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Sunday, 12 August 2007

DayFour ; Time to start drinking heavily....

"14. Form T2062A, Request by a Non-Resident of Canada for a Certificate of Compliance Related to the Disposition of Canadian Resource or Timber Resource Property, Canadian Real Property (Other than Capital Property), or Depreciable Taxable Canadian Property, is to be used for reporting the proposed or actual dispositions of properties identified in paragraph 4 above. Except as otherwise noted below, the notification process for Form T2062A is the same as the process outlined for form T2062 in paragraphs 6 to 12 above."

Tax issues lie heavily atop, almost as heavily as Toshack, who has become incredibly clingy since Nel left, and who not only follows me round everywhere miaowing, but also sleeps on top of me at night, riding my constant turning (so Nel tells me), like a skilled surfer balancing on the crest of a wave. He's convinced, I think, that if he does this it will be impossible for me to leave, although I do so every morning for work, to his amazement.

The above tax form is also linked to IC172.17, T4056(E), NR7-R, T1243, T1-2006(Schedule3), T2062 E, and T2091 (ND). All of which on a second and third reading are necessary in order to report that we have made a modest Capital Gain on the house we sold in Nova Scotia.

I telephone the Canadian Revenue Agency Non-Resident Office for advice and help on how to unravel the Gordian knot. Mme LaPierre is on the other end of the phone quickly,and apologizes immediately for not knowing her job, having only been in post for two weeks. It is possible she may not be able to give me any help, or advice.

I sketch out the details of the labyrinth which I require her to illuminate , so that I can avoid the Minotaur of over-paying the Canadian Government money that they did'nt earn anyway. I already know that

(a). We may have to pay no Capital Gains on the property
(b) We may have to pay up to 50% of $12,968.72 Capital Gains tax on the property

Web searches have also revealed that we may either be deemed non-residents of Canada, or Emigrants from Canada. Clarification on these fine points of law, is therefore, to me, a six thousand dollar question. Mme LaPierre confirms that residency status depends on "essentially, Mr Nickson, on whether you have retained ties to Canada. For example, if you have many friends here, and you had many parties,went for dinner etc., then you may be a non-resident. If no friends - voila! [ok, she did'nt say 'voila'] Emigrant". This confirms my own findings, but I'm getting the feeling that Madamoiselle is putting her own Quebec interpretation on the law here.

Establishing our residency status at exact times is critical, according to the CRA Website, and there does seem to be a difference between non-residents and Emigrants. I need to get to the bottom of the issue "Can you tell me if I am non-resident or Emigrant?". "No, only you can decide that, the guidelines are in the Website. Or you could ask your friends to write to the Government". I'm beginning to flag so I half seriously ask "Does it mean that if I have friends in Canada, I do NOT have to pay Capital Gains Tax?" . "No", Mme LaPierre laughs "You still have to pay. You always pay. Everybody pays."

We're getting nowhere except complimenting each other with our respective accents. I then ask a question, that I already know the answer to "Can you go through these forms with me and help me fill out just three lines, I'm confused about?". Mme LaPierre laughs again, "No, I cannot do that, I just tell you what forms you should be filling out".

Faced with the choice of paying either £6,000 tax or no tax, I opt for electing to pay "no tax", with a covering letter saying that if I have to pay £6000.00, then the Canadian Government should feel free to take it.


JoeyMac said...

uhoh. That cover letter is as good as giving them the money in the first place. You need to state on the form in your most convinced and authoritative script that
a) you are a non resident (or whichever one pays no tax, I'm also confused there)
b) you indeed have friends in Canada (unless that means you pay the tax - see above statement of confusion)
c) you even have Cats and adopted bunnies in Canada, if the aforementioned friends are insufficient.

MJN said...

Yeah, Joe, where I really got confused is when the tax office person told me that you could be an emigrant from Canada, and still live there -- seriously, she cited the example of people who for some reason do this near to the border.

Non-resident status is a real mix up but I've decided we were non-resident since January, although this status could be argued as we have bank accounts, a car, friends and still have to complete a tax return for 2007.

Finally, unfortunately, they already have the money - in the case of non-residents like us, our Canadian lawyer is legally bound to hold back 25% of our cleared "gain", until the Canadian Govt has assessed that we owe no tax etc in Canada. Then they take their capital gains from this, and we eventually get the rest (about 7 -9 months later).