Non-resident UK citizen can get allowance

PUBLISHED : Friday, 19 May, 1995, 12:00am
UPDATED : Friday, 19 May, 1995, 12:00am

QUESTION: I am resident in Hong Kong and hear I might be entitled to Britain's personal allowance. I have shares in a British company that pays dividends from which tax has been deducted. Is it possible for me to claim a refund and, if so, how many years back can I go? ANSWER: Yes, if you are a British or Commonwealth citizen you can claim a British personal allowance even if you are not resident in Britain.

The amount of the allowance is GBP3,445 (about HK$42,000) a year, which means that on income up to this figure you are not required to pay tax.

You would need to send the dividend counterfoils to Inland Revenue with a claim form. You can make back claims for six years. Q: MY entire family will be immigrating to Canada, but I will spend most of my time in Hong Kong to attend to my business. Do I have to declare the salary I earn in Hong Kong? A: Your liability for Canadian tax depends on your residency status. The term 'residency' is not defined in the Canadian Income Tax Act.

The courts have held that a person is resident in Canada for tax purposes if Canada is the place where he, in the settled routine of his life, regularly, normally or customarily lives.

In making this determination, all of the relevant facts in each case must be considered.

These facts include the existence of a dwelling place in Canada, the residency of the spouse and dependents and the individual's personal property and social ties with Canada.

Once you have become a Canadian resident, your worldwide income will be subject to Canadian tax.

This means that a salary earned in Hong Kong will be subject to Canadian tax.

Any income taxes that you pay in Hong Kong will be eligible for a foreign tax credit in Canada.

Some taxpayers tried to minimise their Canadian tax by not drawing a salary from their Hong Kong business or by drawing an amount which is less than the fair market rate.

There is a provision in the Income Tax Act which will deem these individuals to have received what would have been a reasonable amount from arm's-length employers.

Recently, there has been a significant amount of publicity in Canada about certain Hong Kong 'astronauts' who have not reported their Hong Kong source income in Canada.

Revenue Canada is deeply concerned about this and undoubtedly will be more alert in looking for unreported income from overseas.