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  • Arsalan
  • Site Programmer

    • 2011

    • September 18, 2006, 02:00:00 pm
    • Alberta
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Tax refunds & Bonus
« on: September 28, 2006, 08:10:27 am »
Just curious, does anyone know how we get our tax refunds at the end of the year? as well as the 1 month salary bonus for contract completion?

My school doesn't seem to know about the Bonus, and I have not given them any info about my Canadian account for a tax refund after I leave the country.

Sorry if my question is a little naive.
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Re: Tax refunds & Bonus
« Reply #1 on: September 30, 2006, 12:50:13 pm »
Hey Arsalan,

My last year's experience with tax refund and xtra 1 month salary went smootly.  Make sure your school knows about the 1 month salary, though.  It was just added to my last month's pay.  So I recieved 2 months pay on my final check.  You will get this on your last day of work.  As for the tax refund,  you need to visit an immigration office.  From here, you apply to have the money wired to your bank account at home.  This is the equivalent of a months pay or more.  This will take 30-45 days or so.  Mine was in Canada in only 15 days.  One stipulation on this is that you have to be leaving the country for at least 2-3 months inorder to recieve this.  So, if you stay in Koea it accumulates and you recieve a really nice chunk of change (all the years added together) when you leave. If you return to Canada, it is wired to you shortly after you return.    When you leave, you have approx. three months pay at once.  It's a really nice easy way to save some money.   Also, when I filed my tax refund in Canada, the tax agerncy (H&R Block) said that I didn't have to claim my overseas income becuase I was a resident of Korea when I made the money.  So, I worked tax free, except for minimal Korean taxes, for one year.    I would check to clarify this.   Anyway, hope that helps.

Chris


Re: Tax refunds & Bonus
« Reply #2 on: October 11, 2006, 12:03:02 am »
Does anyone know if I can apply for a tax refund working at a hakwon?  I know I pay 3.3% in taxes on each paycheck.  What do I need to do in order to apply for this?

Erinn


  • Brian
  • Featured Contributor

    • 735

    • September 19, 2006, 01:07:56 pm
    • Pittsburgh / Jeollanam-do
Re: Tax refunds & Bonus
« Reply #3 on: October 11, 2006, 10:31:36 am »
I've been asking around but I haven't found an answer yet.  In the meantime, you can email the National Tax Serivce and get an answer to your question, in English:  http://www.nts.go.kr/eng/default.html


Further reading: Tax issues for Canadian expats  http://wiki.galbijim.com/Tax_issues_for_Canadian_expats


The situation here is a little different for Americans and Candians, and since I'm not Canadian I can't speak with too much authority about it.  I recommend you email the NTS, and if I get an answer to your question I'll post it here.
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Re: Tax refunds & Bonus
« Reply #4 on: March 05, 2007, 01:38:11 pm »
I have a question:  Say you ARE still a resident of Canada, and still have to pay tax on the amount you earned in Korea... anyone have any idea how I'm supposed to claim my Korean income from last year?  It's not like Korea gave me a T-*$&% slip with my information neatly printed with my equivalent Canadian income on line 26 or anything.  It's also not like my school gave me any pay stubs or anything, either.  All I have are my bank books from my Korean bank account, with the monthly deposit information.  I think I have to go have a sit-down with H&R block or something.


Re: Tax refunds & Bonus
« Reply #5 on: March 05, 2007, 03:12:21 pm »
Hi Jen,

My experiece from last year was that we do not have to claim our Korean income in Canada.  I went to H & R Block and at first they had no clue on what to do.  I left it in their hands and after a few weeks they figured out that I did not have to claim any of my income while here.  I was under the impression that we could make x number of dollars abroad before being taxed, like $60000 or so, but they said it was not so.
Anyway, in brief, I did not have to claim or pay anything.  Just for the 4 months of that year I lived in Canada.  This, year, I will be living in Korea during the whole year.  They said I don't hvae to do my taxes at home. 
I might add that I was left with the impession that they were not absolutely sure on the entire issue.  So you may want to double check.
  On a similar note, when you live in Korea, you will recieve GST's until you do your first income tax.  It would be best to put them aside until you do your taxes.  You will have to pay these back.   
As for residencies, I'm not sure how that works. 

Hope that helps you,

Chris


Re: Tax refunds & Bonus
« Reply #6 on: March 08, 2007, 02:52:40 pm »
Here is tax info from Canada revenue agency.  This may help some people:

Canada Revenue Agency: International and Non-Resident Information
The main question that one needs to ask before filing taxes is, “What is my residency status?”  Your liability for Canadian income tax is based on whether or not you are a resident or non-resident of Canada, either factual or deemed.  A resident of Canada is subject to all Canadian taxes on income earned in Canada and worldwide sources.  A non-resident of Canada is only subject to Canadian taxes on income earned from sources in Canada and not worldwide income.  The most important factors to consider when determining your residency status are your significant residential ties to Canada, intent to return to Canada and length of time abroad. Residency is not the same as citizenship; you can still be a Canadian citizen but not a resident for tax purposes. Thank God!

If you are unsure about your status while living in Korea, you can contact Canada Revenue Agency (the former Revenue Canada) for an assessment. You can make an enquiry by contacting the International Tax Services Office (ITSO), Enquiries & Adjustments Division, at 1-800-267-5177 (toll free in Canada and the US), or call them collect at (613) 952-3741 (for service in English), or (613) 954-1368 (for service in French).  Written enquiries should be addressed to:
International Tax Services Office
2204 Walkley Rd.
Ottawa, Ontario
K1A 1A8

If they are unable to advise you over the phone, they will most likely ask you to complete an NR73 form and mail or fax it in for a formal assessment. 
This form can be found at: http://www.cra-arc.gc.ca/E/pbg/tf/nr73/nr73-04e.pdf

Note:  Be aware that information you give to them may be used to support an assessment against you (you might prefer to contact a Canadian tax accountant if your situation is complex or questionable).  Also, keep in mind that Canada Revenue Agency will assess individuals on a case-by-case basis after considering all relevant facts.  In other words, there is no cut and dry formula for determining residency. 

If your circumstances are relatively straight forward, you will most likely be able to assess your own residency status and file as such.  If CCRA question it, they will alert you right away and ask you to re-file under the status in which they determine.  If you don’t hear back from them after you file, assume they have accepted your claim and (fingers crossed) you are in the clear. 

Residential Ties To Canada

Generally, unless you sever all significant residential ties to Canada, you will continue to be considered a resident of Canada and subject to all Canadian taxes on your Korean income.

Significant Residential Ties:  These are most important when considering your status.

A)   Dwelling Place:  If you own or lease a house/apartment in Canada for your own dwelling, that place will be considered a significant residential tie during your stay in Korea.  *However, if you lease to a third party on arm’s length terms and conditions, Canada Revenue Agency will take into account all of the circumstances of the situation (including the relationship between the individual and the 3rd party, the real estate market at the time of your departure and the purpose of your stay in Korea), and may not consider that dwelling place to be a significant residential tie except when combined with other residential ties. 

B)   Spouse or Common-Law Partner:  If you are married or co-habiting with a partner and that individual remains in Canada, that person will be considered a significant tie.  *However, if you were separated from your spouse or common-law partner prior to your departure from Canada, that individual will not be considered a significant tie.

C)   Dependants: If you have dependants who are currently residing in Canada, they too will be considered significant ties.


Secondary Residential Ties:  These are looked at collectively to determine status and generally, single secondary residential ties are not considered significant enough to determine the holder a factual resident of Canada.

A)   Personal Property:  furniture, clothing, cars or recreational vehicles.
B)   Social Ties:  memberships in recreational or religious organizations
C)   Economic Ties:  employment with a Canadian employer, active involvement in business, bank accounts, retirement savings plans, credit cards or securities accounts.
D)   Landed Immigrant Status or Work Visas
E)   Provincial Medical Coverage
F)   Driver’s License
G)   Registered Vehicle
H)   Seasonal Dwelling Place
I)   Canadian Passport
J)   Memberships in Canadian Unions or professional organizations

* Other residential ties that the Courts have considered when determining residency status which may be factored in by Canada Revenue Agency include:  the retention of a Canadian post office box, safety deposit box, personal stationary/ business cards, telephone listings or local newspaper/magazine subscriptions.  These residential ties are usually of limited importance however, unless combined with several other residential ties.


Intent to Return to Canada and Length of Time Abroad

When determining your residency status, Canada Revenue Agency may look at your intent to return to Canada and your length of stay in Korea.  Generally, if it is evident that you had intent to return home upon your departure, CCRA may attach more significance to your secondary residential ties, making it difficult for you to claim non-residency status.  Your length of stay in Korea may become a factor in this intent.  The longer you stay, the less evident your intent to return is.  A person who claims non-residency status is expected to have little or no intent to return to Canada.  That’s not to say that you can never return!  A person can have the “intent” to stay abroad, then suddenly for unforeseen reasons be forced to go home. 

If you decide to sever your residential ties to Canada with the “intent” not to return, your status as non-resident will not be affected by occasional visits to Canada for business or personal reasons.  *However, if return visits are seen as frequent rather than occasional and you have some secondary residential ties remaining, the significance of those ties will be evaluated more closely.


What Is Your Residency Status?

1) Factual Resident of Canada:  You are considered a factual resident of Canada if you keep residential ties with Canada, even while travelling or living abroad. This can mean that although you are not physically present in Canada, you are still liable for income tax.

2) Deemed Resident of Canada:  Even if you don’t have residential ties to Canada, you may be considered a deemed resident if you are not considered a resident of another country (under the terms of the tax treaty with that country) or you stay in Canada for 183 days or more.
3) Non-resident:  You are considered a non-resident if you normally or routinely live in another country and aren’t considered a resident of Canada or you have no significant residential ties to Canada, no “intent” to return, you live outside of Canada during the tax year and you stay in Canada for less than 183 days of the year. You are not eligible for Canadian benefits such as GST/HST rebates, provincial tax credits or the Child Tax Benefit, but you don’t have to claim your income earned in Korea either. Since Korean taxes are generally lower than Canadian taxes in many situations, you will find you are better off setting yourself up as a non-resident if your circumstances allow. 
4) Deemed Non-resident:  You may be a deemed non-resident of Canada if you are otherwise considered a factual or deemed resident of Canada and a resident of Korea. There is a tax treaty between Canada and Korea that would be used to determine your tax country in such a situation. If you are found to have stronger ties to Korea under the treaty, you would only have to report your Canadian source income on your Canadian tax return. You are not eligible for deductions on income gained in Canada, however.
 
*Please keep record of your Korean Alien Registration Card, as this will support your Korean residency in the above situations.


Claiming Non-Residency

If you want to become a non-resident of Canada while teaching in Korea, here are some things to consider:

•   You can inform the government of your intent to cease Canadian residency for tax purposes by simply stating your date of departure on the jacket of your T1 return for the year you leave Canada. You are only taxable in Canada up to that date of departure.

•   When and if you decide to return to Canada, you inform the government of your return in a similar manner, that is, you simply state your date of arrival into Canada on the jacket of your T1 return for that tax year. You are only taxable in Canada for income earned after that date of arrival.

•   If you own any non-registered assets such as investment accounts there is a departure tax charged when you become non-resident. The departure tax is charged on any capital gains that have accrued on your assets up to the date you leave Canada. These gains must be reported on your tax return in the year you leave Canada. Departure tax does not apply to bank accounts, RRSPs, pension plans, Canadian real estate or to most personal effects you own. The most common assets subject to departure tax are shares, mutual funds or bonds held in non-registered investment accounts.








Important:  Generally, your tax return must be filed on or before April 30th, 2005.


GOOD LUCK!