Taxes

Taxes are complicated for Canadians working overseas, and the average Canada Revenue Agency employee is not going to be able to answer your questions. As a result many subscribers contact the CAIDP-Hub every year looking for advice.

CAIDP's accountant John Lunn has provided advice for handling UN income, which is the most common question. As CAIDP paid for this advice on behalf of members it is posted on the members portion of the website. If you are a member sign in and go to https://www.caidp-rpcdi.ca/resources/insurance/how-report-un-income.

If you are not a member, we urge you to consider membership.

The best advice we have from our accountant is every individual is different, contracts are different, and this can mean that the tax treatment is different. Check with an accountant who specialises in dealing with international income.

The following posts are made by members. They reflect their experiences but should not be relied on as a substitute for professional advice.

Comments

[CAIDP-RPCDI Hub] à la recherche d'un comptable

Bonjour, hello
 
Un ami citoyen canadien mais résidant à l’étranger est à la recherche d’un comptable dans la région de Montréal qui serait familier avec les règlements de Revenu Québec qui s’appliquent aux personnes ayant le statut de non-résident. Merci à l’avance pour toute suggestion et bonne journée!
 
 
Danièle Blain
Passez Go S.E.N.C.
6630 Monkland
Montréal Qc
H4B 1H4 Canada

tél: (514) 488-3331 / (514) 707-2700 (cell)
téléc.: (514) 488-3999
www.passezgo.net

Re: [CAIDP-RPCDI Hub]à la recherche d'un comptable

Dear Daniele;

 

I have had the experience of being a non-resident while working overseas in international development. Revenue Canada is responsible for determing whether of not a Canadian citizen qualifies as a non-resident. The International Tax Centre determines who qualifies. Individuals have to apply for non-resident status. There are several criteria which the International Tax Centre uses to determine if a person is a non-resident, not Revenu Quebec. Revenu Quebec has to abide with the ruling of the International Tax Centre of Revenue Canada.

 

To qualify for non-resident status an individual (and family members) have to submit an outbound form for non-resident status at the time of their departure. Essentially a person has to demonstrate that they have terminated all connections with Canada…that's the general principal but it doesn't totally apply. The ITC expected me to terminate my bank accounts. I argued that such a move did not make sense because I kept my money in banks which are considered the most stable and secure in the world. I did this as a conscious decision because I was afraid to keep all of my money in a local bank in the country where I was living or even in a U.S. bank. I asked them if they would be willing to take that risk if it was them. I got them to see that banking services are international and it is up to each person to decide what is the best jurisdiction to keep their money. They bought that argument.

 

I put all of my possessions in storage, until I decided when and where I was going to ship it.

 

I rented my home while I was overseas and paid tax on the rental income, 25% of total revenues every quarter. You can be a non-resident and still have a rental property in Canada because it is treated as an investment. The argument here is that it makes sense to keep a property that is in a market that is climbing. That might change if there is a major market correction but until that happens, you are simply being an astute investor who is keeping his/her money parked in the Canadian real estate market, just like any other international party can do (as so many do in Vancouver). It also makes sense to do this to keep pace with the escalation in the Canadian market while someone is overseas. To sell a property costs money, approximately 5% of the sales price and another 5% when you buy a new home. If you are out of the country you could find yourself facing a major loss in purchasing power. The house you sold when you left will not buy you the same quality of house when you return where the overall market price has been rising at the rate of 5% to 10% a year. Renting your house while you are away makes sense if you want to keep pace with the market.

 

One of the keys to non-resident status is whether or not you are paying taxes in the country you are currently living in. This can apply even if you are not a non-resident. For example, Canada has taxation agreements with many countries to prevent double taxation. These taxes usually top out as a 20% withholding tax. If you are paying that tax to an overseas government you are not required to pay tax to Revenue Canada or Revenu Quebec on your overseas earnings.

 

If you return to Canada, you must register your return with the International Tax Centre of Revenue Canada. That document determines if you are a resident or a non-resident of Canada. In other words you have to establish that you are a full-time resident of Canada, not a non-resident visiting Canada.

 

You need to provide proof of the filings with and the decisions made by the International Tax Centre to Revenu Quebec with a letter of explanation. Revenu Quebec has to respect the decision of the International Tax Centre of Revenue Canada.

 

On one occasion, I had a Revenu Quebec tax officer demand that I pay taxes to Quebec even though I had ITC approved non-resident tax status. They went so far as garnishing the money from my bank account. It took two years to get the matter sorted out in my favour. I got all of the tax money back. If you get into this type of battle, tell the Revenu Quebec officer that Quebec is not an independent country. It doesn't have the right to enter into international tax agreements with foreign countries. That right remains with Revenue Canada, which determines the tax status of all Canadians, whether or not they are resident or a non-resident.

 

Aside from the high-handedness of this one individual, my relationship with Revenu Quebec has been good and it is relatively easy to file your own taxes for professional income, except for one thing. You have to file a Professional Services tax return for Revenu Quebec and then a tax return for Revenue Canada. Any questions you might have can usually be answered by telephone.

 

Sorry I can't recommend a tax accountant.

 

All the best,

William Finseth

Re: [CAIDP-RPCDI Hub]à la recherche d'un comptable

Moi de même.
 
Je travaille à l'étranger depuis un certain temps, mais suis considéré comme résident, puisque ma femme et mes trois enfants y vivent en permanence, que nous possédons une maison, une voiture, des comptes en banque.
Quel comptable pourrait m,aider avec les lois et règlements de Revenu Canada qui s'appliqnet dans ce cas?
 
Merci d'avance.
 
 
Henri-Paul Bolap, Ph. D.
 
DESS, Public Administration (Énap-Montreal)
 
Senior International Specialist
Governance, Media/Capacity Development
 
Monrovia, Liberia

[CAIDP-RPCDI Hub] Recommendation for a tax advisor

Dear CAIDP members,

I am looking for recommendations for an Ottawa-based tax advisor who is familiar with assisting with tax returns of independent consultants who have both domestic and foreign (UN) sources of income, and related complications such as working part of the year outside Canada.

If you have had good experiences with someone who fits this description, please let me know.

Thank you,

Kelly Babcock
Credentialed Evaluator
https://ca.linkedin.com/in/kellybabcock1

Re: [CAIDP-RPCDI Hub] Recommendation for a tax advisor

Hi Kelly,

 
You may want to check CAIDP's website or past posts on this. Basically, accountants are reluctant to provide advice on anything they can't back up with ocular proof. And Revenue Canada won't come out with a clear statement on UN income, so independent consultants have to resort to filing out our own tax returns, entering UN income on one line (104?) and taking it out as a deduction on another (237?). 
 
Good luck,
 
Stuart
 

Re: [CAIDP-RPCDI Hub] Recommendation for a tax advisor

Kelly,
 
I would suggest that you contact John Lunn, “The Tax Guru” (as per his website!). His website is at http://johnlunn.ca/index.html
 
Tel. 613 729 8681
 
John knows a lot about International incomes such as UN or IFI incomes; particularly for independent consultants. 
 
Good luck.
 
Jean-Jo. Bellamy

Re: [CAIDP-RPCDI Hub] Recommendation for a tax advisor

I use him also. I got his name from a colleague at UNICEF and I am an independent consultant working with UN and NGO clients. 

Kate Mahoney
P. O Box 2095
Rossland, BC V0G 1Y0
Tel. +1 250 362-7295

Re: [CAIDP-RPCDI Hub] Recommendation for a tax advisor

Hello Kelly,

I have been a client of Paul Spare (in Ottawa). He has experience in tax advisory services for Canadians who work abroad. He's part of an accounting and tax company, check out their website:
http://www.mccayduff.com

He is very good!!

Maria Ghazzaoui
Lebanon

Re: [CAIDP-RPCDI Hub] US W-8BEN Form

Dear Jackie;

 

First, I am not an international tax expert but there are a few things I do know about international tax. Canada has tax treaties with many countries but not all. It does have a tax treaty with the United States which was updated in 2007. If you want to see what's in that agreement go to URL:

 

http://www.fin.gc.ca/treaties-conventions/USA_1-eng.asp

 

It is:  The Protocol Amending the Convention Between Canada and the United States of America

http://www.fin.gc.ca/new_template/2013/img/finbullet.pngWith Respect to Taxes on Income and on Capital Done at Washington on 26 September 1980, as Amended by the Protocols Done on 14 June 1983, 28 March 1984, 17 March 1995 and 29 July 1997.

I think the question you need to focus on is where the work was done. If it was done in the United States then the bilateral tax agreement between Canada and the United States would apply. If the work was done in a developing country like Tanzania, then bilateral tax agreement between Canada and Tanzania would apply.

If you go to the following URL you will find the tax treaties that are in force:

http://www.fin.gc.ca/treaties-conventions/in_force--eng.asp#UnitedStates

(don't worry about the #United States, it was what led me to their tax treaty but you will find all the other countries that Canada has tax treaties with).

In cases where Canada doesn't have tax treaties, like Botswana, Canada seems to deal with the tax payer in a fair manner. For example, I was working in Botswana. Canada does not have a bilateral tax treaty with that country. The Inland Revenue Agency of Botswana, was retaining a sur-tax on all of my income, approximately 15% or 20%. When I filed my taxes, I informed Revenue Canada of the taxes that were charged, with proof, and I didn't have to pay federal or provincial taxes on that income. In short, they seem to respect the concept of avoiding double taxation.

It sounds like you are working for a U.S. consulting firm as a sub-contractor. If that is the case it is up to you to insure you a getting paid your full professional per diem and then you take on the responsibility of dealing with your tax obligations. For example, I was working in Sri Lanka on an ADB contract. The prime contractor was from Britain. They paid me my full contracted per diem plus my DSAs. I happened to be a non-resident of Canada at that time and it was up to me to sort out my tax obligations during the period I was a non-resident and later when I returned to Canada and became a full-time, tax-paying resident. I didn't get caught up in paying taxes to the U.K. and in that particular case I didn't pay taxes in Sri Lanka because it was an ADB contract and none of the international specialists were required to pay tax on their earnings. It was a rare instance but because I was technically a non-resident of Canada under the tax laws of Canada as determined by the CRA, I did not pay tax on my income while I was deemed a non-resident working in Sri Lanka. I did eventually return to Canada and from that point on I was deemed a resident of Canada from the date of my return, even though I did not have a place of residence for the first four months, when I was living on a sailboat. When I bought a house in Gatineau, Quebec, I was deemed to be a resident of that province because that is where I was residing on December 31st of that tax year. At that point I had to file taxes with Revenue Canada and Revenu Quebec.

It sounds to me like this U.S. firm wants you to sign this form so that they will not be withholding a portion of your fees to pay your taxes, either in the U.S. or in the country you are working in. It saves them time and money to manage all of that accounting and transfers that responsibility to you. So long as you are getting paid the full amount and there are no hidden bugs that will cause you grief.

William Finseth

P.S. Consult with an international tax lawyer who has plenty of experience in dealing with international development contracts.

Re: [CAIDP-RPCDI Hub] US W-8BEN Form

On Wed, Mar 23, 2016 at 4:28 PM, Jackie Yiptong Avila <jackie.yiptong@sympatico.ca> wrote:
One of my US client wants me to sign this form so that they do not retain taxes from my fees. This is the first client who makes such a request. Have you any experience with this? The problem is that I am not sure how to fill this out. Does Canada has a Treaty with the US? 
 
Any advice for me? 
 
Cheers
 

Jackie 
 

Jackie Yiptong Avila, BSc. MBA, DPE
Independent Consultant
59 Columbus Avenue
Ottawa
Ontario K1K 1R2
Canada
 
Tel : +1 613 749 4141
Cell: +1 613 882 4141

Re: [CAIDP-RPCDI Hub] Is income from consultancy for UNagencies

Hi ,
I was reassessed for my UN income generated from consulting with UNDP. I was forced to repay taxes for last year, the letter noted a clause in the Tax Act stating that it is non taxable if you were an employee of UN agencies and not a consultant.
 
Regards 
Mazen 
 
 
 
Sent from my Samsung device

Re: [CAIDP-RPCDI Hub] Is income from consultancy for UNagencies

Phillip. My experience with 15 years as a world bank consultant and 2 audits is same as yours. Declare and deduct using the exchange rate on the day funds are deposited. 
 
UN is supposed to be treated same way as long as you are an employee and as you said, not an employee of a company or "self employed" even though you really are. 
 
This is particularly relevant if you are paid from trust funds as international agreements prohibit taxing trust funds
 
The real problem is that CRA staff are not well versed on the rules. Talk to 5 people and you will get 5 answers.  In the end, as long as you declare the income, it's up to CRA to say no and if they do there is no penalty.
 
I won both my audits but the appeal process is notoriously inconsistent and errs on side of CRA (but usually CRA loses if it goes to court)
 
Lawry 
 

Re: [CAIDP-RPCDI Hub] Is income from consultancy for UN agencies

Hello Sadie et al:
 
I do apologize for the confusion I stirred up, but I am finding the resulting feedback quite interesting.  I think the comments to either get a specialist in UN income, or contact the international tax centre is very prudent, as I am an accountant with a lot of years in income taxes, albeit no UN clients and have obviously stepped into muddy waters.
 

At this link:

 http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns248-260/256/mply-prscrbd-eng.html

​CRA states:

the amount of employment income is deductible under Line 256 - Employees of prescribed international organizations

If in 2015 you were employed by a prescribed international organization, such as
the United Nations, you can claim a deduction for the net employment income you report from that organization. Net employment income is your employment income minus the related employment expenses you are claiming. If you do not know if your employer is a prescribed international organization, contact your employer.

At another link:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns409-485/426-eng.html

CRA states:

You may be entitled to claim this credit for qualifying income from our duties must also have been in connection with a contract (or for the purpose of obtaining a contract) under which your employer carried on a business outside Canada conducting one of the following activities:

1.       the exploration for or exploitation of petroleum, natural gas, minerals, or other similar resources;

2.       any construction, installation, agricultural, or engineering activity; or

3.       any activity performed under contract with the United Nations (UN).

 

I wish to point out a couple of things:

·         Both these provisions are dealing with employment income and not professional consulting income per se.

·         It appears that CRA has not made a clear ruling on this but is following internal assessing practices which varies from office to office (and auditor to auditor), as some of you have found out.

·         Someone was kind enough to send me a copy of the UN "one pager" which clearly states it is employment income.  Employment income is defined in the act and is a question of fact, which means CRA does not necessarily have to accept the UN's position.

·         It seems to me the "90 day" rule is an indication of CRA policy saying anything less is clearly not employment income unless it can definitely be proven otherwise.

·         I could not find any info to say that professional consulting income would not be taxed, but I do not know what CRA means in their comment dealing with the overseas tax credit. 

 

In closing I would just like to add:

  • you have to assess your own risk tolerance in dealing with CRA
  • It would be prudent, if you do claim any deductions, to put your tax savings away for a few years so you have the funds to deal with a reassessment, if any.
  • CRA is only bound by official tax rulings and is not bound by any information provided by their employees.
​All the best,

 

 
Keith Forsythe
 
Cell1-902-599-4208
better information = better decisions

 

On Sat, Apr 2, 2016 at 9:30 PM, Richard Labelle <rlabtag@gmail.com> wrote:
Hello Sadie,
 
Income tax is a very individual thing and conditions vary by circumstance and thus by individual. I am not an accountant or a lawyer, so what follows just reflects my experience. What follows may or may not apply to you and the following may depend on your residence status. But, in principle, as a resident of Canada, who is not employed on a full time basis by the UN, UN income is non taxable if you are an individual, i.e. if you have a personal services contract, i.e. SSA (Special Services Agreement) with most UN organizations. This applies to UNOPS as well as the World Bank, which is an UN organization (they just do not like admitting it). World Bank individual contracts make this clear, but UN contracts do not, in my experience.
 
To justify tax free status, you must, in my experience, include all copies of the signed contracts and payment stubs you receive from UN organizations when you submit your tax return. This means you cannot make an electronic tax return. Payment stubs are the statements you should be receiving from your bank documenting electronic fund transfers from the UN payments office into your private bank account (make sure its your private bank account and not that of your corporation or of someone else). Your bank should be providing these to you as a matter of fact, but not all do, so you may have to go to your branch to demand a detailed receipt which should include information that the funds are coming from the UN, they are in USD, and have been transferred to your account in CAD at a given exchange rate. If you receive cash payments directly in USD or other currencies while on mission, make sure that you keep the receipts of all transactions and scan them. Scanned copies are acceptable once you have established your trustworthiness on this matter with the CRA.
 
If you are doing this for the first time, best to go through an accountant who deals with international clients, don't go to just any accountant as most DO NOT KNOW about this as they deal with local clients for the most part, and they are a waste of time and money, trust me, I have been there. Even if with large accounting firms.
 
The CAIDP Blogs have information on this score:
 
Go to the CAIDP Web site Blog, and then search "Un income"
 
Here is the link:
 
 
And here is one such blog from JJ Bellamy.
 
 
There are a few accountants who know about the legislation and who interact directly with the international desk of the Canada Revenue Agency. Find one of these, and speak or meet with them to determine your status and eligibility and requirements associated with this. You can go the route suggested by Stuart Black, but expect some push back. Eventually, you should be able to prove your bona fides on this matter. In regards to Revenue Quebec, you will have to prove the same to them as well. Once CRA accepts, Revenue Quebec should follow.
 
There is one accountant in the Ottawa area who provides these services to CAIDP members across Canadafor who this situation applies. Check out the blog for further details.
 
Consider becoming a CAIDP member to help us continue to provide these services to you.
 
Best,
 
Richard Labelle, CAIDP Hub / Reseau du RPCDI
 
 

Richard Labelle
Twitter : www.twitter.com/rlabelle
LinkedIn : http://www.linkedin.com/pub/richard-labelle/0/648/5a6 Google+ : google.com/+RichardLabelle Richard LABELLE @ Gatineau, Quebec, CANADA Skype: rlabelleklaf
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Re: [CAIDP-RPCDI Hub] Is income from consultancy for UN agencies

Dear CAIDP Members;

 

I ran into a tax nightmare related to my overseas earnings in 2003, where the CRA made a mistake regarding my residency status during that year. It took two years to sort out. Associated with that tax nightmare was the position taken by a tax officer with Revenu Quebec who said that the CRA decision regarding my non-residency status, which resulted in a whopping tax bill. I appealed the decision on the basis that Quebec is not a country and therefore is not in a position to enter into bilateral tax agreements or to make determinations regarding the residency status of Canadian tax-payers who are working abroad. It took two years to sort it out but in both cases I got my money back from the CRA and Revenu Quebec and it all hinged on the final decision by the International Tax Centre, when I supplied them with the right information.

 

My big mistake after learning that I was deemed a non-resident was assuming that the officials at the International Tax Centre would automatically take action to make the proper adjustments to my tax assessment for the 2003 tax year. They did not. It was up to me to provide the decision made by the International Tax Centre to the CRA tax authorities that were handling my T1 submission. That misstep by me caused a lot of financial chaos until things got sorted out. It's possible an international tax specialist would have saved me a lot of grief but I always believe the tax systems (Federal and Provincial, particularly in the case of Quebec) should be transparent to anyone with average intelligence using the Tax Guides provided along with the proper support of the internal tax specialists at the CRA and Revenu Quebec. I got to test that theory this year with Revenu Quebec to sort out this year's filing because the information supplied by RQ fell far short of the clarity needed to file an accurate tax filing. Getting a clear explanation from the right person is more challenging than it should be but with persistence I was able to get some complex issues resolved. Finding the right experts to speak to is the key.  Start with the contact numbers in the guides and on the respective web-sites. You can get general tax information numbers through Service Canada at the beginning of the blue pages in your telephone book.

 

Good luck.

William Finseth  

 

From: CAIDP-RPCDI [mailto:caidp-rpcdi-bounces@list.web.net] On Behalf Of Pamela Branch
Sent: April-03-16 10:23 AM
To: PHILLIP OR YUKIKO RAWKINS <rawkins@rogers.com>; Gabe ferrazzi <gabeferrazzi@rogers.com>; stuartblack@shaw.ca; Sadie Yang <sadieyang@inclusivedev.com>
Cc: caidp-rpcdi@list.web.net
Subject: Re: [CAIDP-RPCDI Hub] Is income from consultancy for UN agencies taxable?

 

Hi All;

 

The topic comes up often. 

 

I have been told that the tax treaty covers many UN agencies as well as the World Bank, and some of them can provide you with a statement about the treaty from their accounts office if you ask. However, as Philip notes this is handled inconsistently by CRA and Revenue Quebec, and it depends on the nature of the contract as noted by Gabe. So it is a good idea to seek professional advice on this. Then the professional can argue with CRA.

 

This has come up so often, always at this time of year, that CAIDP does have guidance on the website for members. We have done our best to make sure the information is accurate, but tax law changes all the time and neither CAIDP nor I are international tax specialists. For your own protection it is a good idea to consult one. 

Pamela Branch

https://www.caidp-rpcdi.ca/2016-conference 

Canadian Association of International Development Professionals (CAIDP)/

Regroupement des professionnels canadiens en développement international

 

 

 


Date: Sun, 3 Apr 2016 00:40:01 +0000
From: rawkins@rogers.com
To: gabeferrazzi@rogers.com; stuartblack@shaw.ca; sadieyang@inclusivedev.com
CC: caidp-rpcdi@list.web.net
Subject: Re: [CAIDP-RPCDI Hub] Is income from consultancy for UN agencies taxable?

Hi Sadie and All,

 

There seems to be a lack of consistency in the way CRA has dealt with UN income over the years. Like many others, following advice received, I had claimed UN income as non-taxable for many years. However, in the course of an audit a few years ago, I was informed that this was an incorrect procedure, and that the income was taxable (In terms of re-assessment of taxes due, The ruling only applied to the two years to which the audit applied).  I appealed the ruling, but with no luck. Others may have been more fortunate, in avoiding trouble of this kind.

 

World Bank income is a different matter, since a tax treaty between Canada and the Bank clearly indicates that income is non-taxable, and this is stated specifically in contracts. The consultant is viewed as an employee of the Bank during the period for which she/he is contracted and this provision enables the consultant (where recruited directly by the Bank) to meet the terms of the treaty. There is no tax treaty between Canada and the UN on tax requirements for short-term consultants.

 

Regards,

 

Phillip Rawkins

 


From: Gabe ferrazzi <gabeferrazzi@rogers.com>
To: Stuart Black <stuartblack@shaw.ca>; Sadie Yang <sadieyang@inclusivedev.com>
Cc: Caidp Rpcdi <caidp-rpcdi@list.web.net>
Sent: Saturday, April 2, 2016 3:37 PM
Subject: Re: [CAIDP-RPCDI Hub] Is income from consultancy for UN agencies taxable?

 

Hi Sadie,  

It's a bit complicated, and it hinges on whether you are an employee or  self-employed, within definitions that are found in the CRA website. Would be nice to have CAIDP explanations at the ready for the UN and World Bank‎ situations...

‎Cheers 

Gabe

Sent from my BlackBerry 10 smartphone on the Koodo network.

From: Stuart Black

Sent: Saturday, April 2, 2016 2:32 PM

To: Sadie Yang

Cc: Caidp Rpcdi

Subject: Re: [CAIDP-RPCDI Hub] Is income from consultancy for UN agencies taxable?

 

Hi Sadie,

 

Yes, it is non-taxable. Richard or JJ should be able to find you the description of what to do. But basically you enter the UN income in one line (say 256) and take it out as other deduction (say 104). 

 

You should submit a paper copy of your tax return, which can be printed from a quick tax program, otherwise it flags a possible audit. And if this happens there is a one page form that you get the UN HR department to fill out and sign.

 

Stuart

 

Stuart Black, Vancouver, BC, Canada (604) 739-1034 

 

 

 

 

On 2016-04-01, at 6:44 PM, Sadie Yang wrote:

 

Dear all,

It is tax season again! I have heard in the past that if you provide consultancy service to the UN agencies, such income is not taxable in Canada. I am wondering whether this is accurate. What requirements you have to meet in order to qualify this exemption? Do you need to provide any supporting documents to the Canadian Revenue Agency?

These questions may have been asked in the previous years. Many thanks in advance to those who will kindly share their knowledge and experience.

Best regards,
Sadie Yang
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Re: [CAIDP-RPCDI Hub] Is income from consultancy for UN agencies

Hi All,

 

Bear in mind that the rules for tax exemption of income received by Canadian residents from international organizations that have been mentioned in previous messages do not apply equally to ALL entities that one would ordinarly consider as an "international organization" - only those that are "prescribed" under the income tax regulations. The link to the relevant section is here:  

 

http://laws-lois.justice.gc.ca/eng/regulations/C.R.C.,_c._945/page-120.html#h-404

 

This does lead to the rather bizarre situation where "Sue" who is employed at a "prescribed IO" at Level P3 earns her salary tax free whereas "Fred" who is also employed at Level P3 at another IO that uses the same UN pay scale but does not fall within the definition of a "prescribed IO" must pay tax (assuming both are considered residents of Canada by CRA).  This has been pointed out to CRA on many occasions, for many years, but….

 

Best to get professional advice for your particular circumstances and document everything.

 

Jeannette Tramhel

Re: [CAIDP-RPCDI Hub] Is income from consultancy for UN agencies

International staff with the UN pay (or at least paid in the 90s) 25% of their gross income off the top in lieu of national taxes.  For this they received UN medical and UN pension benefits (which as I recall vested only after 10 years.

M

-----Original Message-----
From: CAIDP-RPCDI [mailto:caidp-rpcdi-bounces@list.web.net] On Behalf Of William Finseth
Sent: April 2, 2016 5:01 PM
To: 'Sadie Yang' <sadieyang@inclusivedev.com>; 'Caidp Rpcdi'
<caidp-rpcdi@list.web.net>
Subject: Re: [CAIDP-RPCDI Hub] Is income from consultancy for UN agencies taxable?

Dear Sadie et al.;

I recommend that you contact the specialists at Revenue Canada's International Tax Centre. My understanding was that you could be taxed on contracts with the UN that were less than 90 days but the minute the contract went 90 + 1 or more days for an overseas assignment you were not tax on the total of your U.N. earnings. That was certainly my case when I worked for UNDP in 2005-2006. I had to file the form concerning non-resident status on my outbound (which in the case of a UN contract has nothing to do with being a non-resident). The CRA simply wants to know when you left the country. You also have to fill out another form at the time of your return.

If you are non-resident for a whole year simply provide them with the relevant information...i.e. the form stating when you left Canada and information about your overseas residence status if it goes beyond Dec. 31st that first year and every year following.

But the situation regarding UN contracts may have changed as Keith Forsythe e-mail suggests. To be honest I find it a bit surprising that things have changed because if you were working for the U.N. or one of the IFIs like the World Bank, the European Bank for Reconstruction and Development, the WTO, the Asian Development Bank, the African Development Bank, the IMF, the IFC, etc. The tax status of all staff was tax-free, certainly for all international staff. I think the rationale behind it was that these agencies wanted to be able to attract the very best staff at an affordable rate. If these agencies had international staff who were being taxed they would be required to pay their staff probably 30% more, otherwise the very best talent would go elsewhere. It also recognises that it is generally a costly business because of all of the moving, especially if it involves personnel who are married and who have children, with factors for risk and hardship included. By keeping the salaries lower but acceptable, the UN operations can be managed on a smaller budget, which in the end is being funded by U.N.
member nations like Canada.
It doesn't make a whole lot of sense to pay salaries that are 30% more just to turn around and tax that back. The situation for federal staff working in Canada, who do not live and work overseas, get paid a competitive salary which is taxed. But this begs the question why Canadian federal staff working for CIDA, IDRC, DAFTD (or whatever its new name is), DND and the RCMP - aren't given tax-free status while working overseas because of the stress it puts on family life, the higher levels of risk and the higher costs that overseas staff encounter.

Bottom-line, check with the International Tax Centre.

All the best,
William Finseth

Here is the appropriate contact information:

International tax and non-resident enquiries For questions about GST/HST, please see Non-resident GST/HST enquiries. For questions about Corporation Internet Filing, please see Corporation Internet Filing Help Desk Hours of Service. For all other questions, see the telephone numbers below.

Calls from anywhere in Canada and the United States
Individuals and non-resident trusts    1-800-959-8281
Non-resident corporations and corporation accounts (including sole proprietors, partnerships, self-employed individuals,
payroll accounts and GST/HST enquiries)    1-800-959-5525
Part XIII tax and non-resident withholding accounts    1-855-284-5946
Calls from outside Canada and the United States (We accept collect calls by automated response. Please note that you may hear a beep and experience a normal connection delay.)

Individuals and non-resident trusts    613-940-8495
Non-resident corporations and corporation accounts (including sole proprietors, partnerships, self-employed individuals,
payroll accounts and GST/HST enquiries)    613-940-8497
Part XIII tax and non-resident withholding accounts    613-940-8499
Fax numbers
Individuals    1-613-941-2505
Non-resident corporations, corporation accounts, and trusts
1-613-952-3845
Part XIII tax and non-resident withholding accounts    1-613-941-6905
Hours of telephone service
Individuals and non-resident trusts - within Canada and the U.S.A.
9:00 a.m. to 5:00 p.m. (local time) from Monday to Friday (except holidays).
From February 15 to May 2, 2016, telephone agents will be available Monday to Friday (except holidays) from 9:00 a.m. to 9:00 p.m. (local time) weekdays, and from 9:00 a.m. to 5:00 p.m. (local time) on Saturdays (except Easter weekend).

Individuals and non-resident trusts - outside Canada and the U.S.A.
9:00 a.m. to 5:00 p.m. (Eastern time) from Monday to Friday (except holidays). From February 15 to May 2, 2016, telephone agents will be available Monday to Friday (except holidays) from 9:00 a.m. to 9:00 p.m.
(Eastern time) and from 9:00 a.m. to 5:00 p.m. (Eastern time) on Saturdays (except Easter weekend).

Non-resident corporations and corporation accounts - within Canada and the U.S.A.
9:00 a.m. to 6:00 p.m. (local time) from Monday to Friday (except holidays)

Non-resident corporations and corporation accounts - outside Canada and the U.S.A.
9:00 a.m. to 6:00 p.m. (Eastern time) from Monday to Friday (except
holidays)

Part XIII Tax and non-resident withholding accounts - within Canada and the U.S.A.
7:30 a.m. to 6:00 p.m. (Eastern time) from Monday to Friday (except
holidays)

Part XIII Tax and non-resident withholding accounts - outside Canada and the U.S.A.
7:30 a.m. to 6:00 p.m. (Eastern time) from Monday to Friday (except
holidays)

William Finseth
President

MarketPower International
330 Boulevard des Trembles
Gatineau, Quebec
Canada J9A 3K9

Telephone/Fax/Voice Mail:  1-819-772-9363 Mobile/Voice Mail:  1-613-324-1017
E-mail:  mktpower@storm.ca
Skype:  william.finseth

Re: [CAIDP-RPCDI Hub] CAIDP-RPCDI Digest, Vol 139, Issue 5

Can someone provide me the names of accountants in the Ottawa area that are familiar with the tax process for overseas income?

 
Thanks in advance,
Claudia
_______________________________________
Claudia Nicholson, M.A.
Principal Associate and Founder
Nicholson & Associates Consulting
Tel: +1.613.590.1228/ cell:+1.613.866.2080
 
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