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  #1 (permalink)  
Old 04-04-2013, 01:42 PM
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Default Family, Tax, Immigration Lawyer?

Hello everyone

I will try to explain my situation as it is not a usual one; excuse my english as it is not my native language.

I just moved to Canada (Toronto) from Switzerland, been here for 3 months. My wife is living in Switzerland with my 4 and 7 year old children. We are living separately since Jan.2010.

Initially the plan was to move all together to Canada and give it a go together again because the relationship was improving; but unfortunately after I accepted the job offer in Canada our situation deteriorated dramatically, hence we decided it was to risky to move to Canada and therefore, for the moment they should stay in Switzerland.

First, I would like to clarify that neither of us (including the children) are Swiss or Canadian, this rules out any country bilateral tax agreements since these are based on citizenship.

As mentioned previously, my wife and I are separated since more than two years. Separation in Switzerland works somehow differently there, the easy way when there are no conflicts between the parties (which is the way my wife and I went), is to download a form from the internet, fill up information like, child support, distribution of property/wealth, who has legal custody of the children, visiting schedule, etc. Both parties sign this form and send it to the tax office, yes: tax office, there are no judges, no lawyers involved, nothing, none, nada. You can somehow call this a tax separation. This concept does not seem to exist in Canada (since there is no legal involvement) and due to this, the office doing my work visa indicated that in Canada I figure as legally married.

Tax wise, what happens afterwards is that each party is taxed independently, myself as single, my wife as single with 2 children. In Switzerland, the amount of money I provide as child support is deducted from my yearly income (hence I pay less tax at the end of the year, but as a single I am on a higher tax bracket) and is added to the income of my wife (her income increases, but she is on a lower tax bracket because of having two dependents). Bottom line is, there is a lot of money going down the drain in tax (I am taxed on my income in Canada and then my wife is being taxed again); also there are some traveling costs involved for me visiting my children (which in Switzerland can somehow be deducted from taxes too). I am wondering how to avoid this situation, it seems I cannot benefit of any of the tax benefits (day care costs, sport activities, etc) because the children do not live in Canada.

I have spent hours looking for information, unfortunately my case is very unusual.

My questions:
1. Would changing my legal status to separated bring anything in terms of taxes?
2. From what I have read, separation in Canada seems pretty much final, can this be undone? Are there possibilities for reconciliation?
3. Most likely I will need to consultant a professional, but have no idea which kind, a Family Lawyer, a Tax Advisor or an Immigration Lawyer?

Suggestions?

Thanks in advance for your replies
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Old 04-04-2013, 08:02 PM
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This might be way out there... but if you are located in a city that has a law school maybe you can start there. What an interesting challenge... they might be motivated to steer you in the right direction without any exchange of money.

You must be able to call a Law Society to at least pin down the expertise you need.

There is at least one person posting here who I'd safely guess is a lawyer (Orleans Lawyer) I think. Maybe he'll/she'll (?) catch your post and answer.
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Old 04-05-2013, 12:53 AM
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I don't think there is anything mysterious or puzzling about this situation at all. Maybe I'm missing something.

You work and live in Canada. You pay income tax in Canada. Your children and wife live in Switzerland so why would you think you can claim day care expenses when they are not in a daycare facility in Canada? What you do with your after-tax money is your own business. How do you think CRA would be able to verify your wife's income/expenses while not living and filing taxes in Canada? For all CRA knows your wife could be a figment of your imagination. [I'm just throwing that thought out here and don't mean to offend you]

It is unfortunate but if you look at it from CRA's perspective you will understand that they have no way to verify anything of a non-resident.

If your wife and children lived in Canada then the tax laws would be similar to those of the Swiss government. You essentially ARE single now with your wife and children living in another country. Your wife and children are not residents of Canada. Canada certainly isn't a tax haven!

What country are you a citizen of?

You can probably get the best information from Canada Revenue Agency directly. It is painfully slow and frustrating but perhaps simply phone them.

Last edited by arabian; 04-05-2013 at 12:57 AM.
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Old 04-05-2013, 01:03 AM
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Another thought - what would happen if Canada allowed people to claim extended family who live in other countries on their income tax returns? Every immigrant would claim children and dependent elders living in other countries (and possibly children from multiple wives) on their income tax returns. Where does one draw the line?

Don't think so. Don't know of ANY country in the world that would allow that.
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Old 04-05-2013, 01:08 AM
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Your question seems to be about tax and not of family matter so I would recommend seeking advice from an accountant that is qualify in international personal tax to confim this

Just my opinion:

It seems to me that in Canada, you would file as separated thus equivalent to single as tax. You would not benefit from any tax credit and the children are living with the mother outside the country.

Your ex received child support from Canada where taxe were already deducted under Canada tax law thus this should not count as income for her and should not declare it in Switzerland.

The difference is that you are not living in Switzerland so the child support is not subject to any Switzerland tax law. Only her own income is subject to Switzerland tax and none is taxable under the Canada law.
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Old 04-05-2013, 08:26 AM
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I think he is trying to look out for the tax implications for both parents. Not a cut and dried situation necessarily.
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Old 04-05-2013, 11:38 AM
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Pretty cut and dried to me - he is a visitor to Canada (having been here only 3 months).
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Old 04-05-2013, 08:15 PM
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Thanks for the valuable input. I do get the point; but however different countries, different taxing rules.

Quote:
You work and live in Canada. You pay income tax in Canada. Your children and wife live in Switzerland so why would you think you can claim day care expenses when they are not in a daycare facility in Canada? What you do with your after-tax money is your own business. How do you think CRA would be able to verify your wife's income/expenses while not living and filing taxes in Canada?
Quote:
It seems to me that in Canada, you would file as separated thus equivalent to single as tax. You would not benefit from any tax credit and the children are living with the mother outside the country.
Understood and agreed, I am not trying to profit here. If I understand correctly, as separated, I would get taxed on the income, but the child/spouse support I provide would not be taxed on my wife's income? (if hypothetically my wife would be living in Canada)

Quote:
If your wife and children lived in Canada then the tax laws would be similar to those of the Swiss government. You essentially ARE single now with your wife and children living in another country. Your wife and children are not residents of Canada.
I understand, logically speaking, if you have a wife and children living abroad there is a very good chance you are providing some support. I get it if the CRA has verify/confirm this, but this is not some random wild scenario.

Quote:
Canada certainly isn't a tax haven!
I have noticed that the hard way

Quote:
Another thought - what would happen if Canada allowed people to claim extended family who live in other countries on their income tax returns? Every immigrant would claim children and dependent elders living in other countries (and possibly children from multiple wives) on their income tax returns.
Fair enough, however I can prove I have children living abroard (birth certificates, confirmation of residency, etc) and additionally how much child/spouse support I have provided in the last two years; also a fixed monthly amount is flowing to Switzerland out my bank account.

All the child tax benefits are at the moment in Switzerland because that is where the children live, very much obvious to me. What doesn't seem logical; and in an effort not to appear naive; is that the child/spouse support I provide from Canada, is taxed from my income and taxed again on hers. This is the situation I am trying to avoid.

If I would change my marital status to separated, would that make any difference? Is this status final? Can it be revoked/undone?

Thanks.
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Old 04-05-2013, 09:29 PM
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As I understand it... separation in Canada is a limbo state... a precursor to divorce. Theoretically, reconciliation is possible after a couple has separated.

BUT you should get this information from a valid legal source.
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Old 04-05-2013, 10:04 PM
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confusedincanada, Child Support is not tax deductable in Canada, nor is it considered income. If you ex is being taxed on Child Support in Switzerland, that is between her and the Swiss government.

Spousal Support is tax deductable for you, and is considered taxable income for recipients in Canada. In order to claim it on your tax return, you must register your court order or written agreement with the CRA.

CRA - Support Payments Made

CRA - Registering your court order or written agreement

CRA - Payments to or from a non-resident

In Canada, child care costs are only deductable by custodial parent, and are only deductable if the care is required so that the parent can work or go to full time school. You don't fit any of those criteria.

Separation is not "limbo," it is a legal state that exists when you have been living separate and apart, with intent to be separate. Obviously when spouses live in separate countries, the intent is critical. There are no tax implications for you. There are some tax implications for a custodial parent, in terms of claiming deductions for the children.

There are some implications with federal programs like the Canada Pension Plan. This likely will not affect you unless you are a permanent resident, otherwise you will not be paying into the plan.

You would be considered "reconciled" if you were to resume co-habitation with intent to reconcile, but this really has no implications for you unless you had a legal separation agreement or a court order which you wished to set aside. There would be no tax implications for you in Canada.

If you wish to file for divorce in Canada, you would need to be separated for at least one year. This would be affected by a reconciliation that turned out to fail.

If you wish shared custody of the children and you would wish them to reside with you in Canada full or part-time, then you should consult an immigration lawyer. Otherwise, I cannot think of a reason why such would be relevant.

A tax lawyer would be expensive, and if you are not appealing your taxes in Canada, would probably not be relevant. A tax accountant who was familiar with professionals working temporarily in Canada would be a better option.

If you simply want to divorce, if it were me, I would encourage my ex to take care of the process in Switzerland. If you are a permanent resident in Canada, you would have reason to file for divorce in Canada, but if you are on a tempory work visa, this would not be seen as within the Canadian courts' jurisdiction. If you seek some level of custody, of course you should see a family lawyer, but since the Swiss courts would have jurisdiction, Canadian family lawyers would have no experience or expertise.
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