Does anyone cruise abroad and avoid taxes?

[koenig]

For my work we are researching a project in the Dominican Republic. I plan to live aboard and cruise the other places on my off time. I'm already selling my Canadian house and don't have any other assets in this country. A friend pointed out that no resident ties to Canada, your a non-resident and don't pay income tax on your global income. Our tax system is pretty much the same as the United Kingdom and other countries. I believe America is the only western G20 nation that taxes global income on their non-resident persons living abroad. So I'm curious if anyone is living abroad and has the benefit of avoiding (not paying) income taxes on their global income?

 

[Tranona]

You should be addressing your question to the Canadian tax authorities.

Not that it helps you, but from a UK perspective it is extremely difficult to become "non resident" - and usually when you have taken up residence in another (more favourable) country.

The only effective way of avoiding taxes is to not have any income or assets.

 

[dt4134]

For my work we are researching a project in the Dominican Republic. I plan to live aboard and cruise the other places on my off time. I'm already selling my Canadian house and don't have any other assets in this country. A friend pointed out that no resident ties to Canada, your a non-resident and don't pay income tax on your global income. Our tax system is pretty much the same as the United Kingdom and other countries. I believe America is the only western G20 nation that taxes global income on their non-resident persons living abroad. So I'm curious if anyone is living abroad and has the benefit of avoiding (not paying) income taxes on their global income?

There are the concepts of domicile & ordinary residence which quite possibly exist in Canada too. Non-residence usually involves being resident somewhere else and paying tax there. Allied to which there is maybe a double-taxation treat between Canada & the Dominican Republic which would trump the tax laws in both countries.

It's really a question for a tax specialist who understands Canadian tax law and the tax rules between Canada & the Dominican Republic.

You do need specialist knowledge as it would be easy to do something that slightly lowered your tax liability in one country and significantly increased it is another.

Be very careful if there isn't a double taxation treaty between the two countries. I know someone who ended up paying income tax twice on the same income (but neither country was Canada or the Dominican Republic).

 

[Icarus39]

UK income tax on seafarers

Hi, I am quite up to date on UK tax legislation regarding seafarers.
As a seafarer, working more than half the year on ships / out of the UK you can claim a 100% deduction on UK income tax. There are several qualifying rules - the main ones are -

- you must be ordinarily resident in the UK - i.e that is where you live and pay your taxes
- you must be employed on a ship - the IR define a ship as self propelled vessel capable of navigation. This rules out rigs, barges, ships on DP (oil related sub sea work mostly), etc
- the ship must make 1 foreign port call each 12 month period
- you must pass a qualifying year where whenever you come back in to the uk, you cannot stay for more than half the total qualifying period - this is known as the half rule

The following link explains all

http://www.hmrc.gov.uk/pdfs/2003_04/self_employment/ir205.pdf

I know a Canadian who went to work in Singapore. He didn't pay any Canadian taxes as he didn't return there as specified by Canadian rules (for more than a few days a year). I know he did have terrible trouble with health care, etc when he eventually moved back to Singapore !

Like the other forumite says ... beware taxation in other countries if they deem you to be living there, etc ....

Good luck !

 

[Conachair]

Google perpetual tourist or permanent traveller.

 

[Conachair]

Not that it helps you, but from a UK perspective it is extremely difficult to become "non resident" - and usually when you have taken up residence in another (more favourable) country.

Not sure where you got that from but that certainly wasn't my experience.

i spoke to the tax office, told them what I was doning, and left the country. Easy.
These days there's form P85 to fill out i believe.
Any income arising from duties carried out in the UK was declared, income resulting from duties carried out abroad was not taxed in the UK. So long as you stay out of the country and they don't think you are having a big long holiday and haven't really left. I had no property or any links which would suggest this so no problem.

Non resident anywhere.

Easy.

 

[DaveNTL]

Not sure where you got that from but that certainly wasn't my experience.

Nor mine. Maybe he meant non-dom? That's difficult, non-res is easy.

 

[Sandyman]

Slightly off topic I know but thought this may be of interest. Apologies to the OP


A friend of mine works for the RFA. They do there best to ensure there employees get six months abroad each year and hence no tax liability.
I questioned as to why this did not also apply to members of the Royal Navy, myself having done many deployments of over 6 months duration. The reply was that we did not qualify for such status as we were, even though abroad, still on British Territory. I then pointed out that RFA ships were also Crown property. The reply was that they were under a different flag
and registration. Seems that whats good for the Goose is not also good for the Gander.

I wonder how they apply this to the Army ?

Apologies once again.

 

[Tranona]

Not sure where you got that from but that certainly wasn't my experience.


Easy.

But would not be so easy if you had family, proerty, investments etc where you have to cut all ties. Easy if your life is simple and you can do that.

 

[Conachair]

But would not be so easy if you had family, proerty, investments etc where you have to cut all ties. Easy if your life is simple and you can do that.

Investments shouldn't matter, you pay tax on any income from UK. If you have family living at home in your own property then, no, very unlikely you'll get away with claiming to be non resident.
Though it's not cut and dried, if you own a football team and the revinue think you are trying it on then most likely they will come after you. If you rent out a cottage in Cornwall, pay the tax on that but rarely visit the uk then shouldn't be a problem.

But to the OP, go visit your tax office, if anything like the UK then they will be helpful people. Don't take anything you read on a net forum to be anywhere close to real world Including this post...

 

[KellysEye]

I don't know if this applies to Canada but we spent six and a half years away from the UK. This is the tax position. It is extremely difficult to get non resident status unless you have cut all ties to the UK, including from owning UK property to many trivial things such as club membership. Also the Inland Revenue will not allow you to have non resident and not ordinarily resident status unless you pay tax in the country you are in. However, there is a three tax years rule, if you are away for that length of time you can apply for nr and nor and it is backdated to the date you left, thus a tax rebate may be given.

Even if you have nr and nor if you also have rental income, or savings in UK accounts, or shares etc you still pay UK tax on that but not overseas income.

Your problem may be that you are working most of the time and not sailing full time. That would I guess make you tax liable in the DR, you need to check DR's rules. If you can get Canadian nr and nor cut all ties with Canada and put all assets in an offshore bank or offshore trust. Beware of using European offshore banks, if you don't have nr and nor then you will have to pay a European Withholding tax on interest, which is rising to thirty per cent in July this year. Best use somewhere closer like the Caymans.

Hope that helps.

 

[duncan99210]

Sandyman,
This is a long standing irritation for the forces. As far as the taxman is concerned, you're a UK based employee, no matter where you're actually serving and get taxed on that basis. This applies to all of the services and when you're serving alongside US forces, who get their salary tax free when serving on operations, it is a bit galling.

Members of the RFA have the same status as merchant sailors; that is, providing they are outside UK waters for 6 months of the year, they pay no UK tax. Would that the forces themselves were subject to this rule - I'd have saved a fortune over the years. Once upon a time, I used to task the Landing Ships (Sir Galahad and the rest) and was under constant pressure to ensure that all 6 vessels spent at least 6 months of the year outside UK waters - not an easy task when their normal peacetime task was to keep the Army in Germany resupplied.....