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Canadian taxes and Danish income??

Hi, I’m looking for some advice regarding filing my Canadian income tax return.

I moved here in March 2010 and have been working for a Danish company with no ties to Canada since then.  I still have residential ties left in Canada (apartment that I rent out so there is some Canadian income that I will declare, bank accounts, drivers license, etc.).  I’ve read through the resident statuses on the government site, but it’s still a bit confusing to me and I’m hoping to get a layman’s explanation of this.

Because of my residential ties, I am guessing I am considered a Resident still.  I did read about Deemed Non-Resident, but I’m unsure if I fall under that at all.  What I’d like to know is, if I am a Resident, how do I actually file my taxes?  Do I declare my Danish income?  I read one discussion where someone was working in the UK and declared their UK income, but still ended up paying additional taxes to Canada (possibly because the tax bracket he was in while working in the UK was lower than what he would have been had he made the same amount in Canada).  It also doesn’t really make sense to me why I would even need to declare my Danish income since it has nothing to do with Canada.

That’s the gist of my situation, if anyone has any information it would be really helpful.

7 comments

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  1. Brian Keith

    The primary consideration is which country you are a tax resident of (Denmark in this case). You can only be a tax resident of one country at once. Typically, you become a Danish tax resident the day you start working here.

    If you have financial interests in other countries (Canada, England, etc.), then you may have some tax liability there, and possible tax exemptions. So your primary task is to fill out your Danish tax return for each year in which you have income (starting with 2010). That will list your Danish plus possible foreign income (on which you may already have paid tax overseas).

    Then, only fill out tax returns for the other countries (Canada, England) if you have to. Denmark and Canada have a tax treaty, so you won’t be double-taxed. You don’t have to declare your Danish income on your Canadian tax return.

    1. So am I basically doing my Canadian tax return like I normally would (because of my income from the rental apartment) without stating that I’m not living in the country or declaring my foreign income?

      I’m also now being told that I have to declare foreign income on my Danish tax return as well. I found a page on the SKAT site that says global income is supposed to be declared, and you have to have documents proving that you’ve paid tax on the foreign income to avoid being double taxed on it in Denmark. Does this sound right?

  2. Brian Keith

    I believe your assumptions are correct, Melissa. It’s a bit confusing especially for the year you move countries. If you’d like further help (and are in Copenhagen), I can give you a hand. But I think your conclusions are correct so far.

  3. Pete

    Very interesting. If any yanks happen to read this and wonder what they should be doing then I can remind you to file in both countries. This does not mean that you have to pay in both. When filing your form 1040 remember to file a form 2555 to make the first $92,000 tax free. (this amount increases every year) DON’T be like Wesley Snipes and end up in jail because you didn’t file! :o)

  4. Heather Spears

    Hi Brian: Living here, have some Can income tax forms. I am in same boat Brian and would really like advice. Also – for everyone – want more information about strategic voting campaign for next election. Live on FRB 35364610.
    Heather

  5. PF

    “I’m also now being told that I have to declare foreign income on my Danish tax return as well. I found a page on the SKAT site that says global income is supposed to be declared, and you have to have documents proving that you’ve paid tax on the foreign income to avoid being double taxed on it in Denmark. Does this sound right?”

    Do we have to declare global income then?

    Does it even matter since the only other income I will get is with a country that already has a tax treaty? (aka. Canada)

  6. Brian Keith

    The information on the SKAT site is valid. In my experience, SKAT is primarily interested in taxing you on your Danish earnings. It’s not necessary to report on foreign holdings that are tax-sheltered (like RRSPs).

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