TAGS: #canada
If you've been wondering how to stop paying income tax in Canada the easiest way is to become a tax exile by leaving the country. That's not your only option, though and The Tax Collectors Bible explains what those are.
As for leaving the country, this might seem to be an easy task but unfortunately it's not the case. The Canada Revenue Agency has a list of conditions (in the NR 73 form) that you must meet before you're no longer subject to income tax.
This form should be approached with extreme caution. The reason why is this: In the Statement of Residency section is the question: "Are you subject to income tax in your new country of residence on your world income?"
This is where things get murky. Some time ago I was visiting the site of Alex Doulis, author of the runaway Canadian bestseller "Take Your Money and Run," which tells the reader to get out of the Canadian income tax system.
On his website, Alex relates the story of a client who moved to Dubai, which has no income tax. When the client filled out the NR 73 form he received the following response from the CRA: "Since you're not subject to income tax in that country, we consider you to be a factual resident while you're away."
This is totally insane. The CRA considers this guy to be a resident of Canada for tax purposes and they expect him to pay taxes in Canada even though he severed all his ties. Not only that, he's not eligible to receive any Canadian services.
I immediately called Alex and asked: "Alex, this is entrapment, isn't it?" "Yes," he replied.
If you go to Alex's web site you can read the whole sordid tale for yourself. The bottom-line is simple, don't fill out the form. And if the CRA sends you the form, don't fill it out. Never put anything in writing; it will only come back to haunt you with the CRA.
As it is, if you spend more than 182 in two years outside of the country you're deemed to be a non-resident and you no longer have to pay income tax.
If your stay outside the country isn't permanent. You could run into all sorts of trouble when you return and file your first income tax return.
Before you go on the road, check with an accounting professional. Beyond that, read The Taxpayers Bible. Without a doubt it's the most complete source on Canada's income tax system that I've ever seen. At 463 pages, it's a storehouse of incredibly valuable information. I highly recommend it.
I also recommend two other books, both by Alex Doulis. The first is called: "Tacking the Tax Man" and it shows you how to protect yourself from audits and investigations. If you've ever been audited you'll know it's an unpleasant experience. This book informs you of your rights and how to conduct yourself around the CRA. The second book is: "My Blue Haven," which is about the offshore and protecting your assets from the CRA.
Disclaimer: I'm not an income tax professional. If you have any doubts about what your read here, consult with a professional.