Vancouver CPAs say it's important to decided whether to pay taxes on worldwide income or sever ties and pay only on Canadian generated income

/EINPresswire.com/ -- VANCOUVER, BC--(Marketwired - August 24, 2016) - Mew + Company, a team of chartered professional accountants in Vancouver, want to remind people that taxes can be tricky when it comes to working abroad. Their latest blog explains that the best way to handle taxes depends on your particular situation. For more, go to: http://www.mewco.ca/blog/moving-abroad-cutting-ties-canada-lower-taxes/

While it seems logical to assume that taxes will be lower by severing ties with Canada, it's important to pay close attention to the taxes and tax breaks that could be affected.

One key factor to consider is your home-will you be selling it? If you're keeping your home, rental income earned as a non-resident is subject to a Part XIII tax at 25% of gross rent as withholding tax. There are options for non-residents to file a special return where tax is paid on the net rental income as well as additional procedures that can be undertaken to reduce the 25% withholding tax on gross rent.

However, these special options and additional procedures incur additional accounting fees. What's more, failure to file your taxes on time can result in penalties. The bottom line-reporting rental income as a non-resident can be expensive.

The biggest tax benefit lost when Canadians sever ties is the principal residence capital gains tax exemption. Principal residence exemption calculation is very complex. The exemption amount is determined by the gain on the sale of the home and a multiplier, which takes into account years of residency in the house, and years of ownership of the house. The years the taxpayer chooses to be a non-resident will effectively reduce the exempt amount of the gain.

Another consideration is the unpaid balances under the homebuyer and lifelong learning plans. Severing ties with Canada would require the repayment of any balance before the tax return for the year of departure should be filed, or 60 days after becoming a non-resident, whichever date is earlier. Failure to pay will result in income inclusion of the unpaid balance.

If you find that severing ties to Canada is beneficial after these considerations, you must sever all significant ties so the CRA will not find you to be a factual resident. Deemed disposition rules will apply to all capital property unless specifically excluded. Excluded property includes Canadian real estate, business properties, RRSPs, stock options, and interest in some trusts. Mutual funds and stocks held in a trading account will be subject to the deemed disposition rule.

Taxes resulting from deemed dispositions can be deferred until actual sale, and security is not required as long as the resulting federal tax on the deemed disposition is $14,500 or less.

Remember, tax rules as they pertain to resident and non-resident status can be tremendously complex. If you're looking for professional tax advice so you can move confidently, call Mew + Company, professional chartered accountants, at 604-688-9198.

About the Company

Mew + Company, Vancouver, is an ideal solution to the taxation problem. With a simple philosophy of building long-lasting customer relationships, the company has been serving corporate clients in a variety of fields-including restaurants, real estate, retail, and the service industry. Investing in their specialist services will undoubtedly be fruitful for all kinds of clients.

To learn more about Mew + Company and discuss their services, log on to http://mewco.ca/.

Lilly Woo, CPA, CA, CFE, CFP
Mew + Company Chartered Professional Accountants
604 688 9198
Company Website: http://www.mewco.ca