Does getting paid in HKD only stop being double taxed?

[goldenegg]

My gf and I are moving from Canada to HK next year. Her employer has given her control of how her salary is paid out. It can be all in CDN, all in HKD or a combination of both. So here are my questions.

1) Will the currency she gets paid determine whether or not Canadian taxes must be paid on the salary? (i.e. If all is HKD, will she only pay taxes in HK and not Canada?)

2) If she gets paid only in HKD and saves a good portion of that money in a HK bank, will there be an issue bringing those savings back to Canada at the end of her contract? Will that money be taxed when we come back to Canada?

Any information is greatly appreciated! If you happen to have more information you think we need, please let me know!

[PDLM]

1) No.

2) I doubt it.

Tax is generally paid based on the place of employment or residence - i.e. where you actually do the work. It doesn't matter what currency you are paid in, where you are paid, or where the contract was signed.

The US is different in that it taxes its citizens globally regardless of where they are employed (with some small exemptions). Canada, from what I have read here, makes it a little harder than most to demonstrate that you have gone non-resident in Canada, but after that I believe it conforms to the rest of the world's norms.

Someone with mor specific knowledge on Canada will be along shortly I'm sure...

[HowardCoombs]

#1) the currency and/or where she gets paid is irrelevant.

#2) Where you save the money is also irrelevant. You can bring the money back with no hassles.

The issue you need to concern yourself with is "non resident" status.
If you dont want to pay and be liable for Canadian taxes, first you must declare yourself a non-resident. You can do this simply by ticking off the box (it used to be on the front page of the tax return) to indicate that you are moving away from Canada. After that, your income that you earn outside of Canada will be free from Canadian taxes provided that you will actually in rule and in spirit leave Canadian residency.

The trick then becomes (and there are no hard and fast rules here) to demonstrate to and convince Revenue Canada that you actually intended to leave Canada and you intended not to return as a resident in any time in the near future; *if* they ask.

If you sell your house, sell your car/boat/cottege, give up your credit cards, give up your club memberships etc etc; basically you can demonstrate that you intended to leave and not come back any time soon, they will accept that you were non-resident and will not ask you to pay anything.

OTOH, if you only have a 1-2 year contract, keep your house and posessions, store your car temporarily, keep bank accounts and RRSPs etc etc and actually get back at the end of the 2 years, they will look at that and decide that you really never intended to leave for a long time and you will get hit by Candadian taxes for anything you earned.

If you go to any Revenue Canada office, you can get a pamphlet that describes the above and you will find out that the rules are quite subjective and fuzzy. There are no guarantees. If asked, you must clearly be able to convince them that your intent was to leave for a "long time".

Having said that, I know many Canadians that have kept cottages which they use during summers (its ok), Canadians that have kept bank accounts and houses for investment purposes(also ok), but overall they have "left" Canada and intend on living and working outside of Canada for the foreseable future.

I hope that helps.
HC