Moving from India to Canada brings financial opportunities and complexities. For PAN card holders, managing taxes and finances across two countries requires a strategic approach. Here’s a simplified guide to staying compliant and making the most of your financial life as an NRI (Non-Resident Indian) in Canada.
1. Determine Your Tax Residency in Canada and India
Your tax residency status in each country affects how you report income. Canada taxes residents on worldwide income, while India only taxes NRIs on Indian income. In Canada, living here more than 183 days a year means you’re considered a tax resident. In India, you’re classified as an NRI if you’re there for less than 182 days in a financial year.
For tax filing help, visit Rex Tax.
2. Keep Your PAN Card Updated
Maintaining your PAN card is crucial for managing Indian investments like mutual funds and stocks and filing Indian tax returns if required. Update your contact information if necessary to avoid issues with financial transactions.
3. Set Up NRE and NRO Accounts
These accounts make managing your finances simpler:
NRE Account: Holds foreign earnings, allows easy repatriation, and is tax-free in India.
NRO Account: Ideal for handling income from Indian sources like rent. Note that interest is taxed in India, but repatriation is possible with some restrictions.
Check our NRI Services to learn more.
4. Report Global Income in Canada
Canada requires all residents to report foreign income. If you earn from Indian investments (dividends, rent, capital gains), include it in your Canadian tax return. The Canada-India Double Taxation Avoidance Agreement (DTAA)helps you avoid being taxed twice:
Claim Foreign Tax Credits: Use taxes paid in India to reduce Canadian tax liability.
Deductions for Indian Income: You might benefit from lower Canadian rates on certain Indian income.
Learn about foreign tax credits on Rex Tax.
5. File Taxes in Both Countries (If Required)
You may need to file taxes in both Canada and India. In India, you must file if income exceeds INR 2.5 lakh per year. For Canada, you’ll need records of taxes paid in India to claim foreign credits. Working with a tax advisor can help navigate these filings smoothly.
6. Stay Organized with Key Documents
Managing accounts in two countries requires diligent documentation. Here’s a checklist:
TDS Certificates for Indian income (for claiming foreign tax credits in Canada)
Form 15CA/15CB for repatriation to Canada
Investment Statements for Indian assets
Having the right documents will make tax season smoother.
7. Engage an NRI Tax Specialist
For cross-border tax assistance, work with a specialist in NRI taxation to stay compliant and optimize tax savings. At Rex Tax, we offer tailored solutions to help you manage dual-country finances effectively.
8. Plan for Long-Term Financial Goals
Consider long-term goals, like retirement planning, investments in both countries, and estate planning for assets in Canada and India. Managing tax and investment structures carefully can help you achieve financial stability while optimizing benefits across borders.
Disclaimer: This article provides general information only and should not be relied upon as specific financial, investment, or tax advice. Individual circumstances vary, and all efforts have been made to provide accurate information. However, please seek professional advice to address your unique financial situation and confirm all tax details. For personalized guidance, reach out to Rex Tax.
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