Canadian tax reassesment

4 comments

1. Why were you filling taxes with Canada? If you live and work in Japan you should be a tax resident of Japan and not of Canada.

   The tax treaty above all establishes rules for determining tax residency. That is how it prevents double taxation. If you went and filled a tax return anyway you’ve made trouble for yourself.

2. Sounds about right for the CRA…they were always giving me grief when I was on JET.

   If you have the My CRA online account, you can file an objection there. As Line 25600 isn’t a JET-specific item, you’d probably have to show them a copy of your 2020 Japanese tax return + proof of Japanese residency.

   If you call, tell them you a) are a resident of Japan for the 2020 tax year and b) paid your Japanese taxes (I assume). I’ve actually found the telephone agents to be pretty helpful for stuff like that.

3. You have to be deemed not a tax resident of canada to not be subject to any canadian income taxes. There is a form to send in for that, but if you hold assets and bank accounts in canada they may still deem you a tax resident. JET income is exempt but other income will will be subject, but they will take into account how much J tax you paid so make sure to put in any J tax possible and anything else that can be a tax credit, income tax, resident tax, health payments, car taxes and consumption taxes if possible.

   Someone in /japanfinance may know more but it may be worth your time/money to do a consultation with an accountant familiar with 日加 taxes.

4. This happened to me after JET when I got a sister-city job with a municipal government. I was contacted by CRA telling me that without further proof, I could be partially taxed on my non-JET earnings (any income not covered under the double taxation laws in the treaty).

   IIRC, the reason JET earnings are not taxed under the tax treaty is because earnings from any employment (not only JET) with a government entity in Japan from municipal to national is exempt from Canadian taxation. Because I had a sister-city position with a municipal government and provided proof of this, my earnings were completely exempt from Canadian taxation.

   However, for other employment in Japan, under the double taxation exemptions, you could be liable for Canadian taxation for income not covered under the exemptions. This is why, shortly after my experience with the CRA, I applied for non-residence status in Canada for taxation purposes and no longer filed Canadian income tax returns.

   If you plan on continuing to live in Japan, you should probably do the same and there will be no need to even file a tax return. However, in order to be considered a non-resident of Canada for taxation purposes, you are supposed to cut most financial ties to Canada including Canadian bank accounts and credit cards issued by Canadian banks, as well as your provincial driver’s licence and provincial health care. You might be able to get away with keeping a bank account and credit card, but if you continue to belong to your provincial health plan and continue to renew your driver’s licence, you will most definitely be considered a resident of Canada for taxation purposes and any income not covered under the double taxation portion of the tax treaty will be open to taxation in Canada. The CRA may never find out about these things, but it’s not worth the risk.