturn/


The downside is the gov't has use of your money where it will take a bit of time to get the refund. The upside is that since it is one month total, it is likely less of a hassle compared to if CRA corrects it. I have done this many times when I have run out of time, where I have preferred to potentially over-pay then get a refund versus having to figure why the return was adjusted/possibly owing more.


No idea on whether it should be pro-rated ... though if it is paid in monthly chunks, I would doubt one can split it up as one was not paid the income before becoming a PR.


As for "foreign income" ... that sounds right.


Welcome to Canada ... it likely will be a lot easier as it becomes familiar. :biggrin:


Cheers


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## jmomcc (Mar 23, 2016)

Eclectic12 said:


> If you are running short of time (if someone here on CMF does not know the answer, it is typically difficult to get a hold of CRA to ask with it being busy season), you could always include the full amount on the return. If you discover later that it is allowed to be pro-rated, once a notice of assessment (NOA) is received, you can file a change.
> 
> 
> The downside is the gov't has use of your money where it will take a bit of time to get the refund. The upside is that since it is one month total, it is likely less of a hassle compared to if CRA corrects it. I have done this many times when I have run out of time, where I have preferred to potentially over-pay then get a refund versus having to figure why the return was adjusted/possibly owing more.
> ...



I think I'll do what you suggest. It seems like the easiest and wisest way to proceed.

note: i removed the link you posted because I have too few posts for links.


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## Eclectic12 (Oct 20, 2010)

^^^^

I suspect between learning what is needed as well as arranging for your wife's old returns to be filed, you may run out of time. So I thought it might be useful to know that it is easy to file and later adjust the return.

One of the principals is that filing with your best guess or interim info avoids late filing penalties. As long as one is demonstrated best efforts, the process to get it right is relatively flexible.

BTW ... usually the quoting is used to make sure readers know the context. If it can clearly be shown without a full quote, most find it easier to read than quoting the whole post. Likely as you get used to the system, you'll move to quoting small pieces instead.


Cheers


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## jmomcc (Mar 23, 2016)

Eclectic12 said:


> ^^^^
> 
> I suspect between learning what is needed as well as arranging for your wife's old returns to be filed, you may run out of time. So I thought it might be useful to know that it is easy to file and later adjust the return.
> 
> ...


I'm starting to wonder if she can qualify as being a non-resident for her time outside the country. I'll have to ask the accountant. 

Thanks for the info on taxes - I was wondering about that for the simple reason - I don't know my exact 2015 korean tax yet so I would have to estimate somewhat.


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