Quote:
Originally Posted by YouSureSir
Ya I wasn't sure how the tax treaty would work. Lets say that I have dual citzenship, and I live half the year in mexico. I have UK citzenship and Canadian. Why would the Canadian government be more entitled to taxing me than the UK government for the income I made during my period of time out of the country.I can see if I lived in Canada obviously the canadian government is entitled then to tax me, but when I'm outside of the country, then I don't see how it gets decided which government gets the tax.
I'm not sure how UK tax laws treat citizens abroad, but in Canada it has nothing to do with citizenship. The CRA has its own definition of what makes you a resident for tax purposes. If you were to reside in Canada for more than 182 days in one year, no matter what your legal status in the country is
was (student visa, permanent resident, citizen, etc.), then you have to start paying taxes as of that year. To stop paying taxes in Canada you have to do all of the following:
1- leave the country
2- get rid of all your primary assets
3- close bank accounts, surrender driving liscence and medicare card
4- if you're married and have kids, you need to move them with you
if you fail to do at least one of the above, the CRA can still come after you for taxes on your worldwide income. And you don't even have to be a citizen or a legal resident for them to come after you for taxes.
I know in the US it doesn't work the same way. As long as you're a US citizen who's resided in the US at some point in your life, then you owe the government taxes on your worldwide income.
Canada and UK have an extensive tax treaty to deal with cases where their citizens end up living in each others respective countries. But as a Canadian living in the UK, you more or less end up paying the same amount of taxes you'd pay in Canada. Basically, you pay your UK portion for residing there, and Canada gets the difference b/w the Canadian rate and UK rate (not absolutely sure about this, but not far off either).
Now if you were to reside in Canada first, then move to the UK without severing your ties to Canada (four steps above), then move to Mexico without severing UK ties, not sure if any treaty covers this. But it would be an interesting case study for a tax lawyer.