Unique situation. Moved from UAE to Toronto

[Vandana Sharma]

I will try my best to summarize this unique situation.

In summary, got PR and moved to Toronto from Dubai. Still have residency in UAE because of remote work in a Dubai company. Good money but yes I WILL pay Tax here in Toronto.
(PS: Don't ask why I moved here. That's a long discussion. Doesn't mean I will be here forever. Passport was a factor.)

Situation details:

1. PR was obtained in 2018, only had a bank account and credit card. Never moved to Toronto.
2. Moved properly here in 2021 November and renting an apartment since November in Toronto. For reasons, my rental agreement in Dubai is valid till Jan 10 2022.
3. Transferred some amount for survival to Toronto, 23,000 CAD etc in November

Questions on Tax

1. I want to pay taxes on my Dubai income because I am using services in Toronto and I am living here for the next few years.
2. BUT I do not want to give income taxes for Nov & Dec 2021, since I just moved here, and also got a Bonus for December

Do I file my documents now, or just wait for Jan and do the first filing for 2022 anyway. I am also speaking to another CPA / Tax expert.

Questions on Investments

I own crypto in multiple platforms and NFT. I am not declaring there. Crypto is no ones business and I am not "selling" for another 10 years.
I have investments through an international broker; where I trade options often. The account is based on Dubai residency for now.
Planning to move this to my Dad's name AND get a parental WILL done - he really does't care and is not someone who will "run" with the money. Rather he doesn't even spend the amount I give my parents as support.

What's the best possible course of action on my investment account, and Options and trades? I cannot stand giving 20% gains on every trade, heck keeping track of this needs someone full time.

 

[Larin]

I'll take a stab at your question on Tax, as your Questions on Investments is a lot more complicated.

Do I file my documents now, or just wait for Jan and do the first filing for 2022 anyway. I am also speaking to another CPA / Tax expert.

In Canada you must file a tax return if: you owe tax, would like a refund, want to claim benefits. If any of the three points are relevant you need to file a tax return by end of April of the following year (the tax year is the calendar year).

Revenue Canada will consider you to be a tax resident when you establish residential ties to Canada (Newcomers to Canada (immigrants) - Canada.ca). In your case it could be argued that happened the day you landed in Canada (tenancy agreement, PR status, intention to stay long-term). Thus, it is likely that you will be liable to pay tax in Canada from that date onwards and will therefore have to file a tax return for the 2021 tax year.

Edit: One consideration that may be relevant here is your citizenship. Are you a UAE national by any chance?

 

[Vandana Sharma]

Thanks Larin for this. A very interesting topic indeed.

My citizenship isn't Emirati (South African/Indian/Iran background) however I still have a Residency Visa in UAE. Also, rental agreement for UAE home till Jan 10 2022.

My objective in November was to visit Toronto and check if I want to stay. Have't decided fully yet, even tho I rented to save money instead of AirBnB.

Furthermore, I am on an expensive medication for my heart that's being paid by my UAE insurance. Haven't got a family doctor here yet. I need to figure out medical. I am going back last week of December to UAE, and will decide if I need to move when I am back in January.

 

[Larin]

Thanks Larin for this. A very interesting topic indeed.

My citizenship isn't Emirati (South African/Indian/Iran background) however I still have a Residency Visa in UAE. Also, rental agreement for UAE home till Jan 10 2022.

My objective in November was to visit Toronto and check if I want to stay. Have't decided fully yet, even tho I rented to save money instead of AirBnB.

Furthermore, I am on an expensive medication for my heart that's being paid by my UAE insurance. Haven't got a family doctor here yet. I need to figure out medical. I am going back last week of December to UAE, and will decide if I need to move when I am back in January.

The reason I asked about your citizenship is because there is a double taxation treaty between Canada and the UAE, however, UAE residents are defined very narrowly (based on citizenship in fact) (Article 4(b)(i)Convention Between the Government of Canada and the Government of the United Arab Emirates - Canada.ca), and had you been one you could avail yourself of the benefits under the treaty. Given that you are not, the treaty (and the fact that you have a residency contract in the UAE), and your life outside of Canada will be of no help to you. The only thing that will matter are your ties to Canada in determining whether you are in fact a Canadian tax resident.

The language you are using in your second post is considerably different from your first post. It is a lot more...transitory in nature. In any case, and this isn't any sort of legal/accounting/tax advise, but if I were you I would have stuck to AirBnBs, and would have left as quickly as possible after my visit to Toronto, without establishing any ties (no health card, no driver license, no large money transfers, definitely no tenancy agreement) and only come back in January once I had finished my affairs and was ready to settle.

 

[JackAlabama]

Yes, best in your situation

Thanks Larin for this. A very interesting topic indeed.

My citizenship isn't Emirati (South African/Indian/Iran background) however I still have a Residency Visa in UAE. Also, rental agreement for UAE home till Jan 10 2022.

My objective in November was to visit Toronto and check if I want to stay. Have't decided fully yet, even tho I rented to save money instead of AirBnB.

Furthermore, I am on an expensive medication for my heart that's being paid by my UAE insurance. Haven't got a family doctor here yet. I need to figure out medical. I am going back last week of December to UAE, and will decide if I need to move when I am back in January.

No advice as I am not too familiar with Canada, but all these Western places run similar actions anyway.
Going back to UAE seem to be helping with not showing too much ties to Canada in 2021.
I'd make sure to get as much salary by year end and then move in January 2022 and pay all tax due from there onwards and make sure you have enough claims to your residency starting in January 2022.
Canada sure has its own views on crypto, leaving limited choices on own interpretations.

 

[karishi]

One consideration, Canada knows nothing about your money, since you are still a UAE resident for banks in the UAE and for any trading platform in the UAE. This is not tax advice or legal advice, and it's a grey area, but Canada Tax Authoirty only knows that you have 23k CAD coming from UAE, where I guess you spent more than 6 months, and doesn't know anything about how much money you do or have in UAE, as UAE banks will not send CRS messages to canada, as long as your residency in the UAE is valid.
So basically what I'm saying is that, even if you do have ties for two months in Canada, which is debatable and would need to be proven somehow, Canada has no hard data on you having money outside and the initial 23k were gained in the UAE so not taxable. So if you keep the last two months money going to the UAE bank and do not move them to Canada, Canada will know nothing about them, unless they start a prosecution, which I find difficult.
This also ties to the investment part, as long as you keep a valid residency in the UAE, nobody will send CRS messages to Canada, so Canada will know nothing about your accounts there. So you coul potentially keep a residency valid in the UAE and keep money in the accounts. This is not legal and will get you into trouble if discovered, border control might find the fact that you have a residency visa in the UAE on your passport suspect ( but if you have two passports....) and do some digging. But digging requires money and if you are a good canadian citizen, which pays taxes in the country and so on, this is unlikely to happen. But it can happen, so do read and get informed about what you are risking. Also think about inheritance taxes, I am absolutely not an expert on them so I wouldn't know how they work, but if at certain popint you are a canada resident, and inerit 1 million CAD and spend them to buy a house, you will have to provide explanations for the money.

 

[Vandana Sharma]

Thanks a lot Jack and Shikari, I hope this thread is also useful to others. Will try to summarize as follows:

Alternate Universe #1:
Canada has no idea of my earnings in UAE. My parents support me since they are retired and I am a useless child. I transfer my salary to my dad's account and every month dad transfers less than CAD 10,000 to "support me". My UAE Visa is still valid. My investment account goes into my dad's name and I trade remotely under his name.

Personal Observation on AU #1:
Nearly illegal and immoral since I will be using Canadian services; I do WANT to pay taxes. Have come to peace with the fact that some things come at a cost (freedom, living here, infrastructure, and supporting useless families with 10 kids). A friend of mine is doing this already and I don't know how or what is he showing in his returns.

For investment account, I will have to declare as non-primary account holder since my broker asks these questions clearly Since I am a useless child who has no idea what they are doing...

Alternate Universe #2:
I move here in January permanently, start a company (sole prop) and provide global services. Somehow manage to pay myself less than 10,000 pm through this sole prop and transfer through hops from my UAE checking account to Canadian account. Pay taxes on "services offered" etc.

Personal Observation on AU #2:
Too complicated and also illegal since all those hops is basically the tenant of money laundering. Or at best grey area.
I would genuinely like to start a start up in Toronto in 2022.

Alternate Universe #3 [Preferred]:
I move here in January, and file my taxes in March clearly stating my earnings from Jan and pay all relevant taxes. I transfer my UAE amount to Canadian bank and provide proof of funds.

Personal Observations on AU #3:
Best decision. I am paying taxes from the month I move seriously here. It's the month I get a family doctor, book my cardiologist, etc. i.e. Jan 2022. My investment account will also be declared and my broker will be informed about my move to a new country. I get my TFSA setup for 2022 and also focus on that. Everything by the book (close enough).

At the same time focus on opening a company here in Apr 2022 and play it smartly.

Next in line, need to read up on regular trading (not day) and CRA regulations.

 

[Larin]

Personal Observations on AU #3:
Best decision. I am paying taxes from the month I move seriously here. It's the month I get a family doctor, book my cardiologist, etc. i.e. Jan 2022. My investment account will also be declared and my broker will be informed about my move to a new country. I get my TFSA setup for 2022 and also focus on that. Everything by the book (close enough).

At the same time focus on opening a company here in Apr 2022 and play it smartly.

Just one clarification, if you move in January 2022, you will only be looking to file taxes in by end of April of 2023 (ie March 2023).

Good luck with your new home! Canada is a lovely place

 

[cryptonite]

Unlike Australia, which has tax residency rules based on the number of days spent in the country, CRA looks at other factors (spouse/children's residence, bank accounts, storage, library card, etc in Canada). In the past, CRA has found some remote excuses (finding some winter belongings in a friend's garage in Canada) to tax on global income even when the PR / citizen has left Canada. So, if you plan to leave after having spent a number of years in Canada, it will be important to formally cut off ties and paying a final disposition tax before leaving.

Once you take PR in Canada, you're taxable on your global income. If you own a foreign structure and are residing in Canada, you have to declare it as a foreign controlled entity. On the day you get PR, you need to take a snapshot of your worldwide assets value. Any disposition of those assets (even if acquired prior to PR), will be taxed on the market value on the day of disposition less the value on the day you took PR.

Are you planning to apply for citizenship after fulfilling the three year residence within the last five years? Once you get the passport, you can technically leave and become a non resident citizen. With PR, you need to stay in Canada for two years out of every five to maintain the PR status. Technically, once you get PR, you never lose it unless you specifically relinquish it. In practice however, once your PR card expires, you will have some explanation to give for them to renew it.

 

[Vandana Sharma]

Once you take PR in Canada, you're taxable on your global income. If you own a foreign structure and are residing in Canada, you have to declare it as a foreign controlled entity. On the day you get PR, you need to take a snapshot of your worldwide assets value. Any disposition of those assets (even if acquired prior to PR), will be taxed on the market value on the day of disposition less the value on the day you took PR.

Heya Conx, thanks for adding in to the discussion

A few observations here:

1. Having PR doesn't make you a tax resident. Yes, primary ties does. Like Home, Health Card (debatable, since after landing one can get the card and leave the country), and Bank Account and CC (also, one can get these and leave the country and not touch the account).

2. Taxation is for people using services of the country, this is why they describe it through primary ties and how much of services have been used within the given year, i.e. the 6 month rule too.

3. Prior to PR, assets aren't taxable. This has been confirmed by the local CPA, twice. Only after being a tax resident, all investments are considered "purchased" on the date, and thus any sale of said stocks / assets after that point will be taxable based on trade type (e.g. 20% capital gains). For example, my 1 Million AED in local back prior to becoming tax resident isn't CRA's concern however the bank may ask for proof of funds if I transfer all in one go.

4. Finally, family ties. I don't have any children or spouse living here, and have not claimed any benefits in the 2 weeks of visits, and in the month of visit. Still need to find a family doctor which I may do when I move here properly in Jan/Feb.

 

[cryptonite]

The waitlist for a family doctor can be more than 3 months. Even after being assigned a family doctor, you may have to wait another 3 months to get an appointment.

If a person gets PR, comes in the country and stay for 3 years and applies for citizenship, while using healthcare. In that case the global assets will eventually be taxable, unless there is a formal request to relinquish tax residency prior to being tax resident for 5 years.

 

[karishi]

The waitlist for a family doctor can be more than 3 months. Even after being assigned a family doctor, you may have to wait another 3 months to get an appointment.

As usual, a good health insurance is at the top of the list of things to have

 

[Vandana Sharma]

Absolutely, since medication aren't covered by OHIP. Mine costs about 3k to 7k per month depending on dosage and need a good private insurance. Currently the UAE company covers the insurance.

Also, family doctor appointment is quick but yes specialists can take a long time, if not an emergency.