Author Topic: Posting Policy-Out of Canada (OUTCAN) [MERGED]  (Read 112061 times)

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Offline Dimsum

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #50 on: January 16, 2012, 20:03:52 »
Thanks for the info.

Now, to slightly switch gears, I'm re-reading the stuff the High Commission sent me and they talk about being a Deemed Resident while overseas, and that if I give financial institutions in Canada my Australian address, then they would apply a non-resident tax on it.  This got me wondering what others did; did you not change your Cdn address and just have mail forwarded overseas, change it to someone else's address (parents, etc) or just go with it and change to the OUTCAN address (and pay the tax)? 

Also, speaking of taxes, how did tax returns get filed? 

Thanks again.
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Offline AmmoTech90

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #51 on: January 16, 2012, 21:15:12 »
I set my residence as Ontario based on the Belleville PO Box, bank account and familial ties there.  I then just filed Ontario tax returns.  You could go for deemed resident in which case you fill out special tax return.  When I was OUTCAN they discouraged deemed residents.

http://www.cra-arc.gc.ca/E/pub/tg/t4131/t4131-e.html
http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/it221r3-consolid-e.html
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Offline captloadie

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #52 on: January 17, 2012, 03:33:43 »
I have all my mail from Canada forwarded to the Belleville post office, as this saves anyone mailing something a whole lotta money. Some things though I have sent directly to my Dutch address (Mondial insurance checks, Friends sending Christmas cards, etc.)

For the tax thing, I too kept everything as if I was still living in Ontario. The main reason for this was because I could still use an online tax program and netfile. If you do it the other way, you have to file a papercopy, as it won't let you netfile (unless things have chnaged this year). I also noticed the the amount I paid in taxes was slightly less than if I did it as a deemed resident. Will this stand up to an audit? I'm not sure, but I wasn't given any direction saying what I was doing was wrong.

Offline Inverted

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #53 on: January 17, 2012, 08:45:29 »
I haven't bothered with the Belleville address, most of my mail is sent direct to Australia. For things like Revenue Canada and my bank, my wife has family in Alberta so I use their address, this works out pretty well come tax time. I will caveat this by saying that if Revenue Canada decided to audit me I would probably be %^$*ed!

The only thing that surprised me was that according to my pay statements I pay no provincial taxes. Not being a tax expert I am assuming that MFSS has switched me to the deemed resident federal tax rate, then come tax time when I file Alberta taxes it balances out the difference between the deemed resident rate and the Alberta rate, which results in a nice return.

I realize this is probably a backwards way of doing things but I'm afraid of having MFSS touch my pay too much. This is the same organization that took 16 months to get my allowances right (and I won't even get into the mess they caused when I delpoyed).

Cheers

Offline Ditch

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #54 on: January 20, 2012, 00:01:00 »
FWIW - CF members who are OUTCAN are considered Deemed Resident's of Canada.  You don't pay provincial income tax - instead you pay something in the order of 45% of the federal tax rate.  No big deal to file this way, for some you might actually get more of a refund.  It's also audit-proof, and legal.
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Offline captloadie

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #55 on: January 26, 2012, 10:08:01 »
FWIW - CF members who are OUTCAN are considered Deemed Resident's of Canada.  You don't pay provincial income tax - instead you pay something in the order of 45% of the federal tax rate.  No big deal to file this way, for some you might actually get more of a refund.  It's also audit-proof, and legal.

Actually, according to this new brief I just found, we are actually considered factual residents, and do out taxes as if we still lived in Canada.

http://www.europe.forces.gc.ca/Resources/UK/Ruislip_DetUK/Documents/Briefing/Canada%20Revenue%20Agency%20UK%20Outreach.pdf


Offline Ditch

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #56 on: January 26, 2012, 11:04:06 »
I just read that brief and it doesn't categorically state anything different from the CRA website - which pointedly states:

Quote
Deemed residents

You may be a deemed resident of Canada for tax purposes if you have severed residential ties with Canada and you are a:

   (1)  member of the Canadian Forces at any time in the tax year;

Factual Residents are those whom travel back and forth between Canada and their place of residence.
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Offline captloadie

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #57 on: January 26, 2012, 11:08:57 »
Right in the section you quoted it says you have to have severed your canadian ties in order to be a deemed resident. Read a little more of the reg and you will see it is very difficult to sever ties as a CF member, especially if you keep a Canadian bank account your pay goes into, own any property in Canada, or have your F&E stored in LTS.

Offline 405sqn

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #58 on: January 26, 2012, 12:46:27 »
Captloadie is absolutely right - you file taxes as a Factual resident of Canada, normally in the last province you were posted. Therefore your bank accounts, your house (if you kept one), your storage items, etc all add up to "substantial ties" back to that province. If you were on IR prior to posting, this could probably be used to change the equation.

Just returned from three years in Europe, having kept a house and all banking in Ottawa. I filed Ontario taxes and know I am on solid ground in the event of audit. Here's why - we were briefed before departure by a Canada Revenue Agency (CRA) foreign tax rep of the tax considerations to consider when OUTCAN. He outlined a case study where a CF member was posted from Quebec to Europe and tried to claim Deemed Resident taxes. On audit, he was assessed to be a Factual Resident of Quebec and had to pay back bucketloads in back taxes.

In summary, just because your buddy recommends something after having got away with it doesn't mean it's legal. Consult the experts and you won't go wrong - they reside at CRA and can give you the straight info without bias. How you decide to apply that advice is up to you.

Forewarned is forearmed!

Cheers.

Offline 405sqn

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #59 on: January 26, 2012, 13:32:33 »
More info for the discussion regarding foreign banking arrangements. At the smaller posts (I have experienced this on both my OUTCAN postings), your admin support is provided on a very limited and remote basis. Your pay will go into a Canadian account and you are responsible to get it into the local currency at your expense using your own ingenuity. There are no shortcuts here, so don't fight the system. Instead, ADAPT. It is far less work. 

These days, online banking systems allow you far more flexibility than you had in the past to pay bills. Some of them must he paid locally, which may require the establishment of a local bank account to pay by cheques, etc. (in the Australian case, the bank taxes drove me nuts!)

Speak to the management of the local bank in your country of posting about lifting the 5 day hold time on transfers. Buy the best account possible in Canada to minimize your withdrawal fees (eg TD "Select Service" account waives all foreign wihdrawal fees for one monthly fee). Raise your withdrawal limits to suit higher cash usage (there is a simultaneous risk to your account if your card/PIN get jacked - it happened to me in Italy - so be careful!). Pay as many bills as possible through e-billing and online payments. See whether you can set up a Standing Advance through your CFSU for official expenses such as rent, TD claims, etc.

Keep your Canadian credit cards active and use them often. You'll pay exchange rates no matter how you slice it, either through foreign transfers to your local bank or on your card.

Foreign postings and banking are not impossible, just different. Every country has different systems and each post has unique requirements. During my last posting to Italy, I spent three years there and didn't open a local account - I managed everything from my Canadian accounts. I opened one "Cadillac" account and used it as the funnel for everything by transferring from other accounts as necessary.

You can make the system work with a little thought. I am preparing now for my next OUTCAN tour (to Africa) and will adjust the plan as necessary to suit the local conditions.

Cheers.

Offline Dimsum

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #60 on: January 26, 2012, 13:55:51 »
Captloadie is absolutely right - you file taxes as a Factual resident of Canada, normally in the last province you were posted. Therefore your bank accounts, your house (if you kept one), your storage items, etc all add up to "substantial ties" back to that province. If you were on IR prior to posting, this could probably be used to change the equation.

Thanks for the info.  I was wondering how this would work in my case though; I don`t plan on storing anything here, have sold my house and my bank account (TD) has never been changed since I got it in ON.  I have opened an HSBC Advance account in BC and plan on using it as my pay funnel (with the instant transfer to HSBC Australia.)  Would I still be able to claim factual residency in BC due to my account only?

(I'll also give CRA a shout and confirm.)
Philip II of Macedon to Spartans (346 BC):  "You are advised to submit without further delay, for if I bring my army into your land, I will destroy your farms, slay your people, and raze your city."

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Offline 405sqn

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #61 on: January 26, 2012, 15:00:22 »
I'm no expert on all of the rules, I can only relate my experience. That said, it looks like you are being posted from BC and will keep your ties with that province. Based on this, chances are good that filing BC taxes will be the safest route. As you note, a quick consult with CRA will yield the facts.

Cheers.

Offline ArmyVern

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #62 on: January 26, 2012, 15:04:46 »
...
If you were on IR prior to posting, this could probably be used to change the equation.
...


An IR posting will not change the equation. Having done many IR postings now, and having spoke with CRA directly on the issue, an IR member is supposed to be filing taxes based upon where the principal residence (ie the family) is located.

Ergo, if your residence is in Gagetown, NB and your are posted IR to Edmonton, AB - you should be paying NB taxes for the duration of your IR posting (that's where you've told the CF your principal residence is at and ergo why you are entitled to IR); if you then found yourself and your family posted outcan to another spot, your last primary residence is still considered NB where your ties are/were 'officially' at.

Edited to add: Yep, I know there's IR pers in different provinces claiming taxes at whichever is the lowest tax rate. No sympathy from me coming when they get nailed claiming AB if their family and home is in NB for example. Would like to see the CF nail them with fraud too for claiming IR in the CF (stating monthly on their claims that family and residence is NB) for being separated from their principal residence, but claiming that principal residence is in AB (for example) when tax time comes.
« Last Edit: January 26, 2012, 15:11:30 by ArmyVern »
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Offline Dimsum

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #63 on: January 26, 2012, 15:25:55 »
More for info than anything else (in case some reads the board afterwards), this is what CRA had to say:

If you sell your house and have nothing in storage (ie. your only residential tie to Canada is a bank account), you are a Deemed Resident.  I think the kicker was if you had a house or stuff in storage.
Philip II of Macedon to Spartans (346 BC):  "You are advised to submit without further delay, for if I bring my army into your land, I will destroy your farms, slay your people, and raze your city."

Reply:  "If."

Offline ArmyVern

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #64 on: January 26, 2012, 15:28:19 »
More for info than anything else (in case some reads the board afterwards), this is what CRA had to say:

If you sell your house and have nothing in storage (ie. your only residential tie to Canada is a bank account), you are a Deemed Resident.  I think the kicker was if you had a house or stuff in storage.

Well, most outcan postings see stuff (perhaps not everything, but certainly some) placed into LTS at the location where the last principal residence is located.
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Offline 405sqn

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #65 on: January 26, 2012, 15:29:03 »
For ref, recommend anyone looking for a CRA opinion contact the International Tax section:

http://www.cra-arc.gc.ca/cntct/international-eng.html

Offline 405sqn

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #66 on: January 26, 2012, 15:35:23 »
An IR posting will not change the equation. Having done many IR postings now, and having spoke with CRA directly on the issue, an IR member is supposed to be filing taxes based upon where the principal residence (ie the family) is located.
Good point. I was (naively) assuming that pers were filing their taxes based on the location of their family to start. Even then, some might try to file the lower tax place upon posting OUTCAN. So you're right, those trying to get out of higher tax payments are probably already doing it....

Offline Ditch

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #67 on: January 26, 2012, 16:28:07 »
If you sell your house and have nothing in storage (ie. your only residential tie to Canada is a bank account), you are a Deemed Resident.  I think the kicker was if you had a house or stuff in storage.
This would apply to OUTCAN pers posted to USA.  We are all considered deemed residents - as we are not permitted LTS and almost all of us sell our homes before coming down here.

In the end, I'm not too concerned about an audit - the tax rate that a deemed resident receives is equivalent to what a factual resident of Ontario would get.  Except that I won't be on the hook to pay any of the criminal OHIP extras that Ontario currently bills CF members and their families.
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Offline captloadie

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #68 on: January 27, 2012, 04:12:05 »
I did my taxes both ways last year, just to see what the difference would be. Even when paying the max OHIP tariff, my tax return was larger as a factual resident than a deemed resident. That being said, it will be different for each individual.

On a separate note, I'm now starting to research all the requirements for returning to Canada. Who would have thought getting back would be three times more difficult than leaving. Especially when my new home will be in Cold Lake  :P

Offline ArmyVern

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #69 on: January 27, 2012, 04:16:17 »
I did my taxes both ways last year, just to see what the difference would be. Even when paying the max OHIP tariff, my tax return was larger as a factual resident than a deemed resident. That being said, it will be different for each individual.

On a separate note, I'm now starting to research all the requirements for returning to Canada. Who would have thought getting back would be three times more difficult than leaving. Especially when my new home will be in Cold Lake  :P

Good luck!!  >:D
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Offline 405sqn

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #70 on: February 01, 2012, 10:53:24 »
Found this page on the internet to help frame the situation regarding how Canada Revenue Service looks at individual situations for tax purposes when posted OUTCAN.  "Residential ties" remains the key determining factor for figuring out whether to file as a Factual Resident or a Deemed Resident, for which specific advice from their experts is the best method.  Note that these are the only two choices available for a CF member posted abroad.

You'll see a section at the bottom for CF Overseas School Staff - these are the civilian teachers at schools such as the NATO School in Geilenkirchen, not CF members.

Happy reading! :)

http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/gvt_mpl-eng.html
« Last Edit: February 01, 2012, 10:56:22 by 405sqn »

Offline KennyE

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #71 on: February 02, 2012, 10:22:18 »
For those who have taken OUTCAN postings in Europe, what was the most difficult part of living there? Was it the initial move and getting settled in? I have two school age children and I think it would be easier for them to live in a country that speaks English or French as they are pretty fluent in French.
Looking for moving companies Toronto for new posting.

Offline 405sqn

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #72 on: February 02, 2012, 13:57:12 »
It depends on the country, as each one of them has its own particular quirks.  In Italy, the biggest issues surrounded bureaucracy, driving habits and language (and I'm quite good in Italian).  You have to learn how to set those issues aside, accept that you will never change their ways and enjoy your brief stay in their country/culture.  If you let the annoyances get to you, you'll end up being bitter and wanting to go home early.  The only loser in that deal is you.

Offline Transporter

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #73 on: May 20, 2013, 22:59:05 »
Hi all. Have been a Forum lurker for some time now and have finally decided to become a full card carrying member by registering for an account  :). I read an interesting article [deleted] today about possible cuts to OUTCAN benefits i.e. FSP, housing allowances, etc. Anyone have any inside info on what is being kicked-around in Ottawa in this regard? Is there anything to it or is it just rumour? We can all speculate but am looking to see if anyone has any factual info on what, if anything, is being considered.

Many thanks.

Edited to meet requirements of this post. Topic discussion may continue, origin article not to be mentioned. - Milnet Staff
« Last Edit: May 20, 2013, 23:07:01 by Michael O'Leary »

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Re: Posting Policy-Out of Canada (OUTCAN) [MERGED]
« Reply #74 on: May 20, 2013, 23:09:51 »
Just read the article, and if its true, wheres the issue? FSP should be a taxable benefit unless you're in a Risk/Hardship 2 area. Is FSP nontaxable for those in Europe currently?

Regardless of the cuts, there are always people willing to go OUTCAN as long as it remains financially viable for their family. I have a feeling that if they are cutting benefits, they'll be doing it just like IR, attempting to remove the "gravy train" aspects.