Thursday, April 15, 2010

Just 15 more days till tax Canada

My family and I spent most of 2009 as expatriates in New Brunswick, Canada, but today, alas, I bring no bawdy tales of being screeched in as an honorary Newfoundlander, or of seeing mooses in Cape Breton, or of watching whales blow in the Bay of Fundy, or learning how to curl (which is far more difficult than it looks).

No, comrades, the topic du jour is an international freelancer's view of the differences in our income tax systems, which for some reason is on top of my mind today.
  • I can't speak for anyone else, but at our income level, a Canadian pays more than a comparable U.S. citizen. A lot more. Keep in mind, this is on top of an already-nasty federal/provincial sales tax (13% in N.B.) and, worst of all, wicked tariffs on liquor. Oddly enough, easy access to unemployment benefits (known shorthand as "EI," for Employment Insurance) and healthcare are not free. They are expensive.
  • Although we paid into the healthcare and EI systems, we were not eligible for benefits. We were covered by a Cigna International policy.
  • That being said, I admire how simple the Canadian T1 General Income Tax and Benefit Return is. Ours was 19 pages long, and it covered both federal and provincial taxes.  
  • By comparison, our fed and Arizona forms ran 47 and 16 pages, respectively. And to add insult to injury, the postage to mail our 1040 cost almost a dollar more than the T1!
  • The T1 is also admirably clear about what your tax rate calculation is, compared to the byzantine B.S. charts in the U.S. system. The Canadian government appears quite content to spell out how badly you're getting reamed.
On a final note, for U.S. citizen freelancers who find themselves outposted north of the border: Make sure you're an LLC. As it turns out, freelancing in Canada went very smoothly and my fears from last May of owing taxes to the Dominion on my worldwide income were unfounded. Our tax preparer concluded that "Boomvang Creative does not carry on business in Canada through a permanent establishment maintained in Canada."

Uncle Sam, you're very welcome.

1 comment:

  1. Reading between the lines, it's probably not financially worth it to move to Canada for the free healthcare, eh?