Emigrating to Canada, Tax implictions for income and CGT

Hi there,

I was considering emigrating to Canada next year but plan to rent out my house here for a couple of years. Ultimately if I decide to stay in Canada to sell my house and buy over there.

I have a few questions about moving and working away. I know that there are lots of very knowledgeable and helpful contributors on this forum so hopefully you can give me a few pointers. Any help would be greatly appreciated.

Questions
1 - I know that Ireland have have a double taxation agreement with Canada but the REv site states that is is being renegotiated...does anyone know why or in relation to what?

2 - when would I officially become non resident and have no more involvement with Irish Revenue in terms of making returns etc? I would be working here for some of next year (upto 6 or 8 months).

3 - are there any taxation issues I need to aware of if I rent out my house here. I will probably only just about get enough rent to cover my mortgage and pay estate agent fees. If I do not clear any profit do I have any tax liability? If I do clear a modest profit of say €100 pm (wishful thinking!!) how does that affect things?

4 - IF and when I do sell my home, if I am not officially a non resident in Ireland I presume I will have some CGT liability ASSUMING the value of my house increased during the time i rented it out. If it didn’t increase is there any tax?

5 - If I was officially non resident at the time of selling the house, do I have nay tax issues in Ireland or is my only tax issue a Canadian one at that stage?

6 – I have a few shares that used to pay a dividend. If they start to pay dividends again in the future how does that work if I am non resident? Can I apply for a refund of the withholding tax or use it as a credit against income tax in Canada????

7 - Finally, if anyone can think of any other issues or pitfalls etc that I should be aware.....

Thank you.

1. Most renegotian are to bring treaties in line with OECD models if not already so.

2. If you spend 183 days in any tax year or 280 in any two consecutive tax years you remain Irish tax resident. If you leave Ireland to reside permanently abroad, you could be considered non-resident from the date you leave under split year rules. You will be treated as not ordinarily resident from the commencement of the 4th tax year, if you have been non-resident for each of the preceeding 3 years.

3. As a non-resident landlord, your tenant is obliged to deduct basic rate tax from the gross rent and pay this over to the Revenue unless you appoint an agent to act on your behalf with the Revenue. From 2009, you only get tax relief for 75% of your mortgage interst payments against your rental income. You will only get relief for mortgage interest if you are registered with the PRTB. You can generally claim tax relief for any expenses related to the letting of the property (e.g. repairs, redecoration, insurance etc.) after the date of the initial letting. Getting the property into a state in order to let it out would not be allowable. Capital allowances may be granted if the property is let furnished.

3.You will be taxable on your taxable profit - rental income less tax deductable expenses. If a loss you can carry this forward to future years. If a taxable profit - tax at usual rates. Personal tax credits for non-residents calculated at a proportion of tax credits x Irish taxable income / Total worldwide income. If in Canada, they will give you tax credit for Irish tax paid (may be subject to restrictions) against Canadian tax liability. Check this out with Canadian tax advisor.

4.CGT calculated on taxable gain - if no gain no liability to CGT.

5. If you have Irish arising income, liable to Irish tax. Depending on treaty may be able to reclaim tax credits. Need to look at treaty to confirm.

Above are general guidelines. I would suggest you get professional advice due to complexity of your situation.

www.taxingtimes.ie

Am I right in thinking that there is no tax liability on income earned in Canada if you are not an Irish Tax Resident?