Personal Finance

Working in Korea, will I get taxed twice?

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  • May 25th, 2014 9:46 am
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Banned
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Mar 4, 2011
660 posts
493 upvotes
Surrey

Working in Korea, will I get taxed twice?

If I'm working in Korea, and it comes to tax season in Canada, how would I deal with my taxes? I don't think I have to pay Korea any tax. Who would be the best to speak to for these matters? Thanks!
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13 replies
Deal Guru
May 1, 2012
10538 posts
11427 upvotes
Toronto
Declare non-resident in Canada and you only pay Korean Tax. You will lose some benefits though, like health care.

If you are unwilling to do that, you will be taxed the tax "difference."

For example:

Korean tax is 10%
Canadian tax is 30%

You pay 20% to Canada.


Or you don't file and hope you don't get caught while keeping residency in Canada.
Deal Addict
Dec 8, 2008
1887 posts
225 upvotes
GTA
Anikiri wrote:
Or you don't file and hope you don't get caught while keeping residency in Canada.
isn't there a tax treaty between the two countries, making it easier to detect such behaviour?
Deal Expert
May 30, 2005
49008 posts
10301 upvotes
Richmond Hill
Anikiri wrote: Declare non-resident in Canada and you only pay Korean Tax. You will lose some benefits though, like health care.

If you are unwilling to do that, you will be taxed the tax "difference."

For example:

Korean tax is 10%
Canadian tax is 30%

You pay 20% to Canada.


Or you don't file and hope you don't get caught while keeping residency in Canada.
You can't just declare non-residency. There's a process to go through and it takes 1-2 years usually. If you're not going to be away for long, you have to pay taxes. It's part of your duty as a Canadian citizen.
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Deal Guru
May 1, 2012
10538 posts
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Toronto
Jon Lai wrote: You can't just declare non-residency. There's a process to go through and it takes 1-2 years usually. If you're not going to be away for long, you have to pay taxes. It's part of your duty as a Canadian citizen.
Actually it only takes about a day. You have to inform the CRA that you plan on working abroad for a long period of time and they will consider you as either a non resident or deemed non resident. This way you only pay tax to Canada if you incurred any Canadian income.
Deal Expert
May 30, 2005
49008 posts
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Richmond Hill
Anikiri wrote: Actually it only takes about a day. You have to inform the CRA that you plan on working abroad for a long period of time and they will consider you as either a non resident or deemed non resident. This way you only pay tax to Canada if you incurred any Canadian income.
You have to disconnect all your ties to Canada to be deemed a non-resident. IE close all bank accounts, sell everything, etc.
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Banned
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Mar 4, 2011
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Surrey
Well... does anyone know who I can phone to ask more info? I guess the CRA?
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Deal Addict
Sep 26, 2013
3725 posts
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MONTR
convolution wrote: Well... does anyone know who I can phone to ask more info? I guess the CRA?
you know the answer yet you make a thread on rfd.
i think it depends on how long you plan to work in korea. If more than 1 year then just declare yourself non resident, cut all ties to canada and just pay korea tax.
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Jan 2, 2012
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Toronto
Anikiri wrote: Declare non-resident in Canada and you only pay Korean Tax. You will lose some benefits though, like health care.
Note that even if you don't declare non-resident, and continue to pay Canadian taxes, you can still lose your healthcare. There are physical residency requirements to keep BC healthcare. Anything up to a 6 month absence you will keep healthcare, and anything beyond that (up to 24 months) you need to contact BC healthcare and arrange to get an exemption as a "temporary" absence so you don't lose coverage. http://www.health.gov.bc.ca/insurance/m ... hange.html
Deal Fanatic
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Apr 29, 2008
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Montreal
You are not taxed "twice" per se. You will probably taxed more in Canada though!

If you pay taxes in Korea and are still a resident in Canada, you will be able to deduct the taxes you paid in Korea in your Canadian tax report.
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Deal Fanatic
Dec 9, 2003
5132 posts
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Calgary
+1. Its essentially the same process in any country. Pay the local income taxes on your Foreign Income. Calculate your Canadian taxes on all income (Canadian + Foreign + other Foreign if applicable) Subtract foreign taxes paid to get to net Canadian tax payable. And don't forget Form T1135.
Sr. Member
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Jun 29, 2008
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Jon Lai wrote: You have to disconnect all your ties to Canada to be deemed a non-resident. IE close all bank accounts, sell everything, etc.
You are wrong. You dont need to sell everything. What if I have houses and I want to spend my vacation here. The gov't will tell.me, no you cannot.

Declaring non residency will result in loss of your heath benefits, and thats the major loss. You can still buy properties, invest here as you wish even if you are none resident. End of the day you will pay taxes on your properties and any investment you make here.
Newbie
Nov 3, 2013
57 posts
10 upvotes
Kitchener, ON
As posters have mentioned, the Canadian Tax system is based on residency, which considers many factors which includes dwellings, family ties, social ties, financial ties, etc. Ultimately, what CRA is trying to achieve is to determine if you intend to return to be a Canadian resident. The importance of this consideration is you may face penalties/interests if you should have been considered a resident of Canada and you did not file, or you filed as a Non-resident and did not report all the income you should have.

At a high level, a Canadian resident must report all income he/she earns while a non-resident only reports "Canadian-sourced" income. For the Canadian resident situation, if the individual pays foreign taxes (e.g. your case, Korea), there may be relief through a foreign tax credit so you are not double-taxed. There may also be relief through tax treaties that Canada has with other countries. I'm not aware of what the rules would be off the top of my head and it may be in your interest to consult a tax professional if you need to refer to international tax treaties for your situation.

Residency is assessed on a case-by-case basis, and is may not be as simple as selling your dwelling and claiming you are non-resident. Most cases, individuals are not in the "grey" area so take a quick read and see if you can make a conclusion for yourself as we cannot based on the limited information you have provided. Here's a link to factors that would be considered:
http://www.cra-arc.gc.ca/tx/tchncl/ncmt ... 1-eng.html

However, also note that tax treaties may affect how residency rules are concluded, if you are in a "grey" area.
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Aug 3, 2009
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Nova Scotia
Whether or not you are a resident is a question of law should you disagree with the CRA and courts will assess whether you are or not by taking into account all factors.

You'll likely never be flagged if you do not report your Korean income or under report it. But as others have said, you'll likely pay the difference if you report as you should.

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