Expat Taxes: All You Need To Know About Paying Taxes Abroad In 2023

July 9, 2023 Andrew AdolphAudits

So you couldn’t stand the cold icy Canadian winters or perhaps you got a job offer that was impossible to turn down. Regardless, you’re wondering about expat taxes and how much you owe the CRA.

We’ve got you covered; here’s a full breakdown!

Residency Status Matters

Unlike the United States, Canada doesn’t try to make you pay taxes for benefits you’ll never see and roads you’ll never drive on. If you get rid of your residential ties in Canada and establish residential ties in the country you live in, you could, in fact, qualify as a non-Canadian resident for tax purposes. 

In other words, your expat taxes when it comes to your personal income will be zero provided that you don’t earn any income from a Canadian employer.

The Non-Resident Expat Taxes You Should Pay Attention to

If you are a non-resident, there’s still a chance you’re obligated to pay certain taxes. These taxable incomes include rental income, dividends from Canadian corporations, and employment income earned in Canada. Even if you earn income from a Canadian employer and are living abroad, you still might be eligible for reduced tax rates. It’s essential to check if there is a tax treaty with your current country of residence, as these treaties can help you avoid double taxation in most cases.

Expat Taxes: Reporting Foreign Assets

Canadian residents, including expats, may have reporting obligations related to foreign assets. Neglecting to report your foreign assets is a major red flag that could have the CRA knocking on your doorstep. It’s easy to report your foreign assets as a Canadian. The primary requirement is the Foreign Income Verification Statement (Form T1135), which is used to report specified foreign property if the total cost of all such properties exceeds CAD $100,000. This form helps the CRA track and ensure that individuals are reporting their foreign assets accurately.

Understanding Tax Obligations in Your Country of Residence

While your Canadian tax obligations as an expat are important, it’s equally crucial to understand the tax regulations in your country of residence. Each country has its own tax laws and requirements that you need to comply with. Familiarize yourself with the local tax system, including tax rates, filing deadlines, and any available deductions or credits that you might be eligible for. Consulting with a local tax professional can provide valuable insights and ensure you are fulfilling your tax obligations in both Canada and your country of residence.

Tax Planning for Expats

Tax planning is a crucial aspect of managing your expat taxes. By understanding the tax laws and regulations in both Canada and your country of residence, you can optimize your tax situation and minimize your overall tax liability. Consider working with a tax professional who specializes in international tax matters to help you navigate the complexities and identify opportunities for tax savings. They can assist in ensuring that you are taking advantage of any available deductions, exemptions, or credits, and help you develop a tax-efficient strategy.

Expat Tax Planning: The Bottom Line

Understanding your residency status, being aware of your non-resident tax obligations, reporting foreign assets, understanding the tax regulations in your country of residence, engaging in tax planning, and seeking professional advice are all essential elements when it comes to managing your expat taxes. By staying informed and proactive, you can navigate the complexities of expat taxes and fulfill your tax obligations while maximizing your tax efficiency.

For more tax advice book a free consultation or check out our blog. You can also contact me at 1-866-475-3328 if you need help urgently. Don’t wait to file your taxes. The CRA could be watching you!

Andrew Adolph

Andrew Adolph is a CPA and former CRA auditor with 25 Years of experience. He helps businesses to not par any more in sales taxs than the law says they must and acts as an advocate for you if you are being audited, so you can fous on your business.